Filing income tax returns is a complex process and no matter how much you adhere to the rules, a notice from the tax department can easily give you some anxious moments. There can be varied reasons for which I-T department can send a notice, but if you get one, stay calm and then decide on the response. There are specific sections under which you may get notice from the I-T department and you just need to understand the purpose of such notices, and respond appropriately within the stipulated deadline to avoid a legal action.
Types of notices and how to deal with them.
You may get a notice under Section 139 (9) if you have filed your income tax returns (ITR) in the wrong form, there is a difference between name mentioned in the form and PAN card, tax amount is not fully paid, taxes are paid without mentioning the income, and if you have claimed for tax refund without mentioning the source of income.
Your response: On receiving such notice, you must respond within the deadline mentioned in the letter (Normally within 15 days of intimation). You just need to login to website of incometaxindiaefiling.gov.in portal and go to the e-filing section. Click on appropriate section for which you want to respond (U/s 139(9) in this case) and provide the correct information. If you do not respond within the stipulated date, then your return will become invalid.
Under Section 148 of Income Tax Act, Assessing Officer (AO) has the power to assess or reassess taxable income if there are valid reasons with strong proof to believe that there is concealment of income or tax avoidance in a particular year. You may get this notice if you do not mention a source of income or calculation related to it. Notice can be served within six year period if the amount is more than Rs 1 lakh and within four years if the amount is less than Rs 1 lakh from the end of the concerned assessment year.
Your response: You must respond within the specified time period by filing a return of the mentioned assessment year, and thereafter taking further action as suggested by your tax consultant.
You may get a notice Under Section 245 if you filed a return to claim a refund in an assessment year, but at the same time there is tax outstanding in your file.
Your response: Assessing officer (AO) may send you notice asking to respond within specified time. If the response is delayed beyond stipulated deadline, AO has the power to adjust outstanding tax from the due refund amount.
The notice Under Section 143 (1) is an intimation against the ITR filed by you stating that your return is in line with assessment of AO. You are not required to take any action. It may be issued for tax refund when the amount of tax paid is more than tax liability. If the amount of tax paid is less than actual tax liability, then you’ll get it as demand notice to pay the deficient tax amount within 30 days of the date mentioned in the notice.
Notice Under Setion 143 (2) is served for scrutiny by AO. It can be a manual scrutiny in which AO selectively sends the notice, a complete scrutiny in which notice is sent due to major discrepancies and limited scrutiny in which notice is sent seeking clarification for minor points.
Your Response: You need to appear in person or through your designated representative before the concerned officer within date mentioned in the notice and provide relevant proof to satisfy the queries raised by the officer.
When there is a mismatch between income reported in ITR and income as per 26AS, then you’ll get a notice Under Section 143 (1A) that would seek clarification for the mismatch.
Your response: You can visit the income tax department website and log in to your account and respond to this notice within 30 day time period. You must respond to this notice within specified time limit to avoid further action by the IT department.
Apart from the above mentioned notices, you may also get a notice for reasons like high value transaction, big investment in the name of spouse, not showing assets which are eligible for wealth tax etc.
If you are not sure on how to respond to the notice sent by the I-T department, then do not hesitate to hire a tax consultant and settle the issue immediately.
(The writer is CEO, Bankbazaar.com)