INCOME TAX NOTICES
DEFINITION OF INCOME TAX NOTICE
In India an income tax notice is sent by the Income Tax Department to taxpayers to alert them when there is an issue or discrepancy with their tax account. This notice is sent in the form of an email and by registered post to the taxpayers registered email account and home/office address.
An Income tax notice can be sent for multiple reasons such as, the filing or non filing of income tax returns, for assessment reasons or because certain details don’t match up in the income tax returns that have been filed. Once the notice is received by the said taxpayer he or she has to address the issue with the tax authorities. The notices sent by the Income Tax Authorities are issued under the different sections of The Income Tax Act 1961.
Our dedicated team of tax experts at ACE ALLIANCE will help an individual easily manage their tax filing and compliance needs online through our e-commerce platform. Once an individual subscribes to our services, our team of tax experts will help file all their tax returns and tackle any issues in regards to any income tax notices served on them.
DIFFERENT TYPES OF INCOME TAX NOTICE
1)Notice under section 142(1)
Description: Preliminary enquiry before assessment
A notice is served by the assessing officer under section 142 (1) in two cases.
a) If the assessing officer requires additional information and documents pertaining to your income tax return that has been filed.
b) If the income tax return has not been filed and the assessing officer wants the returns to be filed.
If the taxpayer doesn’t comply and respond to the notice then it can result in the following as stated below.
- A Penalty of Rs 10,000 can be imposed on the taxpayer under section 271(1)
- If the taxpayers case comes to fall under the “Best Judgement Assessment” under section 144 then the assessment is carried out as per the best judgement of the assessing officer on the basis of all the relevant material gathered by him at the time of assessment of the case.
- The taxpayer can be prosecuted under section 276CC for a period ranging from 3 months to 7 years with a fine. This completely depends on the case of the taxpayer.
- In the case where the taxpayer fails to produce the said accounts and documents as asked by the assessing officer on or before the date specified on the notice, they can be prosecuted for upto 1 year with fine under section 276D. A search arrant can also be issued under section 132 for conducting search.
2) Notice under section 139(9)
Description:Defective Income Tax Return
A notice is served under section 139 (9) by the assessing officer for filing a defective return when;
a) The income Tax return may be missing vital information.
b) The taxpayer has used the the wrong ITR form while filing the return.
c) The income tax return have been filed in an incomplete manner.
d) The taxes paid don’t match the tax payable in the income tax return.
e) The taxes have not been paid in full.
f) The details of the income have not been furnished but details of taxes paid have been provided in the income tax return.
When the taxpayer is issued this notice, they are given a period of 15 days to respond to this notice. The tax payer can also write to the assessing officer to request for an extension of the deadline to file a revised return. In some cases the assessing officer could also highlight the defect in the income tax return and recommend the solution thereof.
If the taxpayer does not respond to this notice then the defective return would be treated as a ‘Non-filed or Invalid return’ for the said financial year by the the Income Tax Department. The refund due to the taxpayer will also not be processed by the Income Tax Department, if any for the said financial year.
3) Notice under Section 156
Description: Notice of Demand
A notice under section 156 is issued to the taxpayer when any type of penalty, fine, tax, interest of any other amount is due to be paid to the Income tax department. This notice under section 156 is also called the ‘Notice of demand’. The taxpayer has to pay the due amount within 30 days of receiving the notice. In some cases the assessing officer with prior approval from the Joint Commissioner of Income Tax can order the taxpayer to deposit this amount before 30 days as well.
4) Notice under Section 148
Description: Income escaped assessment
A notice under section 148 is issued when the assessing officer has a reason to believe that the taxpayer has filed his ITR on a lower income, paying lower taxes thus evading the right amount of tax that was due to to paid. Once this notice is issued, the tax payer is required to produce the details of his/her income tax returns within 30 days of the duration that has been specified by the assessing officer in the notice given.
5) Notice under section 143(2)
Description : Follow up to a notice issued under section 142(1)
A notice under section 143(2) is sent to the taxpayer if the Tax Department decides to scrutinize the ITR of the taxpayer. The notice is sent by the assessing officer within a period of 6 months from the end of the said financial year in which the return was filed. After the notice is received by the taxpayer, he or she has to furnish a reply to the questions issued by the income tax department and submit all the documents and details requested in the notice.
6) Notice under section 245
Description: Refund adjusted under the tax demand
A notice under section 245 is served by the assessing officer if the officer believes that the taxpayer has not paid taxes in the previous financial year where the taxpayer had a tax liability and the tax refund due in the current financial year can be used to pay off the tax liability. The taxpayer is required to respond within 30 days. If the taxpayer fails to respond within the said period the assessing officer would consider it as said consent to adjust the tax refund with previous tax liabilities. The tax refunds are then issued for the current financial year after making such adjustments.
7) Notice under Section 131(1)
Description: Income is concealed or likely to be concealed
A notice under section 131(1) is sent when the assessing officer believes that the taxpayer has concealed income or is going to be likely to hide income. This notice serves as an intimation that informs the taxpayer that the assessing officer is planning to initiate an enquiry to investigate this matter. The assessing officer is well within his power to impound the books of accounts or any other documents after providing the reasons for that action. There is no time limit defined to serve a notice under section 131(1)
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- Basic Package: Consultation for income tax notice handling and response from a Tax Expert.
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- Premium Package: Consultation for income tax notice response from a Tax Expert, revised return filing and submission of documents requested.