Understanding Income Tax Notices

Receiving a Tax Notice from the Income Tax Department is a stressful situation for a taxpayer. But rather than getting afraid of it, one must understand the purpose of the Income Tax Department to issue such a notice.

It might be possible that you receive a notice from the department for your old dues pending towards the department or for not sufficing your obligations towards the Income Tax Provisions.

Also, it is important that after receiving the tax notice you reply to it appropriately and not get into any non-compliance situation attracting more strict penalties from the department.

Failure to respond to an income tax notice can lead to a penalty in addition to the tax levied by the department or in severe cases imprisonment to the taxpayer.

How an Income Tax Notice is received?

Providing intimation under a particular section applicable, the tax department issues a tax notice to the taxpayer on the email provided by an assessee while filing his Income tax return online.

The sender of ITR is intimated by the department through email like the way, the taxpayer is provided an intimation of his ITR processing by the CPC department through email from intimations@cpc.gov.in

Also, the notice is sent to the taxpayer through post quoting the PAN number of the person on the postal address provided to the income tax department.

What to do when an Income Tax Notice is received?

Analyzing the Details on the Notice

An Income Tax Notice to the taxpayer can be for submission of evidence of income sufficed in the ITR, for clarifications, to appear before the tax authorities or for responding to queries /demands raised by the department.

The foremost thing to do when an Income Tax Notice is received is to check whether the personal details including PAN number, name and address mentioned on the notice are correct or not.

Please note PAN, as mentioned on the notice, has to be correctly verified because in most cases department issues notice putting in PAN number rather than the name of the taxpayer.

Once the details of the recipient have been verified the next step is to check the details of the sending officer or the sending authority including name, designation, office address signature, stamp, Income Tax ward or circle mentioned in the notice.

Understand the Purpose of Notice

The next step is to check in lieu of what purpose the tax notice has been issued.

Some common intimations are as under:

  • Tax Intimation under Section 143(1)   can be received by the taxpayer in case of any tax liability to be paid or there is any refund mismatch or intimating for disallowance of incorrectly claimed loss or expenditure or refund.
  • Tax notice under Section 148 for intimating the taxpayer that he might not have paid the required Income Tax liability on the no reported income or have paid lower taxes intending to escape from his Tax liability. The assessing officer issues order for reassessment or to command for filling of a revised return or any other action done in a prescribed format.

It can be issued within a  period of 4 years from the end of relevant AY in case the income so escaped does not exceed Rs. 1 lakh. Whereas, for the amount exceeding Rs. 1 lakh, the notice can be issued within 6 years.

  • Tax notice under Section 245 where the assessing officer issues a notice to the taxpayer believing that he has not paid tax correctly for the past years (pending tax demand) or claiming refund of the other assessment year and in such cases, the adjustment of the past tax demand is adjusted from the claims refunds of the current period, providing sufficient time to the taxpayer to justify his/her stand on the matter.

The taxpayer can answer such notice by replying to the concerned Assessing Officer or sending the response to the Central Processing Centre Bangalore.

  • Tax notice under Section 142(1) where the taxpayer is intimated by the officer for not providing additional information and documents for any specific exemption or deductions claimed.

TaxReturnWala Tip :

Do not lose the speed post number and the envelope in which the tax notice was received, make two or three copies of the notice and keep it safe as it will be required for sufficing the date of receipt of the notice in case of any future discrepancies.

In any case, do not ignore any notice received from the Income Tax Department further one has to be double sure that the notice received is a true one and not a fraud or scam.

After analyzing or getting into consultation with any tax expert or tax service provider online it’s time to respond to the notice to make sure that, the response is submitted within the stipulated time mentioned in the notice. To provide the necessary documents and evidence referring to your submissions and responses. Also, keeping copies of all such communications for future reference is a very important task.

How to Spot the difference between fake or original Income Tax Notice?

Earlier, a tax notice was issued to the taxpayer putting in the department address and the signatures of the officer. There was no authentic way for the taxpayer to verify whether the notice has been received from the department or not.

Now with the digital technology involved in the process, a taxpayer can confirm for the receipt of tax notice by confirming it with a unique identification number as DIN (Document Identification Number) imprinted on the tax notice.

To know the authenticity of the tax notice issued, the priority check is the presence of DIN on the Income Tax Notice.

As per Finance Minister, issue of any intimation or notice to the taxpayer without a DIN would not be considered as a legal intimation, making the taxpayer nowhere liable to any condition of the department

The taxpayer can now check the validity of the Income Tax Notice on the e-filing portal of Income-tax by putting DIN in the “Notice/Order issued by ITD” section located on the e-filing portal.

This is how you can confirm:

  1. Go to the Income Tax e-filing portal.
  1. Click on the “ Notice/Order issued by ITD” button on the left side of the website.
  1. Put the required notice number and PAN details and click Submit.

For details provided in the portal for the notice – it shall be considered as a valid intimation from the department and has to be responded as soon as possible.

Otherwise, if it is not showing any details on the portal it can be ignored for the time being until further intimation is received from the department.

You might face problems corresponding to intimation received in matters of TDS mismatch, TDS deductions, scrutiny, tax assessment, etc. So, it is recommended that you go through the advice of a legal professional always.

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