Question 1

What is an Income Tax Notice?

Accepted Answer

An Income Tax Notice is a communication from the Income Tax Department to the taxpayer for various reasons. The reasons may be related to: discrepancies in the ITR filed, requests for additional documents, or requests for taxpayer’s personal appearance. Income Tax Notices can be issued under various Sections of the Income Tax Act, and each Notice specifies the purpose for which it is issued, alongwith the response expected from the taxpayer.

Receiving an Income Tax Notice may not always be a reason to worry. However, it does require an accurate and timely response to address the issue raised by the Income Tax Department.

Question 2

How do I check my tax notice?

Accepted Answer

An IT notice is delivered to the taxpayer’s registered email. It can also be checked through the income tax notification portal. However, the portal offers information only on some of the notices. For others, you have to visit the IT department. Remember to check the authenticity of the notices by using a quick link for “Authenticate notice/order issued by ITD” on the Income Tax website. At this point, it is also crucial to know your DIN to facilitate communication with the IT department.

Question 3

Does a salaried person get an income tax notice?

Accepted Answer

Salaried professionals can also get an income tax notice. Most notices come up when there is a mismatch with 26AS/AIS/TIS or any omission of income.

Question 4

What to do if I get income tax notice?

Accepted Answer

Although an income tax notification can be stressful, you should stay calm and understand why it has been sent. If you have received it for missing out on information, you need to provide the details. Conversely, you will have to rectify errors if they are the reason for getting a notice. You must respond to the notice within the stipulated time to avoid possible penalties.

Question 5

What happens if you don't respond to the tax notice?

Accepted Answer

Not responding to the income tax notice may have different consequences according to the type of notice. Such consequences include penalties of up to INR 10,000 and imprisonment for up to one year.

Question 6

What happens if I don't respond to the notice within 30 days?

Accepted Answer

Failing to respond to the notice within 30 days can get you in trouble. The IT department will adjust the outstanding demand without giving you an opportunity to respond.

Question 7

How do you reply to notice?

Accepted Answer

Replying to an income tax notice is easy as you can do it online by visiting the official website of the income tax department. Log in, navigate to the compliance section, and respond to the notice.

Question 8

What is an intimation letter from income tax?

Accepted Answer

An intimation order/notice is issued by the income tax department under section 143(1) after the successful processing of your return. It includes the details of the information submitted at the time of tax filing and a corresponding column of the details available with the tax department. This intimation is sent within a year from the end of the financial year.

Question 9

What does the code EXC 001 mean?

Accepted Answer

EXC -001 means transactions beyond the permission of the IT Act. It is for monthly cash transactions higher than INR 10 lakh.

Question 10

Do I get notices for current account transactions?

Accepted Answer

Yes, you may get ITR notices for current account transactions. For example, any current bank account transaction exceeding Rs 50 lakhs in a financial year has to be disclosed. If you fail to do it, you may get notice for it.

Question 11

What is the communication of the proposed adjustment u/s 143(1)(a)?

Accepted Answer

It refers to any information by the IT department regarding adjustment against refund claimed in your income tax return, such as incorrect claim, arithmetical error, or disallowance of loss claimed. Such adjustment could relate to the outstanding demands of previous assessment years.

Question 12

How can you rectify the discrepancy in u/s 143(1)?

Accepted Answer

If any demand raised in the discrepancy in notice u/s 143(1) is correct, you should pay it. Conversely, you should file rectification u/s 154 (1) or a revised return if a mistake is apparent from the record. For a revision, click ‘e-file’ and choose ‘file income tax return’. For rectification, click ‘services’ and select the ‘rectification’ option from the menu.

Question 13

How do I pay my tax on demand?

Accepted Answer

Paying online is an easy way to clear your tax on demand. You can do it by accessing the e-filing website of the IT department and logging into your account. Check the amount of outstanding tax demand and pay directly under the "Response to Outstanding Tab" on the web portal.

Question 14

How do you correct outstanding tax demand?

Accepted Answer

Once again, you can do it by logging in to the official efiling website, going to the pending actions section, and selecting Response to Outstanding Tax Demand.

Question 15

How long after filing tax returns can you expect an assessment notice?

Accepted Answer

You can get a scrutiny assessment notice u/s 143(2) only up to six months from the end of the financial year.

Question 16

How do I get my CPC income tax return?

Accepted Answer

You get an ITRV (acknowledgment) on your registered mail ID soon after filing the ITR. You can also download it from your account on the official website.

Question 17

How to download the demand notice from the Income Tax portal?

Accepted Answer

You can download the demand notice from the Income Tax portal by logging into your account, going to 'e-Proceedings' or 'My Account,' and then selecting 'View Tax Credit Statement (Form 26AS).’ You can find and download the notice from here.

Question 18

What is Section 156 of the Income Tax Act?

Accepted Answer

Section 156 of the Income-tax Act specifies the provision for demand notice issued by the Income-tax Department on completion of the assessment indicating that a taxpayer is liable to pay some extra amount of income tax. The notice will specify the amount payable and the due date.

Question 19

How to Draft a Reply to an Income Tax Notice?

Accepted Answer

An answer to the notice of income tax would contain the following: details of the taxpayer, reference to the notice in question, explanation or justification with clarity on the issue raised, and supporting documents. One should seek a tax expert for correctness.

Question 20

What to Do if You Get an Income Tax Notice for Not Filing a Return?

Accepted Answer

In case of an income tax notice for failure to file an income tax return, if not already filed, the filing of the return shall be done within the time allowed on that behalf in the said notice. Afterwards, reply to the notice and explain the same along with proof of filing, if applicable.

Question 21

What is the Time Limit for Scrutiny Assessment under Income Tax?

Accepted Answer

Normally, the time limit for completing the scrutiny assessment is 12 months from the end of the financial year in which the return was filed. Extension may apply in specific cases.

Question 22

What is the Time Limit for Issuing an Income Tax Notice?

Accepted Answer

The notice under the income tax that is imposed usually depends on the kind of notice that has to be given. The assessment or reassessment notice should unbelievably be issued within four years from the end of the corresponding assessment year generally.

Question 23

What Triggers a High-Value Transaction Notice of Income Tax?

Accepted Answer

High-value transactions, as big as purchasing substantial properties or making significant bank deposits, investments, and so on, can trigger an income tax notice. These are generally noticed for the source of funds.

Question 24

How to Respond to an Income Tax Notice on Property Purchase?

Accepted Answer

Reply to the notice of the income tax on the purchase of the property, with full details of the transaction, that is, sale deed, proof of payment, and source of funds, and enclosed all necessary relevant supporting documents, with regard thereto.

Question 25

What is the Correct Format of an Income Tax Scrutiny Reply Letter?

Accepted Answer

The format for reply to the letter of income tax scrutiny shall include the subject line, which mentions the notice, then the details of the taxpayer, the summary of the issue under consideration, and thereafter, the detailed explanation for the same with attached documents. The form shall be in formal tone, in clear terms.

Question 26

What You Need To Know About Income Tax Scrutiny?

Accepted Answer

Scrutiny of income tax is undertaken by the Income Tax Department in cases where a detailed check is done on the income tax return, to authenticate whether the declared income, deductions, and taxes are exact and up to date. All supportive documents and timely replies to notices are important.

Income Tax Notice

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When May Tax Payers Get An Income Tax Notice