There are several reasons why you might receive a sudden or unexpected notice from the income tax department. You might have failed to file your income tax return on time, for example. You might not have reported income correctly, or you might have reported excessive losses, or there might have been a calculation error.
A taxpayer may receive an income tax notice under Sections 139(9), 143(1), 143(2), 143(3), 245, 144, 147, 148, 156 (notice of demand) of the Income Tax Act, 1961, if they did not file their ITR, claimed an inauthentic tax refund, concealed taxable income, computed excessive tax losses, or had a long term capital gain. Suneel Dasari, founder, CEO, EZTax.in, an online income tax filing portal, explains.
Here are the things you could do when you receive a sudden I-T notice:
- The Basics: Is it really your name on the notice? Do you have your PAN number listed correctly? For which assessment year is it intended? What is the name of the issuing officer? Can you tell me what their designation is? Does the document have an identification number? What is it? explains Archit Gupta, founder and CEO of Cleartax, a tax portal.
- Read the communication you received from beginning to end to understand the issue. Afterwards, try to understand what the IT department is saying despite the legalese.
- Figure out the discrepancy: There are two columns in the new intimation format. You will have a discrepancy if a particular row shows different amounts in these two columns.
- Through www.incometaxfiling.gov.in, a tax filing account, you can respond to any tax notice online. In order to respond to a tax notice, you need to follow a specific procedure. You can check your refund and demand status under ‘My Account’ once you receive such an email. You can check your demands and arrears by clicking on the ‘My Pending Actions’ tab on the dashboard or by clicking ‘Worklist’ and then ‘For your action’ after logging in.
- Whenever you receive an intimation, you should visit the ‘Response to Outstanding Tax Demand’ tab. Once you select the right assessment year, click on ‘Submit’ to proceed. Choose whether the demand is accurate, if it is partially accurate, or if it is disagreeable.
- You can check if the demand raised is correct by clicking on ‘demand is correct’. If a refund is due, the outstanding demand along with interest will be adjusted accordingly. You must pay any unpaid tax immediately if there is any. You must enter the correct and incorrect amounts, along with the reasons, if your demand is only partially correct.
- Clicking on ‘disagree with demand’ gives you two options – partially or fully. An explanation for why the demand is incorrect must be provided compulsorily.
- Transaction IDs are generated after your response is successfully submitted. You can check your submission by clicking on the ‘view’ link under the response column. Further clarification can also be obtained from your respective assessing officer.
- You may be able to respond to your notice yourself if it is simple enough; otherwise, you must seek professional assistance. Failure to respond to the tax notice within a stipulated period could have a number of consequences. In the event of non-compliance with a tax notice, a penalty of Rs 10,000 can be levied, up to a maximum of the amount due. A tax officer may also make a judgment assessment based on this information. A prosecution for up to one year may also be possible in some cases.
- If you need more time, you can request an adjournment. A tax officer must, however, make this decision at his or her discretion.