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What to do if you receive a notice from the Income Tax Dept

Keep all your tax filing details and documents handy to support your ITR filing. You can also take the help of a tax expert to prepare your response to a scrutiny notice.

Written by Adhil Shetty |
Updated: August 24, 2019 9:57:15 am
income tax returns, itr, itr filing, income tax returns deadline, income tax returns july 31, income tax returns deadline extension, itr deadline extension, income tax returns filing, last date to file itr, income tax Representational image. (Express photo by Praveen Khanna)

A notice from the Income Tax Department can make most taxpayers jittery. There could be several reasons for the I-T Department to send you a notice, and you must act carefully in such a situation. If you ever receive an I-T notice, it’s very important that you clearly understand the reason behind it before you act. And to help you make informed decisions, we discuss some common reasons that can result in you getting an I-T notice, and also what you should do.

Late ITR filing

The last day to file your Income Tax Returns for Assessment Year 2019-20 has already been extended to August 31. If you fail to file your tax returns, you may receive a notice from the I-T Department to complete the filing process within the stipulated time-frame.

Also, do note that delayed filing may attract a penalty of up to Rs. 10,000. You should file your returns to avoid a notice and a penalty.

TDS-Form 26AS mismatch

You Tax Deducted at Source (TDS) amount should tally with your Form 26 AS. However, in some situations, they may not match. There could even be genuine reasons for this mismatch like discrepancy in income from the previous year and for those who have multiple sources of income.

That being said, if there is a mismatch, the I-T Department may send you a notice Under Section 143(1A) seeking an explanation for these discrepancies. You can respond to such a notice by logging in to the ITR filing portal and explaining the reason for the discrepancy, along with valid documents to support your case. You can also seek a professional tax advisor’s help if you get stuck at any point.

Non-disclosure of any income in ITR

The I-T Department doesn’t just believe in your tax declarations; it can inquire about a taxpayer’s income information by reaching out to banks, financial institutions, mutual fund houses, etc. And if it finds out that you’ve not disclosed complete information about your income from all sources, it may send you a notice under section 143(1) for such non-disclosure. While filing your tax returns, take the precaution of verifying all your income beforehand.

Apart from your salary income, do factor in your income from house property, capital gains, dividends, family pension and certain investment returns (like Fixed Deposit interest), and even interest earned on your savings account while filing your ITR.

Read your bank statement carefully, keep records of all your investments, and ensure you file your ITR without making any errors pertaining to your income details. If you have not made any mistakes, you can reply with valid proof of income. If there is a discrepancy in your tax returns, you will have to pay the extra tax amount within 30 days.

ITR under scrutiny

These days the I-T Department selects random files for scrutiny. If you get a notice under section 143(2), it shows the I-T Department has taken your ITR for scrutiny. On receiving the notice for scrutiny, you should respond to the notice within the prescribed time period.

Keep all your tax filing details and documents handy to support your ITR filing. You can also take the help of a tax expert to prepare your response to a scrutiny notice.

Wrong ITR form

Taxpayers having income from multiple sources may make the error of selecting the wrong ITR form while filing their returns. If the ITR is submitted with an incorrect form, the taxpayer may get a notice under section 139 (9).

Usually, the I-T Department allows time up to 15 days to respond in such cases. If you ever receive this notice, make sure you file the revised returns before the deadline. If you fail to do so, your returns could be invalidated by the I-T Department.

Apart from the situations mentioned above, there can be some other occasions when you may get an I-T notice. For example, you may also get a notice in case of a high-value transaction, misreporting of long term capital gains (LTCG) earned from equity investments, for not reporting investments made in the name of your spouse, for failing to deposit the penalty amount or fee (if any), etc.

In conclusion, it would be worthwhile to point out that you should not panic if you ever receive a tax notice. Read it carefully, check the reason behind it and the timeline to respond. Also, ensure you do respond within that timeline.

And lastly, don’t hesitate to take the assistance of a tax expert to prepare the response on your behalf.

The author is CEO, The article has been published in collaboration with BankBazaar. Opinions expressed are those of the author.

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