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Decoding the Types of Income Tax Notices

Our experts can assist you in replying to income tax notices-

High-Value Transaction Notice (HVT)

If you are involved in a transaction with a higher value, purchase a huge share or property, or make a larger-than-normal cash deposit, you might be at risk of getting an HVT notice.

Notice of Demand

The Assessing officer shall serve a notice of demand when the assessee is to pay a fine, penalty, or interest.

Risk Management Notice

Any occurrence such as the exclusion of income, verification of refund claims or disputed deductions prompts tax authorities to issue a notice for addressing these matters.

Relief under Section 90/91/90A

This section provides relief to taxpayers from the burden of double taxation in case the taxpayer is receiving foreign income. They might get a notice to validate the claim.

Deduction Under Sec 80 CCD

The deductions under sec 80(2) are available only to salaried individuals and not to self-employed individuals.

Errors in Submitted Form 67

In case if there are any errors in the submitted form 67 you can expect to receive a notice this is applicable only when you have claimed a deduction for the income of foreign companies.

Notice under Section 131

The assessing officer may get ahead to serve a notice if they consider that the taxpayer keep their income out of sight.

Notice Sent under Section 139 (9)

Filing a defective income tax return can land you an ITR notice under Section 139(9).

Notice under Section 148

You may get this notice if the assessing officer comprehends that you have filed your ITR on a lower income or failed to file when the law mandated it.

Notice under Section 156

It's a reason to worry as it replicates a demand by the income tax department such as penalty, fine, tax, etc.

Notice under Section 245

Expect this notice if the assessing officer finds that you've missed out on the tax payment for the previous financial year.

26 AS- AIS/TIS Mismatch

A mismatch detected between 26 AS and AIS/TIS can bring notice your way.

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Reasons Why You Might Receive an Income Tax Notice

There are several reasons why you might receive an income tax notice. They might include-

  • When the TDS declared in the tax return doesn't align with the details in Form 26AS, form 16 or 16A
  • In case of disparities between the income tax return and form 26AS
  • Incomplete Documentation
  • Random Scrutiny
  • Mismatch in tax return
  • Non-disclosure of high-value transactions
  • Non-disclosure of sale and purchase of property
  • Late or Non-Filing of ITR
  • Claiming unrealistic deductions compare to your income
  • Incorrect Personal Information or wrong calculations 
  • Incorrect tax credits
  • Failure to declare any foreign investment or investments made abroad
  • For prior Years tax evasion
  • Dynamic Changes in investment amount
income tax notice

Let our Seasoned Tax Experts do the Job

It is Stressful to encounter notices issued by the tax authorities while navigating the intricacies of income tax procedures. Since these notices play a pivotal role in ensuring compliance and transparency in financial dealings, understanding the different types of income tax notices can help you alleviate future stress. Being aware of these nuances is crucial for seeking the help of a seasoned tax expert right on time.

Benefits

Benefits of Resolving Income Tax Notices

Resolving income tax notices at the right time is crucial. The benefits of resolving income tax notices are mentioned below-

Avoid Fines and Penalties and Stay Compliant.

income tax notice

Maintain Financial Stability and Preserve Assets.

income tax notice

Enhance Trustworthiness and Credibility.

income tax notice

Maximize Savings and Enhance Tax Efficiency.

income tax notice

Ensure Accuracy in Tax Filings and Avoid Errors.

income tax notice

Simplify Future Tax Compliance and Enhance Transparency.

income tax notice

Preserve Business Continuity and Optimize Liquidity.

income tax notice

Strengthen Financial Records and Reduce Complexities.

income tax notice

Overwhelmed Post Receiving an Income Tax Notice?

Step 1: Read The Notice Carefully

Upon receipt of an income tax notice the pivotal and initial action is to thoroughly pursue the notice, verify whether it constitutes an intimation or official notice. and the Reason behind you receiving the same.

Step 2: Collect Potential Documents and Information

After comprehending the essence of the tax notice, proceed to collect all pertinent documents and information. Properly organising your documents will not only enhance the efficiency but also showcase your dedication to promptly addressing the matter.

Step 3: Seek Expert Assistance

Seeking Professional assistance is crucial in guaranteeing the accuracy and substantiation of your response with sufficient information.

Step 4: Timely Accurate Response

Once you have consulted with the tax expert and gathered the necessary information, respond to the Notice clearly and concisely.

Step 5: Keep Track of the Actions

Keep track of all the actions and document all the records of communication and copies of your response to the income tax department, as these records can serve as evidence for your efforts to comply with the regulations.

List of Document for Income Tax Notice

Documents Required to Reply to an Income Tax Notice

1.A copy of the Notice

2.TDS Certificate Form 16- part A

3.Proof of Income Source

4.Investment Proof

Legal Dispute Resolution Mechanisms

It's not unforeseen to have a difference in opinion between taxpayers and tax authorities such a difference in opinion results in an appeal process. In cases of such dispute, we can adopt legal measures to settle disputes and uphold justice. Appeal cases can be suitable grounds to solve complex legal disputes, and an appeal must be filed within three months from the date on which such an order was communicated to the taxpayer.

A taxpayer can appeal against various reasons, which include-

  • Mistake in the face of the Record
  • Rectification Disregarded
  • Department Issuance of Erroneous Tax Demand
  • Any disapproval made by the central processing centre in accordance with the fact
  • Ex-parte Orders
  • Error in the penalty raised by the Income Tax Department

Section 249(2) of the act specifies that an appeal should be presented within 30 days when the appeal is related to any assessment or penalty, as well as the date of service of notice of demand linking to the assessment or penalty order.

In any other cases, the date on which intimation of the order sought to be appealed against is served.

An appeal against any order should first be filed before CIT (A). If you haven't received a favourable outcome here, the taxpayer can appeal again in the ITAT tribunal at the High Court and ultimately at the Supreme Court.

Juridical Notifications in Taxation

Rectification Notices

In cases where there are errors in the face of the record or corrections are to be made to the prior proceedings, Rectification notices can be issued along with the submission of corroborative documents.

Ex-parte Orders

In case if the procedures were to be completed without the active involvement or adherence of the individuals concerned a notice regarding the same shall be issued.

Appellate Notification

An Appellate Notification can be expected by a person who files an appeal against any decision of the department.

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Frequently Ask Questions

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

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

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

An intimation order/notice is disseminated 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.

Replying to an income tax notice is easy. Visit the income tax department's official website, log in, navigate to the compliance section, and respond to the notice.

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.

Soon after filing the ITR, you will receive an ITRV (acknowledgement) on your registered mail ID. You can also download it from your account on the official website.

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