Types of Income Tax Notice
There are various types of income tax notifications that an individual or entity may receive from the Income Tax Department, including some common ones such as:
| Intimation under Section 143(1) | This is an intimation sent to the taxpayer after the Income Tax Department processes the return. It contains details of the income and deductions claimed by the taxpayer and the tax liability calculated by the department. |
| Notice under Section 139(9) | If there are any discrepancies in the return filed by the taxpayer, the Income Tax Department may issue a notice under Section 139(9) asking the taxpayer to rectify the errors. |
| Notice under Section 143(2) | This notice is issued by the Income Tax Department when it wants to scrutinize the taxpayer’s return in detail. The taxpayer may be asked to produce documents or other evidence to support the claims made in return. |
| Notice under Section 148 | This notice is issued when the Income Tax Department believes that income has escaped assessment and wants to reopen the assessment for a particular year. |
| Notice under Section 245 | If the taxpayer has any outstanding tax liability, the Income Tax Department may issue a notice under Section 245 to adjust the refund due to the taxpayer against the tax liability. |
| Notice under Section 271(1)(c) | This notice is issued when the taxpayer is found to have concealed income or furnished inaccurate particulars of income. |
| Notice under Section 143(3) | This notice is issued after the completion of the assessment proceedings and contains the final outcome of the assessment. The taxpayer is required to pay any tax liability, along with interest and penalty, if applicable. |
Note: It is important to respond to these notices within the specified time period and provide the required information and documents to the Income Tax Department. Failure to do so can lead to penalties and legal consequences.
Service of Income Tax Notice
The Income Tax Act of 1961 mandates that notices, summonses, orders, or any other communication be served by delivering or transmitting a copy through a method sanctioned under the Act. Here are the different methods of serving income tax notices.
Recipient: Income Tax Notices are addressed directly to the individual, but in the case of a minor, they are addressed to their guardian. Rectification of incorrect descriptions of the assessee is possible. However, in cases where the identity of the assessee is entangled with their status, the name mentioned on the return may become relevant.
Service by Post: Income tax notices can be sent by registered post. According to Section 27 of the General Clauses Act 1897, proper addressing, pre-payment, and posting by registered post are necessary to initiate service. Deliveries can be made to any address, employee, agent, or authorized person.
Service by Affixture: If a defendant refuses to sign the acknowledgement or the officer cannot locate the defendant, a copy of the summons or notice can be affixed to the outer door or any other noticeable part of their residence or place of business.
HUFs and Partnership Firms: If an assessing officer discovers the total partition of any HUF, notice can be served on the person who was the manager of the HUF. If the concerned person is deceased, the notice will be served to all adults who were part of the firm or other Association of Persons. Notices concerning the income of the firm or association may be served on any personnel who were former partners or members of the association assessed for taxation.
Closed Business: If a business is closed, the assessing officer has to serve a notice on the person whose income is subject to assessment. In the case of a firm or association of persons, a notice will be served on any members who were part of the firm during discontinuation. In the case of a company, notice will be served to the principal officer or director.
Documents Required to Reply to an Income Tax Notice
The required documents vary depending on the type of income tax notice received.
Basic documents needed to reply to an income tax notice include:
- A copy of the income tax notice
- Proof of income source, such as Part B of Form 16, salary receipts, etc.
- TDS certificates, Form 16 (Part A)
- Investment proof, if applicable
It’s advisable to seek our opinion of tax experts to review the notice.
After uploading the income tax notice copy, our tax experts will review it and suggest the necessary documents to provide a solution.
Checklist for Income Tax Notice
Step 1: Within 30 days of receiving the intimation notice under Section 143(1) of the Income Tax Act 1961, the taxpayer should prepare a reply.
Step 2: Failure to respond within the prescribed time will lead to processing the Income Tax Returns with necessary adjustments without providing any opportunity to the taxpayers.
Step 3: Cross-check the name, address, and PAN number mentioned in the notice.
Step 4: Verify the assessment year mentioned and the e-filing acknowledgement number.
Step 5: Revised returns can be filed only when there is a mistake in the original ITR filing. Revised returns must be filed within 15 days.
Step 6: Rectification returns can be filed only when the taxpayer has found any fault or error in the order sent by the Income Tax Department.
Step 7: On page 2 of the notice, the reason for the notice has been issued is mentioned, along with the difference in the income mentioned in the filed returns and Form 16/16A/26AS.
Step 8: If the intimation notice demands payment of an additional tax amount, that is, demand notice, it should be treated as the notice of demand under section 156.
Step 9: If a notice of demand is received, the taxpayer must respond within 30 days to avoid a penalty imposed by the assessing officer, which includes 1% interest per month from the 30-day expiry period.
