Income Tax Notices

Income Tax Notices

Introduction : 

When we receive Income Tax notices, we often get scared but all these notices have a reason for issuance. Some income tax notices just give us information like intimation under section 143(1), some warrant information for inquiry under 142(1) and some communicate that an audit is required to be done, etc. This article will give you brief information about the income tax notices.

Type of Income Tax notices

Notice u/s 143(1) – Intimation:

Intimation under section 143(1) is an intimation for ITR processed by the income tax department to the taxpayer. It communicates arithmetical mistakes or changes to be done. 

A notice in the email from Income Tax Department may make anyone worry but if you’ve received an intimation under section 143(1), you don’t need to worry as it is just an intimation and not any scrutiny or order by the  Income Tax Department. Intimation for ITR processed may be about:

• Any tax or interest which has to be paid, or
• If you are eligible for refunds from the Income Tax Department

This notice/intimation under section 143(1) is generated by the computer on the basis of any mathematical error or any incorrect tax claim.

Notice u/s 139(9) – Defective Income Tax Return:

Defective Return is the type of return for which a person receives a notice u/s 139(9) if the IT Department has found any discrepancies or mistakes or any missing information in ITR. Once you file your income tax return, the details provided by you in the ITR are cross-verified and processed. The department compares the details provided by you with the information that is available to them.

An assessee is expected to correct the defect within 15 days and if it to correct the defect, it would be treated as an invalid return.

Notice u/s 142(1) – Inquiry Notice Before Assessment: 

Section 142(1) tax notice is the notice that is usually served, in a case where the return has been filed, to call for further details and documents from the assessee and to take a particular case under assessment. This notice can also be sent to require him to file his return where he has not yet furnished it.

This notice is generally issued when information is missing from the taxpayer’s end and an inquiry is sought to be made. The taxpayer is given a reasonable opportunity of being heard for any material that may have been gathered on the basis of such inquiry

Notice u/s 143(2) – Scrutiny Assessment Notice: 

It applies to a case where the return has either been filed by the assessee himself (Self Assessment) or in response to a notice u/s 142(1). This notice is served by the Assessing Officer in order to ensure that the assessee has not understated the income, computed excessive loss or underpaid the tax. It may require him to:

1. Be in physical attendance or represent before the Assessing Officer (AO) to clarify facts; or
2. Make written submissions for providing details; or
3. Produce evidence to substantiate the income/profits/gains/losses.

This notice is issued within a period of 6 months from the end of the financial year in which the return is filed.

Notice u/s 156 – Demand Notice: 

Section 156 tax notice is the notice of demand issued by the Income Tax Department when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed. The section 156 tax notice of demand will specify the sum which is payable.

Notice u/s 148 –Commence Proceedings:

This notice is issued to re-open a case that has already been assessed earlier by an officer. The case is re-opened if the officer believes that any chargeable income is not mentioned in the return.

Before making an assessment or re-assessment, the Assessing Officer (AO) has to serve a notice under section 148.     Assessing Officer (AO) should have a valid reason to re-open the case and must record the reason for issuing the notice.

Notice u/s 245 – Intimation to set off Demand and Refunds:

Section 245 Tax notice is the notice by the income tax department to the assessee in whose return the IT Department feels that there’s an outstanding demand from earlier years and a refund is claimed in another assessment year. In such a case as per section 245, the AO can adjust refund against the tax demand which is outstanding from the taxpayer.