By CA Gauri Chadha
Wrong spelling, an extra 0, forgot a tax demand or additional document – any such reason or there could be many others too that can serve you an Income tax notice. It is not only unpleasant but also very uncomfortable for any law-abiding taxpayer. But do you know that every notice from Income tax should not be feared? So don’t press the panic button till you understand the nature of the notice and the reason why it was sent to you. So here are the 7 types of IT notice that could reach you and the reasons why they are sent-
1 . Defective Income Tax Return : Section 139(9)
An error in filing your return could result in section 139(9) notice .
WHY- An IT return is declared defective u/s 139(9), if any mandatory field is incomplete or blank by the taxpayer like profit and loss account , balance sheet, salary break up etc. There may be other instances as well where wrong challan details have been entered, the name entered in return does not match the PAN and so on. If you receive a notice u/s 139(9), you need to file a reply within 15 days or can seek an extension of further 15 days, also you will have to make the corrections and file a revised return. If you do not reply to the notice within the time frame given your return could be rejected and declared ‘Invalid’.
2. Scrutiny Notice: Section 143(2) –
This one could be a bit scary.
WHY- Section 143( 2) notice means that income tax department is not satisfied with your claim and wants to verify your document proof. You need to provide all the supporting documents to prove the expenses, deductions, exemptions, allowances, reliefs or any other claim made while filling the return to the department and answer the queries. Usually a scrutiny notice requires physical visit by the assessee himself or through authorised representative, however recently with a view to increase transparency ‘E-proceeding’ facility has been launched.
You may receive this notice if you have claimed excessive loss, understated your income, or paid less tax. Once you receive this notice you must check the validity of the same and then timely respond to it. After considering the submissions a final order is passed by the assessing officer.
3. Income Escaping Assessment: Section 148
This notice means that income tax department feels that you have hidden your income.
WHY- You may get this notice if your income has escaped assessment or you have not filled the return at all. While filing your IT return if you have not disclosed any income or have not filed the return at all this refers to income escaping assessment. This is also a type of scrutiny assessment. The assessee will have to respond with all the queries raised by the department and submit the documents as required.
5. Enquiry before an assessment : Section 142(1)
If you receive this notice then you may have to provide additional supportive documents.
WHY- A notice under this section is filed where an assessee has filed his return and the assessing officer wants to call for further documents or details. Assessing officer may also direct the assessee to file his income tax return in case the assessee has failed to do so.
4. Notice of demand : Section 156
When the department directs you to pay an income tax demand
WHY- This notice is served after the assessment of your IT return. This is sent in lieu of any tax, interest, or penalty payable by the assessee. Usually, you get 30 days to respond to the notice, and if you fail to do so interest and penalty will also be levied. You can respond to this notice by choosing to respond to the notice under the e-file tab where you get 3 options, demand is correct, demand is partially correct and demand is incorrect. If the demand is correct you will have to pay it and if you choose any of the 2 other options then you will have to give reasons for the same.
5.Intimation : Section 245
Receivable refund will be adjusted with your tax due and in short, you are not getting any refund!
WHY- This intimation is received if there is any tax demand pending and you have claimed refund this year then the department sends an intimation to adjust the refund against the demand. In simple words the department wants to adjust the refund due against any demand outstanding from your end. An opportunity is given to reply within 30 days where again you will have 3 options to agree with the demand, disagree with the demand or partially agree with the demand. If you fail to reply the department automatically will adjust such refund.
6. Intimation under section 143(1)
Smile, please! This is good news. The IT department will be giving you a refund.
WHY- As the name states, it is an intimation and not notice. It is sent by the department in case any tax or interest is found payable by the department. You may receive this intimation in case your refund had been found in order by the department. But in case any demand is raised then this intimation becomes a notice of demand.
7. Best Judgement Assessment : Section 144
This means that your assessing officer is either not satisfied with your reply or you have not bothered to reply to his notices.
WHY- In the best judgment assessment IT department makes his assessment based on the document and information available to them. After considering all relevant material the department makes an assessment of the total income or loss to the best of their judgment. This happens in those cases wherein a person fails to submit his return, if he fails to comply with all the terms of a notice under section 142(1), if he fails to comply with the direction to get his accounts audited, if a person fails to respond to a scrutiny notice under section 143(2) or if the IT department is not satisfied about the correctness or the completeness of the accounts.
If you fail to comply with the income tax notices you would be liable to pay additional tax, interest or penalty and in extreme cases, the department can attach your bank accounts and property too. There is a provision of prosecution as well depending upon the case.
So, you have it here, 7 IT notices that could come knocking to you. Hope you have understood how to deal with them. Best of Luck.
