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AI-based risk profiling has changed how income tax notices are generated and issued in India. The Income Tax Department now relies on advanced algorithms to analyse data from AIS, TIS, Form 26AS, bank records, PAN databases, and GST portals to identify mismatches and unusual patterns. Even minor inconsistencies can trigger automated alerts and verification notices. This shift has reduced manual discretion while increasing detection speed. Understanding how this system works h

Reassessment under Section 147 allows the Income Tax Department to reopen completed assessments when income is believed to have escaped taxation. These cases usually arise from mismatches in AIS, Form 26AS, high-value transactions, or unreported income discovered later through data analytics. With changes introduced after 2021, the reassessment process now follows a defined notice-based framework under Sections 148 and 148A, with strict timelines and safeguards. Follow-up inc

Income tax notices, demands, and assessment orders appear directly in the inbox of the e-filing portal, and understanding how to check them ensures quick compliance. The portal centralises every communication from the Income Tax Department, including notices under Sections 142, 143, 148, and 156, as well as outstanding demands and assessment orders. The inbox also provides options to authenticate any notice, respond through e-Proceedings, and track updates in real time. With

Income tax notices often highlight mismatches in income, TDS, or reporting errors, and the next step depends entirely on the section invoked and the nature of the discrepancy. The decision between rectification, appeal, or revision hinges on whether the issue is a simple mistake, a disputed adjustment, or an overlooked correction in the original filing. TaxBuddy examines the notice, matches it against ITR data, and selects the most efficient legal remedy under the Income Tax

Section 131 inquiry notices are issued when tax authorities require deeper verification of income, bank transactions, or financial disclosures using powers similar to a civil court. These notices allow officers to summon individuals, demand documents, examine records, and conduct hearings to uncover potential discrepancies or unexplained funds. Clear understanding of the notice, timely documentation, and structured responses play a crucial role in preventing penalties, prose

Lifestyle expenses such as high electricity bills or frequent foreign travel are now key triggers for income tax scrutiny. When annual electricity payments cross one lakh rupees or foreign travel spending exceeds two lakh rupees, mandatory ITR filing is required, even if total income remains below the basic exemption limit. These transactions are tracked through Form 61A reporting, where banks, utilities, and financial institutions flag spending that does not match declared i

Income tax notices under the Income Tax Act, 1961, follow a clear structure that helps identify why the notice was issued, which section applies, and what action is required. Each section points to a specific trigger—mismatches, missing information, scrutiny selection, or defective returns. Reading the notice correctly prevents unnecessary confusion and ensures timely compliance. The necessary details include the section invoked, discrepancies detected, supporting documents d

High business turnover without filing an Income Tax Return immediately triggers compliance red flags under the Income Tax Act. When bank statements, GST data, or AIS entries reflect turnover above statutory limits—such as Rs 1 crore under regular rules or Rs 10 crore under presumptive schemes—the system auto-identifies non-filers. This mismatch commonly leads to notices under Sections 142(1), 143(2), or 148 for unexplained turnover. Many small businesses and professionals are

Misreported or underreported income often results in Income Tax notices triggered by mismatches between the filed return and data captured in AIS or Form 26AS. These discrepancies may involve salary from multiple employers, freelance receipts, capital gains, or TDS credits that do not align with reported figures. Such mismatches prompt notices under Sections 143(1), 142(1), or 148, requiring timely clarification. Penalties for misreporting can reach up to 200% of the tax diff

EXC-001 cash transaction alerts are automated income tax notices issued when banks report high-value or unusual cash deposits that do not align with the income declared in the tax return. These alerts arise from SFT and AIS data, where banks flag deposits exceeding specified thresholds or patterns that appear inconsistent. The purpose is to verify the legitimacy of the cash source and ensure proper tax reporting. When an EXC-001 notice appears, clear documentation, accurate r