Income Tax Notice: How to Check, Authenticate, & Respond to ITR Notices?
Got an income tax notice?
You don’t need to stress over it. TaxBuddy is here to help.
Addressing an income tax notice couldn’t get easier!
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Are you filing an IT return because of the following reasons?
Before worrying about an income tax notice from the tax department, you should know whether you are required to file a return. Here are the reasons you should do it:
Income exceeding the basic exemption limit
More than Rs. 1 crore deposited in 'current' bank account
More than Rs. 50 lakh deposited in 'savings' bank account
TDS or TCS is exceeding Rs. 25,000
Business turnover exceeding Rs. 60 lakh
Professional income exceeding Rs. 10 lakh
Electricity expenditure exceeding Rs. 1 lakh
Spending more than Rs. 2 lakh on international travel
If any of these apply to you, filing an ITR is mandatory to stay compliant and avoid penalties.
Income Tax Notice: When May Taxpayers Get One or Reasons for Receiving an Income Tax Notice
Did You Know? You Can Receive an Income Tax Notice for Various Reasons!
Here are some common reasons why the Income Tax Department might send you a notice:
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Failing to file your ITR: Non-filing of tax returns by the due date can trigger a reminder notice.
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Not disclosing income or a part of it: Undeclared income, whether salary, rent, or freelance earnings, may lead to scrutiny.
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Errors or discrepancies in your returns: Mismatches between reported income, deductions, and Form 26AS can result in a notice.
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TDS/TCS mismatch: If tax deducted at source (TDS) or tax collected at source (TCS) doesn’t align with your ITR, you may be asked for clarification.
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Mismatch with AIS/TIS: Discrepancies between your Annual Information Statement (AIS) or Taxpayer Information Summary (TIS) and your tax return may raise concerns.
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Failure to report high-value transactions: Large bank deposits, big-ticket purchases, or high-value investments that don’t align with your reported income can trigger a notice.
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Not reporting capital gains/losses: Gains or losses from stocks, mutual funds, or property transactions must be disclosed.
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Investing in the spouse’s name without disclosure: If you invest funds in your spouse’s or family member’s name without reporting it, the tax department may inquire.
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Income tax notice for sale/purchase of property: Underreporting property transaction values or not declaring them can lead to scrutiny.
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Using the wrong income tax return form: Filing an incorrect ITR form for your income type can lead to an intimation notice.
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Tax evasions in previous years: Unreported income or discrepancies in past returns may attract reassessment notices.
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Potential audit under Section 143(1): If your return is selected for scrutiny, you may need to provide additional details.
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Liability for self-assessment tax: If you owe self-assessment tax and haven't paid it, the department can issue a demand notice.
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Claiming a refund: Large refund claims may prompt verification before processing.
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Holding foreign assets or income: Not reporting foreign income, assets, or financial interests can lead to an inquiry.
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Any other reason deemed fit by the Assessing Officer: The IT Department has the discretion to issue notices based on suspected irregularities.
Income Tax Notices and It’s Types
A notice from the Income Tax Department is the last thing you want to deal with. But it is more common than you imagine. Whether you are a salaried professional, self-employed individual, or business owner, knowing about the different types of ITR notices can save you from stress down the road. Awareness makes it easy to comprehend a notice and seek help from an expert. No matter how daunting the situation is, a seasoned tax expert can be your savior. Here are a few types of IT notices you may expect.
BASIC NOTICES
Get Expert Guidance
Calling for Information and Scrutiny Notices
Information and scrutiny notices arise from previous filings and require verification of such claims in tax returns. These include:
Information Requests
The Income Tax department may send a notice to taxpayers to verify certain details or claims in previous tax filings.
Limited Scrutiny
Limited scrutiny refers to the in-depth checks of certain aspects of the tax return, requiring the taxpayer to provide additional documentation or explanations.
Full Scrutiny
A full scrutiny entails the comprehensive examination of the entire tax return to verify the accuracy and authenticity of a claim.
APPEAL AND EX-PARTE ORDER NOTICES
A disagreement between the taxpayers and tax authorities on tax-related decisions leads to an appeal. It entails a legal process to resolve the dispute and ensure fairness. Appeal cases can play a key role in interpreting tax laws and setting precedents for future cases.
A taxpayer can file appeals for different reasons, such as:
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Ex-Parte Orders
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Incorrect penalty raised by the IT department
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Incorrect Demand raised by department
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Rectification not considered
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Apparent mistake from record
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Any disallowance by CPC true to the fact
Appeal filings start with CIT(A). After an unfavourable outcome here, the taxpayer can file another one at the ITAT Tribunal and more at the High Court and Supreme Court if rejected every time. Once appeal is filed, you should respond to each and notice under :"E-Proceedings" Tab. Failure to respond an get you an Ex-Parte order.
Notices include:
Appellate Notices
When someone disagrees with a decision of the department and wishes to file an appeal, they can expect an appellate notice.
Ex-Parte Orders
These notices indicate that a decision has been made without a person’s individual participation or compliance.
Seeking Rectification
Rectification notices seek the correction of errors or omissions in previous proceedings by submitting supporting documents.
PRICING
Appeal Cases
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₹25,399
*Exclusive of Taxes
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For 1st & 2nd Appeal
Appeals that can be conducted through online tax portals, without requiring a physical visit
ITAT Appeals will be charged separately, depending upon location & availability of tax consultant
For cases where you cannot proceed with simple Rectification, Revise Return, Feedback
Rectification / Revised / Defective
₹2,499
*Exclusive of Taxes
SUITED FOR
Applicable to rectifying defects, revisions, adjustments, HVT Notice, adjustments, Form 67 defects,26AS-AIS/TIS Mismatch etc.
Major overhauls or replacements beyond basic rectification
If the ITR plan fee is higher than the Notice fee, the higher of the two fees will be applicable
Full payment upfront
We aim to complete the service within 4 business days from the date of receiving the notice with all related documents
This pricing plan covers a two-time rectification / revise / defective service for each eligible customer.
Routine Notice
₹899
*Exclusive of Taxes
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For providing a simple response and cross checking your filed ITR.
Applicable for Risk Management Notices, Refund Re-issue, Simple Response to outstanding demands, E-Campaign Response etc.
For revise filing due to omission of income or taken incorrect deductions, plan will change accordingly
For Agree/Disagree Responses.
Scrutiny Cases
Starting From
₹21,199
*Exclusive of Taxes
SUITED FOR
Comprehensive services for scrutiny cases, including document review, preparation of responses.
NOTE: Scrutiny is done by the tax department on a random basis. The filing of income tax returns (ITR) OR the type of sources of income OR type of ITR Form are not related to this process.
Scrutiny Cases (ITR Filed By TaxBuddy)
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₹12,699
*Exclusive of Taxes
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Special rate for scrutiny cases where Taxbuddy has already filed the Income Tax Return (ITR) on behalf of the client for that particular A.Y. only.
NOTE: Scrutiny is done by the tax department on a random basis. The filing of income tax returns (ITR) OR the type of sources of income OR type of ITR Form are not related to this process.
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Our team is ready to assist with all types of Income Tax Notices, from filing appeals with the CIT(A) to representation in higher courts. With our deep tax law expertise, we're committed to securing the best outcomes for you.
How to Authenticate Income Tax Notice or Orders Issued by ITD?
Before responding to a tax notice, it is essential to verify its authenticity. Follow these steps to authenticate an income tax notice online:
Step 1: Access the IT Portal
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Visit the Income Tax e-Filing Portal
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Click on “Authenticate Notice/Order Issued by ITD” under the “Quick Links” section.
Step 2: Choose an Authentication Method
You can authenticate your income tax notice using either of these methods:
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PAN, Assessment Year, Document Type, Issue Date, and Mobile Number
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Enter the required details, including your PAN and assessment year.
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Enter the OTP received on your registered mobile number.
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If the notice is valid, the DIN (Document Identification Number) and issue date will be displayed.
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If no notice is found, a message stating “No record found for the given criteria” will appear.
B. Authenticate Using DIN and Mobile Number
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Enter the DIN (Document Identification Number) and registered mobile number.
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Receive and enter the OTP for verification.
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If the notice is valid, a confirmation message will appear.
Step 3: Validate and Respond
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If the notice is genuine, download and review it carefully.
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If it seems fraudulent, do not respond and report it immediately.
TaxBuddy can assist in verifying, interpreting, and responding to your tax notice efficiently!
How to Handle an Income Tax Notice: Steps to Take After Receiving an Income Tax Department Notice
Have you got an income tax notification? Stay calm because a notice is not always a reason to stress about. Here are the steps to deal with a notice effectively:
Read the notice: You should understand what it means and why it has been sent in the first place
Check details: Dig deep to check if the notice has your correct name, address, PAN number, and assessment year
Look for discrepancies: Find out the reason for the notice being served by checking your income tax return for discrepancies
Respond to the ITR notice: Since there is an income tax notice time limit, responding before the deadline can save you from penalties and prosecutions
Seek expert help: Professional help is essential to ensure that your response is accurate and backed by adequate information submit
Documents Required to Reply to an Income Tax Notice
The documents required to respond to an income tax notice depend on the type of notice. Generally, you’ll need the following documents:
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A copy of the notice
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TDS certificates (Form 16- Part A)
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Proof of Income source (Salary receipts, Form 16- Part B, etc)
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Investment Proof
Time Limit for Issuing Notices for ITR Filed Before the Finance Act, 2021
Prior to Finance Act, 2021: Notice Timelines Under Section 148
1. Up to Four Years from the End of the Relevant Assessment Year (AY)
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A notice under Section 148 can be issued up to four years from the end of the relevant AY.
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Only an officer of the rank of Assistant Commissioner or Deputy Commissioner can issue such a notice.
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The Assessing Officer (AO) can issue the notice only with the approval of the Joint Commissioner, after recording valid reasons.
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Example: For AY 2017-18, the notice could be issued until 31st March 2022.
2. Beyond Four Years but Up to Six Years from the End of the Relevant AY
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The Chief Commissioner or Commissioner must be satisfied that income has escaped assessment.
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The escaped income must exceed ₹1,00,000.
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Example: For AY 2017-18, the notice could be issued until 31st March 2024.
3. Beyond Six Years but Up to Sixteen Years from the End of the Relevant AY
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If income related to an asset (including financial interest in an entity) located outside India has escaped assessment, a notice under Section 148 can be issued.
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Example: For AY 2017-18, the notice could be issued until 31st March 2034.
Amendments Introduced by the Finance Act, 2021
From 1st April 2021, the reassessment timelines have been modified. The new time limits for issuing notices are:
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Up to Three Years from the End of the Relevant FY: A notice can be issued if income has escaped assessment.
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Beyond Three Years but Up to Ten Years: A notice can only be issued if the escaped income is ₹50 lakh or more.
Updated Notice Timelines After the Amendment
Sr No | Financial Year | Notice up to Three Years | Notice Beyond Three Years (Up to Ten Years) |
|---|---|---|---|
1 | 2020-21 | 31.03.2025 | 31.03.2032 |
2 | 2019-20 | 31.03.2024 | 31.03.2031 |
3 | 2018-19 | 31.03.2023 | 31.03.2030 |
4 | 2017-18 | 31.03.2022 | 31.03.2029 |
5 | 2016-17 | 31.03.2021 | 31.03.2028 |
6 | 2015-16 | Not Applicable | 31.03.2027 (Only in Specific Cases) |
Note:
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For AY 2015-16, the Assessing Officer cannot issue a notice under normal circumstances.
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For AY 2016-17, the notice had to be issued before 31st March 2021.
This amendment significantly reduces the reassessment window while maintaining extended timelines for cases involving high-value escaped income.
Common Mistakes Leading to Income Tax Notices
Understanding common pitfalls can help in avoiding future notices:
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Incorrect Personal Information: Errors in PAN, name, or address can lead to discrepancies.
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Mismatched Income Reporting: Differences between reported income and Form 26AS can trigger notices.
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Improper Claim of Deductions: Claiming ineligible deductions or not providing proper documentation.
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Delayed Tax Payments: Late payment of advance tax or self-assessment tax can attract penalties.
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Non-Reporting of Exempt Income: Even if income is exempt, non-reporting can raise red flags.
Steps to Prevent Receiving Income Tax Notices
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Timely and Accurate Filing: Ensure returns are filed before the due date with accurate information.
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Reconcile Income with Form 26AS: Match your reported income with the details in Form 26AS to avoid mismatches.
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Maintain Comprehensive Records: Keep all financial documents, including proofs for deductions and exemptions, organized and accessible.
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Respond Promptly to Communications: Address any preliminary notices or communications from the department without delay.
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Consult Tax Professionals: Seek advice from certified tax professionals for complex tax matters or uncertainties.
Did you a receive tax notice? Let us help you respond to the IT Department
Frequently asked questions
Q
What is an Income Tax Notice?
A
An Income Tax Notice is a communication from the Income Tax Department to the taxpayer for various reasons. The reasons may be related to: discrepancies in the ITR filed, requests for additional documents, or requests for taxpayer’s personal appearance. Income Tax Notices can be issued under various Sections of the Income Tax Act, and each Notice specifies the purpose for which it is issued, alongwith the response expected from the taxpayer.
Receiving an Income Tax Notice may not always be a reason to worry. However, it does require an accurate and timely response to address the issue raised by the Income Tax Department.
Q
How do I check my tax notice?
A
An IT notice is delivered to the taxpayer’s registered email. It can also be checked through the income tax notification portal. However, the portal offers information only on some of the notices. For others, you have to visit the IT department. Remember to check the authenticity of the notices by using a quick link for “Authenticate notice/order issued by ITD” on the Income Tax website. At this point, it is also crucial to know your DIN to facilitate communication with the IT department.
Q
Does a salaried person get an income tax notice?
A
Salaried professionals can also get an income tax notice. Most notices come up when there is a mismatch with 26AS/AIS/TIS or any omission of income.
Q
What to do if I get income tax notice?
A
Although an income tax notification can be stressful, you should stay calm and understand why it has been sent. If you have received it for missing out on information, you need to provide the details. Conversely, you will have to rectify errors if they are the reason for getting a notice. You must respond to the notice within the stipulated time to avoid possible penalties.
Q
What happens if you don't respond to the tax notice?
A
Not responding to the income tax notice may have different consequences according to the type of notice. Such consequences include penalties of up to INR 10,000 and imprisonment for up to one year.
Q
What happens if I don't respond to the notice within 30 days?
A
Failing to respond to the notice within 30 days can get you in trouble. The IT department will adjust the outstanding demand without giving you an opportunity to respond.
Q
How do you reply to notice?
A
Replying to an income tax notice is easy as you can do it online by visiting the official website of the income tax department. Log in, navigate to the compliance section, and respond to the notice.
Q
What is an intimation letter from income tax?
A
An intimation order/notice is issued by the income tax department under section 143(1) after the successful processing of your return. It includes the details of the information submitted at the time of tax filing and a corresponding column of the details available with the tax department. This intimation is sent within a year from the end of the financial year.
Q
What does the code EXC 001 mean?
A
EXC -001 means transactions beyond the permission of the IT Act. It is for monthly cash transactions higher than INR 10 lakh.
Q
Do I get notices for current account transactions?
A
Yes, you may get ITR notices for current account transactions. For example, any current bank account transaction exceeding Rs 50 lakhs in a financial year has to be disclosed. If you fail to do it, you may get notice for it.
Q
What is the communication of the proposed adjustment u/s 143(1)(a)?
A
It refers to any information by the IT department regarding adjustment against refund claimed in your income tax return, such as incorrect claim, arithmetical error, or disallowance of loss claimed. Such adjustment could relate to the outstanding demands of previous assessment years.
Q
How can you rectify the discrepancy in u/s 143(1)?
A
If any demand raised in the discrepancy in notice u/s 143(1) is correct, you should pay it. Conversely, you should file rectification u/s 154 (1) or a revised return if a mistake is apparent from the record. For a revision, click ‘e-file’ and choose ‘file income tax return’. For rectification, click ‘services’ and select the ‘rectification’ option from the menu.
Q
How do I pay my tax on demand?
A
Paying online is an easy way to clear your tax on demand. You can do it by accessing the e-filing website of the IT department and logging into your account. Check the amount of outstanding tax demand and pay directly under the "Response to Outstanding Tab" on the web portal.
Q
How do you correct outstanding tax demand?
A
Once again, you can do it by logging in to the official efiling website, going to the pending actions section, and selecting Response to Outstanding Tax Demand.
Q
How long after filing tax returns can you expect an assessment notice?
A
You can get a scrutiny assessment notice u/s 143(2) only up to six months from the end of the financial year.
Q
How do I get my CPC income tax return?
A
You get an ITRV (acknowledgment) on your registered mail ID soon after filing the ITR. You can also download it from your account on the official website.
Q
How to download the demand notice from the Income Tax portal?
A
You can download the demand notice from the Income Tax portal by logging into your account, going to 'e-Proceedings' or 'My Account,' and then selecting 'View Tax Credit Statement (Form 26AS).’ You can find and download the notice from here.
Q
What is Section 156 of the Income Tax Act?
A
Section 156 of the Income-tax Act specifies the provision for demand notice issued by the Income-tax Department on completion of the assessment indicating that a taxpayer is liable to pay some extra amount of income tax. The notice will specify the amount payable and the due date.
Q
How to Draft a Reply to an Income Tax Notice?
A
An answer to the notice of income tax would contain the following: details of the taxpayer, reference to the notice in question, explanation or justification with clarity on the issue raised, and supporting documents. One should seek a tax expert for correctness.
Q
What to Do if You Get an Income Tax Notice for Not Filing a Return?
A
In case of an income tax notice for failure to file an income tax return, if not already filed, the filing of the return shall be done within the time allowed on that behalf in the said notice. Afterwards, reply to the notice and explain the same along with proof of filing, if applicable.
Q
What is the Time Limit for Scrutiny Assessment under Income Tax?
A
Normally, the time limit for completing the scrutiny assessment is 12 months from the end of the financial year in which the return was filed. Extension may apply in specific cases.
Q
What is the Time Limit for Issuing an Income Tax Notice?
A
The notice under the income tax that is imposed usually depends on the kind of notice that has to be given. The assessment or reassessment notice should unbelievably be issued within four years from the end of the corresponding assessment year generally.
Q
What Triggers a High-Value Transaction Notice of Income Tax?
A
High-value transactions, as big as purchasing substantial properties or making significant bank deposits, investments, and so on, can trigger an income tax notice. These are generally noticed for the source of funds.
Q
How to Respond to an Income Tax Notice on Property Purchase?
A
Reply to the notice of the income tax on the purchase of the property, with full details of the transaction, that is, sale deed, proof of payment, and source of funds, and enclosed all necessary relevant supporting documents, with regard thereto.
Q
What is the Correct Format of an Income Tax Scrutiny Reply Letter?
A
The format for reply to the letter of income tax scrutiny shall include the subject line, which mentions the notice, then the details of the taxpayer, the summary of the issue under consideration, and thereafter, the detailed explanation for the same with attached documents. The form shall be in formal tone, in clear terms.
Q
What You Need To Know About Income Tax Scrutiny?
A
Scrutiny of income tax is undertaken by the Income Tax Department in cases where a detailed check is done on the income tax return, to authenticate whether the declared income, deductions, and taxes are exact and up to date. All supportive documents and timely replies to notices are important.
Terms & Conditions
Confidentiality: TaxBuddy agrees to maintain the confidentiality of all information provided by the client in relation to their tax notices and appeals, ensuring that sensitive financial and personal data remains secure.
Expertise: TaxBuddy commits to providing expert assistance and representation in handling tax notices and appeals, utilizing its knowledge and experience in tax law.
Timely Handling: TaxBuddy will ensure that all tax notices and appeals are handled within the prescribed time limits to avoid adverse consequences.
Transparent Pricing: TaxBuddy will provide the client with a clear breakdown of fees and charges for its services in handling tax notices and appeals, ensuring transparency in pricing.
Progress Updates: TaxBuddy will regularly update the client on the progress of their tax notices and appeals, keeping them informed about any developments in their case.
Client-Centered Approach: TaxBuddy will tailor its services to meet the specific needs and goals of the client in handling tax notices and appeals, with a client-centered approach to ensure the best possible outcome.
Negotiation and Settlement: TaxBuddy may engage in negotiations with relevant authorities to seek a resolution that is favorable to the client in handling tax notices and appeals, potentially avoiding lengthy legal proceedings.
Legal Representation: If necessary, TaxBuddy will provide legal representation during the handling of tax notices and appeals, presenting the client’s case effectively to the authorities.
Responsiveness: TaxBuddy will be responsive to the client’s queries and concerns in handling tax notices and appeals, providing dedicated support throughout the process.
Professionalism: With their expertise and professionalism, TaxBuddy aims to secure the best possible result for the client in handling tax notices and appeals, whether it’s a resolution, reduction in liabilities, or another favorable outcome.
Fee: TaxBuddy may require an upfront fee from the client to secure its services for handling tax notices and appeals, and this fee may not be refundable.
Engagement Duration: TaxBuddy may specify a minimum engagement duration for handling tax notices and appeals, and the client may be bound by this commitment.
Discretionary Handling: TaxBuddy may have the discretion to determine whether to handle a notice or appeal on behalf of the client, based on the merits of the case and its professional judgment.
Third-Party Costs: If third-party experts or services are required during the handling of tax notices and appeals (e.g., expert witnesses or consultants), the client may be responsible for these additional costs.
Conflict of Interest: TaxBuddy may represent multiple clients in handling tax notices and appeals, and in some cases, there may be conflicts of interest that require TaxBuddy to prioritize one client over another.
Limited Liability: TaxBuddy’s liability for errors, omissions, or inaccuracies in handling tax notices and appeals will be limited to the extent permitted by applicable laws and regulations. The client acknowledges that outcomes are subject to various factors, and TaxBuddy cannot guarantee specific results.
Termination for Non-Payment: TaxBuddy may reserve the right to terminate its services for handling tax notices and appeals if the client fails to make timely payments as per the agreed-upon payment terms.
Scope of Engagement: TaxBuddy may specify the exact scope of its engagement for handling tax notices and appeals, and any services outside of this scope may incur additional charges.
No Guaranteed Outcomes: TaxBuddy may explicitly state that there are no guarantees of specific outcomes in handling tax notices and appeals, and final decisions rest with the relevant authorities or legal entities.
Changes to Terms: TaxBuddy may have the discretion to make changes to the terms and conditions of the engagement for handling tax notices and appeals, with notice provided to the client.
Record Retention: TaxBuddy may retain records related to the client’s case for a specified duration, even after the engagement for handling tax notices and appeals is concluded.
Withdrawal of Services: TaxBuddy may withdraw its services for handling tax notices if it believes that the client’s case lacks merit or if the client fails to cooperate with reasonable requests during the handling process.