Got a Notice After Filing ITR-4? We’ll Sort It

Q: What should I do if I receive a notice after filing ITR-4?

If you receive a notice after filing ITR-4, carefully review the notice and compare it with your tax return. Respond using the Income Tax Department's e-filing portal within the prescribed timeline. For complex issues, seek professional help from a tax consultant or chartered accountant to ensure an accurate and complete response.

Q: How do I check if I’m eligible to file ITR-4?

ITR-4 is for individuals, Hindu Undivided Families (HUFs), and small businesses earning income from business or profession under the presumptive taxation scheme. If your total turnover does not exceed ₹2 crore and you earn income from a business or profession, you are eligible. It can also be used for multiple income sources like salary, house property, and business income under the presumptive tax scheme.

Q: What happens if I don’t respond to the notice within the given time frame?

Failure to respond can lead to penalties, further scrutiny, or legal action. Penalties can be severe, so it’s crucial to respond promptly. Consulting a tax professional can help ensure compliance and avoid unnecessary consequences.

Q: Can I correct an error in my ITR-4 after filing?

Yes, you can correct errors by filing a revised return under Section 139(5) of the Income Tax Act within the assessment year. This allows rectifying mistakes like incorrect income reporting, wrong TDS details, or missed deductions. Filing before the assessment year closes helps avoid penalties.

Q: How long does it take to resolve a notice?

The time to resolve a notice depends on its nature and complexity. Simple issues may be resolved quickly if you provide required documentation promptly. Complex discrepancies in income or deductions may take longer. Responding accurately and quickly helps speed up the process.

Q: Can I file ITR-4 if I have multiple sources of income?

Yes, ITR-4 is suitable for individuals and businesses with multiple income sources such as salary, business income, and interest income, provided total turnover is below ₹2 crore and you are under the presumptive taxation scheme.

Q: What is the presumptive taxation scheme under Section 44AD, and can I use it for filing ITR-4?

Section 44AD allows small businesses with turnover up to ₹2 crore to declare income at a prescribed rate (8% of turnover or 6% for digital payments). If you qualify, you can file your return using ITR-4. This scheme simplifies filing by eliminating detailed books of account and audits.

Q: How can I respond to a notice under Section 143(2) (scrutiny notice)?

A scrutiny notice under Section 143(2) indicates your return has been selected for detailed review. Provide supporting documents and explanations for discrepancies, submit additional records, or attend a hearing if required. Respond within the timeline with accurate information to avoid further complications.

Q: How do I know if I have been selected for scrutiny?

If your return is selected under Section 143(2), you will receive a formal notice specifying areas of concern. If you do not receive a notice, your return has not been selected. Review any notice carefully and respond appropriately to ensure compliance.

Q: How can I avoid getting a notice in the first place?

Ensure income, deductions, TDS credits, and other tax details are accurately reported. Double-check your ITR before submitting to avoid errors. Using platforms like TaxBuddy for guidance and error-checking can reduce the likelihood of scrutiny or penalties.

Farheen Mukadam
Aug 28
9 min read

Filing your Income Tax Return (ITR) is an essential step for every taxpayer, especially for those filing ITR-4, which is commonly used by small businesses, professionals, and individuals with income from business or profession. However, even after filingITR-4, many taxpayers may find themselves receiving a notice from the Income Tax Department. These notices can cause confusion and anxiety. Understanding the potential reasons behind receiving a notice, the types of notices that are commonly issued, and how to respond can help streamline the process and minimize stress.

Why You May Get a Notice After Filing ITR-4

There are several reasons why you might receive a notice from the Income Tax Department after filing ITR-4. One of the most common reasons is discrepancies or mismatches in the information provided in your return. These discrepancies could be related to the income reported, deductions claimed, or TDS (Tax Deducted at Source) credits. Another reason could be missing or incorrect details, such as an error in your PAN, mismatched figures between your Form 16 and Form 26AS, or unreported income. The Income Tax Department uses sophisticated systems that automatically flag returns for such issues, prompting them to send notices for clarification.

Additionally, there could be a random scrutiny or review process, which is part of the department’s routine checks. While such scrutiny doesn’t necessarily mean there’s a problem with your return, it does require you to provide clarification or supporting documents. Receiving a notice might also be a result of audit requirements for specific businesses or professionals under Section 44AB of the Income Tax Act.

Common Types of Notices for ITR-4

After filing ITR-4, taxpayers may receive several types of notices. The most common notices include:

Notice Under Section 143(1): This is the most common notice issued after the department has processed your return. It typically informs you of any adjustments made to your return, such as changes in your claimed deductions, exemptions, or income. If the department finds any mistakes in your filing, this notice will detail the rectifications made.
Notice Under Section 143(2): This notice is issued if your return is selected for scrutiny. It usually requests further clarification or documents related to specific items in your return. It may involve more in-depth questioning about your reported income, deductions, or other tax-related matters.
Notice for Defective Return Under Section 139(9): If there is an error or missing information in your return that makes it incomplete or defective, the department will issue this notice. It may require you to rectify the errors and resubmit the return within a given timeframe.
Notice for Non-Filing or Late Filing Under Section 142(1): This notice is issued when the department finds that you have failed to file your return, or you have filed it after the due date without a valid reason. It may also request additional documents to complete the assessment.
Demand Notice Under Section 156: If you owe taxes or there is a pending liability after the assessment, the department will issue this notice, which demands payment of the due amount along with applicable interest and penalties.

How to Respond If You Get a Notice After Filing ITR-4

Receiving a notice from the Income Tax Department can be unsettling, but understanding how to respond can ease the process. The steps for responding to the notice depend on the type of notice you receive. Here’s what you need to do:

Carefully Read the Notice: The first step is to carefully read the notice to understand what the department is asking for. Notices usually include specific instructions, such as documents or clarifications needed.
Check the Information in Your Return: Cross-check your ITR-4 with the details mentioned in the notice. Look for discrepancies, missing information, or errors that could have triggered the notice. It is also a good idea to compare your Form 16, Form 26AS, and bank statements to ensure the reported income is accurate.
Respond on the E-Filing Portal: In most cases, the response can be submitted through the Income Tax Department’s e-filing portal. You can either upload the necessary documents or respond to the query raised. If you have aSection 143(2)notice for scrutiny, you may need to attend a hearing or provide more detailed explanations about your filings.
Seek Professional Help if Needed: If the notice is complex or involves significant amounts of money, it may be wise to consult a tax professional or a Chartered Accountant (CA). They can guide you through the process, help prepare the response, and ensure all required documents are submitted.
Rectify Errors: If the notice points to specific errors in your ITR, such as incorrect figures or missing deductions, you can file a revised return (under Section 139(5)) to correct the mistake and avoid penalties.

Latest Updates Relevant to ITR-4 Filing (AY 2025-26)

For the Assessment Year 2025-26, there have been some key updates for ITR-4 filers. The forms have undergone revisions to simplify the process and address new tax regulations. Some of the important changes include:

Updated Income Categories: The new ITR-4 form includes more detailed categories for income from business and profession, which helps ensure better reporting and transparency. It has streamlined fields for income from business, profession, and other sources to ensure accurate calculations.
TDS Credit Matching: The form has better provisions for matching TDS credits from Form 16 and Form 26AS to avoid discrepancies during processing. This is important to ensure the accurate reflection of TDS credits in the final tax computation.
Simplified Deductions: Certain common deductions have been simplified in the ITR-4 form, making it easier for taxpayers to claim them without confusion.
Impact of New Tax Regimes: The updated ITR-4 form accommodates both the old and new tax regimes, allowing taxpayers to choose the one that suits them best.

Specific Clarifications About ITR-4 Eligibility

ITR-4 is specifically designed for individuals, Hindu Undivided Families (HUFs), and small businesses who have income from business or profession and meet certain conditions. These include:

Income Type: You must have income from a profession or business, such as income from freelancing, self-employment, or small-scale businesses. It can also be used by those earning income from other sources, such as interest or rental income.
Turnover Limits: For businesses, the turnover must be less than ₹2 crore, as per the provisions of Section 44ADof the Income Tax Act. If your business turnover exceeds this limit, you will need to file ITR-3 instead.
Presumptive Taxation: If you are filing under the presumptive taxation scheme under Section 44AD or 44ADA, you can use ITR-4 to declare your income at a presumed rate.
Income from Salaries or Other Sources: You can also use ITR-4 if you have income from other sources, such as salary, in addition to income from business or profession.

Conclusion

Receiving a notice after filing ITR-4 can be a daunting experience, but understanding the reasons behind the notice and knowing how to respond can make the process much easier. Whether it’s due to discrepancies in income reporting, mismatched TDS credits, or a routine audit, it’s crucial to address the notice promptly and accurately. By carefully reviewing your filing, submitting the necessary documents, and seeking professional help if needed, you can resolve any issues efficiently and avoid penalties.

For anyone looking for assistance in managing and resolving tax notices, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1: What should I do if I receive a notice after filing ITR-4?

If you receive a notice after filing ITR-4, the first step is to carefully review the notice and compare it with the information provided in your tax return. The notice may specify issues or discrepancies that need clarification. Respond to the notice using the Income Tax Department's e-filing portal within the prescribed timeline. If the notice involves complex issues or requires further clarification, it’s advisable to seek professional help from a tax consultant or chartered accountant to ensure that your response is accurate and complete.

Q2: How do I check if I’m eligible to file ITR-4?

ITR-4 is designed for individuals, Hindu Undivided Families (HUFs), and small businesses earning income from business or profession under the presumptive taxation scheme. If your total turnover does not exceed ₹2 crore, and you earn income from a profession or business, you are eligible to file ITR-4. Additionally, it can be used if you have income from multiple sources, such as salary, house property, and business, under the presumptive tax scheme. Always ensure that your income sources align with ITR-4 eligibility before filing.

Q3: What happens if I don’t respond to the notice within the given time frame?

If you fail to respond to a notice within the specified time frame, the Income Tax Department may impose penalties, initiate further scrutiny, or even take legal action. In some cases, penalties can be quite severe. It's crucial to respond to notices promptly to avoid complications and additional financial burden. If you are unsure about how to respond, it is advisable to consult with a tax professional to ensure compliance and avoid unnecessary consequences.

Q4: Can I correct an error in my ITR-4 after filing?

Yes, if you realize that there was an error in your ITR-4 after filing, you can correct it by filing a revised return under Section 139(5) of the Income Tax Act. A revised return can be filed within the assessment year, which allows you to rectify mistakes such as incorrect income reporting, wrong TDS details, or any missed deductions. Ensure that the revised return is filed before the closure of the assessment year to avoid penalties.

Q5: How long does it take to resolve a notice?

The time taken to resolve a notice depends on the nature and complexity of the issue. Simple issues may be resolved quickly, especially if you can provide the required documentation and clarifications promptly. More complex issues, such as discrepancies in income or deductions, may require a longer time for resolution. It is crucial to respond to the notice as soon as possible with accurate information to speed up the process.

Q6: Can I file ITR-4 if I have multiple sources of income?

Yes, you can file ITR-4 if you have multiple sources of income. ITR-4 is suitable for individuals and businesses with income from multiple sources such as salary, business income, and interest income, provided your total income is eligible under the presumptive taxation scheme. As long as your total turnover is below ₹2 crore, and you are filing under the presumptive taxation scheme, ITR-4 is the correct form for you.

Q7: What is the presumptive taxation scheme under Section 44AD, and can I use it for filing ITR-4?

Section 44AD of the Income Tax Act is a presumptive taxation scheme for small businesses, allowing businesses with a turnover of up to ₹2 crore to declare income at a prescribed rate, which is 8% of the turnover (or 6% if the payments are made digitally). If you qualify under this scheme, you can file your return using ITR-4. The scheme simplifies the filing process by eliminating the need for detailed books of account and audits.

Q8: How can I respond to a notice under Section 143(2) (scrutiny notice)?

If you receive a scrutiny notice under Section 143(2), it indicates that the Income Tax Department has selected your return for detailed review. You will need to provide supporting documents and explanations for any discrepancies or issues highlighted in the notice. This may involve submitting additional records or attending a hearing if required. Ensure that you respond within the timeline and provide accurate, thorough information to avoid further complications.

Q9: How do I know if I have been selected for scrutiny?

If your return is selected for scrutiny under Section 143(2), you will receive a formal notice from the Income Tax Department. This notice will specify the areas of concern or items being reviewed. If you do not receive a notice, your return has not been selected for scrutiny. It's essential to review the notice carefully and respond appropriately to ensure compliance.

Q10: How can I avoid getting a notice in the first place?

To avoid receiving a notice, ensure that your income, deductions, TDS credits, and other tax details are accurately reported. Double-check your ITR before submitting it to ensure there are no discrepancies or errors. It's also beneficial to use platforms like TaxBuddy, which offer guidance and error-checking features. Filing your return accurately, with all supporting documents, can help reduce the likelihood of scrutiny or penalties.

Q11: What should I do if I receive an incorrect TDS certificate?

If you receive an incorrect TDS certificate, contact your employer or the deductor (the entity that made the TDS deduction) to get it corrected. It’s crucial to ensure that the TDS certificate reflects the correct amount of tax deducted, as any discrepancies may affect your ITR filing. Once the corrected TDS certificate is issued, you can update your return accordingly, ensuring that your tax records are accurate.

Q12: Can I use TaxBuddy for all types of ITR filing, including corporate returns?

Yes, TaxBuddy supports various types of ITR filings, including those for individuals, businesses, and professionals. The platform provides both self-filing and expert-assisted options, helping users navigate the complexities of filing their taxes, whether it's a simple individual return or a corporate tax filing. TaxBuddy is designed to simplify the process for all taxpayers, ensuring compliance and accuracy.