Income tax

Everything you need to know about Income Tax Service Notices

The Income Tax Department sends notices to certain assessees and asks them to respond. Abhishek Murali, President of the Indian Taxpayers Association (AITPA), decodes everything you need to know about these notices.

What is a tax notice? What are the common reasons for issuing it?

Once a tax return is filed, it must be processed and accepted. This is normally a system driven process. The computer algorithm or the income tax officer/commissioner may determine that the tax return should be reviewed under certain specific aspects. This could be due to a computer reporting specific parameters or because information had been received from taxpayer income sources. Therefore, a notice is issued to the taxpayer to verify the same, before making an addition to income (and increasing the tax payable).

How do I check if I received a notice?

Previously, notices were physically sent to the registered address. Now it is sent by e-mail and also uploaded to the income tax portal under the taxpayer PAN. If you have updated your email id and mobile number, you will also receive an SMS about this.

What should a taxpayer do when he has received a tax notice. What is the deadline for responding?

Each type of notice, depending on the subject, has a specific deadline. The taxpayer must respond to all notices, even if the reason for the notice is incorrect.

What are the consequences if we do not respond within the time limit?

The first consequence would be that the assessed person’s income would be likely to be increased by the disputed amount (as specified in the notice). If the income has increased, the income tax payable (along with interest) also increases. There is also a penalty that will be imposed on the taxpayer for not disclosing their details correctly in the tax return. An additional penalty for non-response to notices may also be imposed by the income tax department.

What are the key points to keep in mind when responding to an income tax notice?

Answer all questions asked by the income tax service. Whenever you need time to compile information or submit it, ask for a reasonable time. Address only the problem mentioned in the question. Attempting to gain sympathy for a personal issue may not be helpful if it does not specifically address the issues raised.

What can a taxpayer do if an adverse order is made?

If the income tax order passed (after the notice is issued) is against or unfavorable to the taxpayer, he must appeal the order for relief. Opinions often deal with complex matters and may have greater ramifications for the taxpayer. Therefore, it would be advisable to seek professional advice when answering.