Types of notices issued by Income Tax Department, India

The different types of notices issued by Income Tax Department, India

Introduction

One can receive an Income Tax notice from the Income Tax Department, India should they find an error in the Income Tax Returns (ITR) filed by the tax-payer/assessee. There are broadly 6 types of notices generally given out.

Section 143(1) notice: Summary assessment without calling the assessee

This is a prelim assessment. This notice is sent in the event of your ITR calculations not matching with the ones of the Income Tax Department. This generally results either in a refund or in additional amount to be paid.

Section 139(9) notice : Defective ITR

This notice is sent in the event of the Income Tax Department deeming elements of the filing to be incomplete or inconsistent information. For instance, if you have an FD but you haven't mentioned the interest in your income and hence haven't paid the tax on the income. Another scenario could be that you have TDS deductions that have happened but you didn't upload the income corresponding accurately

The timelines for this notice is similar to the section above, i.e., the notice can be sent anytime before 31st December 2024. The stipulated timeline for such notices to respond to can vary, with a usual timeline of 15 days

Section 142 : Inquiry before assessment

This is in line with a delayed IT filing (or in a few events, missing of filing the IT altogether). Under this notice, the ITD can seek clarification on why an individual hasn't paid their taxes on time. This notice does not have a time limit prescribed and can be sent at any point in time. The stipulated response time is mentioned as part of the notice.

Section 143(2) : Scrutiny Assessment

This notice is generally sent asking the assessee to reconfirm the correctness of their incomes and deductions as claimed by them in their ITR. The response to this is online and this will be an ongoing process until Income Tax Department gets satisfied with the outcome. This can be issued anytime from now till the 30th of June 2024 and the time limit to respond to this notice will be as part of it.

Section 148 : Income escaping assessment

This notice is mostly observed as one that's given to NRIs and where Notice Mitra can potentially play a huge role in solving their problems. This happens when a tax payer would not have reported income correctly as part of the previous AY. An opportunity is provided to the individual to respond before initiating reassessment proceedings. This notice can be issued anytime within 3 years if the income is less than 50L and anytime less than 10 years if the income is beyond 50L. The response times are pretty steep and at 30 days

Section 245 : Adjustment of tax payable with refund amount

This happens only in the event of a taxpayer getting a refund for this year but possessing outstanding demands for the previous years. The Income Tax Department has the authority to offset existing demands with the refunds applicable for the current year. If there is an objection to such a notice, the assess is expected to respond within 30 days to them receiving the notice