Understanding Income Tax Notices: Types, Reasons, and How to Respond

Introduction

Receiving an Income Tax Notice from the Income Tax Department can be stressful. However, understanding the reason behind the notice and knowing the correct way to respond can make the process much easier.

Why You Might Receive an Income Tax Notice

The Income Tax Department may issue notices for various reasons, including:

• Failure to file income tax returns

• Discrepancies or errors in the filed returns

• Request for additional documentation or information

Common Types of Income Tax Notices

1. Notice under Section 143(1) – Intimation

Sent when there are errors, incorrect claims, or mismatches in the filed return. You may be required to revise your return within 15 days.

2. Notice under Section 142(1) – Inquiry

Issued when your return has been filed, but further details or documents are required.

3. Notice under Section 139(1) – Defective Return

Given when the return is incomplete or contains incorrect information.

4. Notice under Section 143(2) – Scrutiny

Issued when the submitted return is unsatisfactory or requires detailed scrutiny.

5. Notice under Section 156 – Demand Notice

Sent when there is an outstanding balance (tax, interest, or fine) that needs to be paid.

6. Notice under Section 245 – Tax Refund Adjustment

Issued when the current year's refund is being adjusted against previous tax arrears. Your consent is required for this adjustment.

7. Notice under Section 148 – Reassessment

Sent when the department suspects undisclosed income or if the return has not been filed.

How to Respond to an Income Tax Notice?

Responding promptly and accurately is crucial. Depending on the type of notice, you may need to:

• Provide a copy of the notice received

• Submit proof of income such as salary receipts and Form 16

• Share TDS certificates and investment proofs, if applicable

• Verify personal details and the assessment year mentioned in the notice

Income Tax Notice Service

Income Tax Notices can be served through:

• Registered post

• Affixing at the recipient’s address

• Sent to guardians (for minors), HUFs, partnerships, or companies

Dealing with tax notices requires a clear understanding of the notice type and compliance requirements. Seeking professional assistance from tax experts can help ensure accurate responses and avoid penalties.