How to Reply to Income Tax Scrutiny Notice Under Section 143(2)
- Rashmita Choudhary
- Nov 3
- 9 min read
Receiving a notice under Section 143(2) of the Income Tax Act, 1961, means your Income Tax Return has been selected for detailed scrutiny by the Assessing Officer. This is part of the government’s regular assessment process to verify the accuracy of income, deductions, and claims made in your return. Such scrutiny doesn’t imply wrongdoing—it simply ensures your filings align with available data and compliance norms. A timely and accurate response is crucial to avoid penalties or further inquiry.
Table of Contents
Understanding Section 143(2) Scrutiny Notice
A scrutiny notice under Section 143(2) of the Income Tax Act, 1961 is issued when the Income Tax Department selects a taxpayer’s return for detailed assessment. The purpose is to verify whether the income declared, deductions claimed, and taxes paid are accurate and complete. The Assessing Officer (AO) examines the ITR in depth to ensure that there are no discrepancies between reported data and the information available through Form 26AS, AIS, TIS, or third-party sources. This notice serves as an official intimation that the return will be reviewed under a specific assessment cycle.
Why Are Returns Selected for Scrutiny?
Returns are chosen for scrutiny through an automated system that evaluates various parameters and risk factors. Common reasons include mismatched income or TDS entries, unusually high refund claims, excessive deductions, underreporting of capital gains, or inconsistencies between reported income and bank transactions. Sometimes, selection is random to maintain transparency in the assessment process. High-value financial transactions reported through Annual Information Statements (AIS) or inconsistencies in previous returns can also trigger scrutiny.
Types of Scrutiny Under Section 143(2)
The Income Tax Department usually classifies scrutiny assessments into two categories:
Limited Scrutiny: Focuses on specific issues such as a mismatch in TDS or certain deduction claims. The AO examines only the points mentioned in the notice and cannot extend the scope unless approval is obtained.
Complete Scrutiny: Involves an in-depth review of the entire return, including income sources, investments, and deductions. This is generally triggered when there are significant discrepancies or high-value transactions.
Understanding the type of scrutiny helps taxpayers prepare a targeted response and gather relevant documentation accordingly.
How to Check and Download the Income Tax Scrutiny Notice
The scrutiny notice is issued through the official Income Tax e-filing portal and simultaneously sent via registered email. To check and download it:
Visit the official e-filing website – www.incometax.gov.in.
Log in using your PAN and password.
Navigate to the ‘e-Proceedings’ tab.
Select ‘View Notices’ or ‘View Communication’ to find the Section 143(2) notice.
Download and review the document carefully to understand the issues raised and the response deadline.
Always cross-verify the communication reference number on the portal to ensure authenticity and avoid responding to fraudulent emails.
Step-by-Step Guide to Replying Under Section 143(2)
Read the Notice Carefully – Understand the reasons for scrutiny and the specific details requested by the Assessing Officer. Note the timeline mentioned in the notice.
Gather Supporting Documents – Collect all necessary proofs such as Form 16, salary slips, investment receipts, property papers, and bank statements.
Prepare a Point-Wise Reply – Address every issue raised, provide factual explanations, and attach supporting evidence. Avoid general or incomplete statements.
Log in to the Income Tax Portal – Access the ‘e-Proceedings’ section and upload your reply along with relevant attachments.
Authenticate Submission – Use a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) to verify your response.
Monitor Communications – Keep checking your registered email and portal inbox for follow-ups or further clarifications.
TaxBuddy’s platform can make this process easier by providing guided workflows and expert validation before submission, ensuring that replies meet compliance standards.
Documents Required for Responding to Section 143(2) Notice
Depending on the queries raised, you may need to provide:
Income proofs like Form 16, salary slips, and Form 26AS.
Investment proofs for deductions claimed under Sections 80C, 80D, 80E, etc.
Bank statements showing major transactions.
Proofs of sale or purchase of property, rent receipts, and agreements.
Loan statements for housing or education loans.
Capital gain statements or brokerage reports for trading income.
Business-related books of accounts or invoices if applicable.
Submitting well-organized and labelled documents improves credibility and reduces chances of further queries.
Timeline and Deadlines for Submission
The scrutiny notice under Section 143(2) generally specifies a deadline, usually 15 days from the date of receipt. However, taxpayers should respond as early as possible to avoid last-minute errors. Extensions can sometimes be requested through the portal, but delays without valid reasons may lead to penalties or adverse assessment. Always ensure acknowledgment of submission through the portal as proof of compliance.
Consequences of Not Responding to a Scrutiny Notice
Ignoring or delaying a response to a Section 143(2) notice can have serious consequences. The Assessing Officer may proceed with a best judgment assessment under Section 144, where tax liability is computed without considering your explanations or deductions. Additionally, penalties under Section 271(1)(b) of up to ₹10,000 can be imposed for each instance of non-compliance. In severe cases, prosecution under Section 276D may also apply for persistent non-cooperation.
Common Mistakes to Avoid While Replying
Submitting incomplete or unverified documents.
Ignoring the exact points mentioned in the notice.
Providing explanations without supporting proofs.
Delaying submission beyond the deadline.
Responding to fraudulent emails without verifying authenticity.
Avoiding these errors ensures that your reply is accepted smoothly and prevents unnecessary complications in future assessments.
Role of Technology and AI Platforms like TaxBuddy
Modern tax platforms like TaxBuddy simplify scrutiny response and compliance by automating much of the manual effort. Using AI-based verification, TaxBuddy cross-checks your declared data with Form 26AS, AIS, and TIS to identify mismatches early. It also offers guided steps to prepare and upload your reply, along with expert-assisted options for review. The app sends reminders for pending responses and helps maintain a clear record of communication, making the entire process transparent and stress-free.
Tips for a Smooth Income Tax Scrutiny Process
Always maintain digital copies of key documents like Form 16, investment receipts, and loan statements.
Ensure that all deductions and income details are correctly reported during ITR filing to minimize scrutiny risks.
Double-check your AIS and Form 26AS data before filing the return.
Respond to notices within the specified timeframe.
Keep your registered email and mobile number updated on the Income Tax portal.
Use reliable platforms like TaxBuddy for filing and managing compliance digitally.
Conclusion
Receiving a scrutiny notice under Section 143(2) is a routine part of tax compliance and not necessarily a sign of wrongdoing. Responding carefully and on time ensures smooth resolution and avoids unnecessary penalties. Maintaining transparency, proper documentation, and prompt communication is key to managing the process effectively. TaxBuddy can assist in drafting accurate replies, managing e-proceedings, and ensuring all communications are handled correctly. For anyone looking for assistance in tax filing, I highly recommend you download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers flexibility to suit different types of taxpayers. Those comfortable with handling their taxes independently can opt for the self-filing plan, where AI-driven tools guide users step-by-step through the filing process. This includes automatic data validation, pre-filled details, and real-time error checks. For individuals or businesses that prefer professional assistance, TaxBuddy provides expert-assisted plans where qualified tax professionals prepare and review the entire return on your behalf. This dual approach ensures accuracy, convenience, and compliance for all taxpayers, whether filing simple returns or complex cases involving multiple income sources.
Q2. Which is the best site to file ITR?
The official Income Tax Department portal is the standard option for taxpayers who prefer to manage filings on their own. However, many users find third-party platforms like TaxBuddy more efficient and user-friendly. TaxBuddy enhances the experience by integrating AI tools, automated data checks, and personalized recommendations to help minimize errors and maximize eligible deductions. Additionally, it provides direct expert assistance, which can be particularly useful when responding to scrutiny notices or dealing with complex cases. The platform also ensures secure data storage and compliance with government regulations, making it a reliable choice for most taxpayers.
Q3. Where to file an income tax return?
Income Tax Returns can be filed online through the government’s official portal at www.incometax.gov.in or through trusted e-filing platforms such as TaxBuddy. Filing through TaxBuddy simplifies the process, as the platform automatically reads Form 16, AIS, and other financial data to generate accurate returns. TaxBuddy also offers error-checking, refund tracking, and notice management—all in one place. For those new to e-filing, this eliminates confusion and helps ensure that returns are filed correctly and within the due date, reducing the risk of notices or penalties later.
Q4. What triggers a Section 143(2) notice?
A scrutiny notice under Section 143(2) is issued when the Income Tax Department wants to verify the correctness of the details declared in your return. Triggers can include mismatches between reported income and Form 26AS, high-value transactions flagged in AIS, unusually large refund claims, or inconsistencies in deductions. Sometimes, cases are selected randomly through computer-based risk profiling. The notice doesn’t always imply wrongdoing—it simply means that your return requires a closer look. Providing prompt, transparent, and accurate information in response usually resolves the matter efficiently.
Q5. Is it mandatory to respond online to the notice?
Yes, all scrutiny proceedings under Section 143(2) are now faceless and must be handled digitally through the official e-filing portal. Taxpayers can no longer submit physical documents or meet the Assessing Officer in person. This system ensures transparency and reduces the possibility of manual errors or miscommunication. Once the notice is received, the taxpayer should log in to the portal, review the communication in the “e-Proceedings” section, and upload their reply with supporting documents. TaxBuddy provides easy-to-follow guidance and automated prompts to help users complete this process accurately.
Q6. Can an extension be requested for submitting the reply?
Yes, extensions can sometimes be requested through the e-filing portal if there is a valid reason for delay, such as illness or difficulty in collecting documents. However, the final decision lies with the Assessing Officer (AO). It’s advisable to file a partial response acknowledging the notice and requesting additional time before the original deadline expires. Timely communication reflects compliance and can help avoid penalties. Platforms like TaxBuddy also send alerts and reminders to ensure taxpayers never miss important deadlines.
Q7. What happens after replying to a Section 143(2) notice?
After you submit your response and supporting documents, the Assessing Officer reviews them to verify the accuracy of your return. If the explanation and proofs satisfy the AO, the scrutiny process may be concluded without any additions or adjustments. In some cases, the officer might seek further clarification or request additional evidence through follow-up notices. If discrepancies remain unresolved, a demand notice may be issued for additional tax, interest, or penalties. TaxBuddy’s expert team can assist in analyzing such follow-up communications and preparing appropriate replies to ensure compliance and avoid litigation.
Q8. How can one verify the authenticity of the notice?
To confirm the authenticity of a notice, log in to your account on the official Income Tax portal and navigate to the “View Notices” or “View Communications” section. Every genuine notice carries a unique Document Identification Number (DIN) that can be verified directly on the website. Never respond to emails or calls claiming to be from the department without confirming the communication reference number. TaxBuddy automatically cross-verifies received notices with official records to ensure taxpayers don’t fall prey to fraudulent messages or phishing attempts.
Q9. What is the difference between Section 143(1) and 143(2)?
Section 143(1) pertains to the preliminary processing of your filed return. It involves automatic verification of mathematical accuracy, TDS credits, and refund calculations. If everything matches, the return is processed, and refund or demand intimation is issued. Section 143(2), however, involves detailed scrutiny by the Assessing Officer to verify whether the income and claims in your return are correct. It’s a deeper assessment where supporting documents may be required. While 143(1) is routine for every taxpayer, 143(2) applies only to selected cases.
Q10. What are the penalties for non-compliance?
Failure to respond to a Section 143(2) notice within the stipulated time may lead to a best judgment assessment under Section 144, where the Assessing Officer determines taxable income without considering your explanations. This often results in higher tax liability. Additionally, a penalty under Section 271(1)(b) of up to ₹10,000 per instance can be levied for non-compliance. Continued disregard of notices can even attract prosecution under Section 276D. Responding promptly and accurately helps avoid these outcomes, and using expert platforms like TaxBuddy ensures complete compliance.
Q11. Can a professional represent a taxpayer during scrutiny?
Yes, taxpayers are allowed to appoint an authorized representative, such as a Chartered Accountant (CA), tax consultant, or legal practitioner, to respond on their behalf. The representative can submit replies, attend virtual hearings, and correspond with the Assessing Officer through the e-filing portal. This is especially beneficial for complex scrutiny cases involving multiple income sources, capital gains, or business transactions. TaxBuddy’s expert-assisted plan connects users directly with qualified professionals who manage all communications and ensure responses are compliant with legal requirements.
Q12. Does TaxBuddy help in responding to scrutiny notices?
Yes. TaxBuddy offers a comprehensive notice management feature that helps taxpayers handle scrutiny notices efficiently. Its AI-backed system identifies the reason for the notice, suggests a response structure, and enables secure document uploads. Tax experts on the platform review each case to ensure replies are accurate, evidence-backed, and submitted within the deadline. The mobile app also allows users to track updates in real time and receive notifications for pending tasks. This combination of automation and expert intervention makes TaxBuddy a reliable partner for managing scrutiny and other tax compliance matters.
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