Have you received a notice or intimation from the Income Tax authorities? But don’t have any clue why you received it in the first place or under which section you are being served then this article is for you. Today, we are going to explain various notices issued by the Income Tax authorities under different sections and what will happen if you fail to respond to such notices.
So, without further ado let’s discuss. Happy reading!!
- Notice/Intimation for defective return is issued under section 139 of the Income Tax Act.
A notice is issued under section 139, by the income tax officer if he believes that the ITR filed by the assessee is defective in nature and one or more errors has been committed such as an incorrect ITR form is filed, any information is missing or an incomplete ITR is filed by the assessee, etc. An observation sheet explaining the error done by the assessee while filing the return along with suitable solutions is also attached with such notices. The assessee can review the errors mentioned or take the help of an expert to do the same and respond accordingly within the timeframe given in the notice, which is generally 15 days.
In case an assessee fails to respond to notice received under section 139 within the given timeframe then the original return filed by him shall be deemed rejected / Invalid.
- Notice for inquiry before an assessment is issued under section 142(1) of the Income Tax Act.
Notice for conducting preliminary inquiry before an assessment is issued by the income tax officers under section 142(1) to the assessees. There are majorly two reasons to issue this notice. Firstly, if the income tax return is not filed by the assessee before the due date and the assessing officer wants him to file it. Secondly, when an assessing officer needs additional documentary information or books to verify the claim assessee has made related to his income while filing the return.
In case an assessee fails to respond to notice received under section 142(1) then a penalty of Rupees 10,000 can be levied or he can face jail time or both will be applicable.
- Notice/Intimation for processing of return is issued under section 143(1) of the Income Tax Act.
Once, the return is filed by the assessee, it shall be processed by the Central Processing Centre(CPC) after making a few adjustments such as an arithmetical error in the return, an incorrect claim apparent in the return, disallowance of any loss or expenditure claimed, any increase in income or any disallowance of any deduction claimed. Before processing the return, an intimation under section 143(1) shall be sent to the assessee and he shall be obligated to respond to such intimation within 30 days of issue or timeframe given by the assessing officer. Also, the assessing officer is required to issue such intimation within 9 months from the end of the relevant assessment year in which the return is filed.
In case an assessee fails to respond to an intimation received under section 143(1) then the processing of adjustments shall be carried out by the assessing officer and refund/demand shall be raised.
- Notice for regular scrutiny assessment issued under section 143(2) of the Income Tax Act.
To conduct regular scrutiny assessment, an assessing officer, not below the rank of the Income Tax officer is required to serve the notice under section 143(2) to the assessee. This is done to notify the assessee that he is under scrutiny assessment. The notice has to be served within three months from the end of the relevant financial year in which the return is filed.
The section under which scrutiny assessment is conducted by the assessing officer is different from section 143(2) under which notice for scrutiny is received by the assessee.
- Notice for conducting income escaping assessment is issued under section 148 of the Income Tax Act.
In case an assessing officer believes that if any income chargeable to tax has escaped assessment for any assessment year, then he may assess or reassess such income and issue notice for conduction income escaping assessment under section 148 to the assessee. In response to notice under section 148 assessee is required to file the return of income, even if he has filed it already and such return shall be deemed as filed originally under section 139 as per the due date. Also, such notice can be issued within three years or within ten years if income escaped assessment amounts to or is likely to amount to Rupees 50 lakh, from the end of the relevant assessment year in which return is filed or due to file as amended by Finance Act 2021.
In case notice under section 148 for income escaping assessment for the assessment year 2021-22 or earlier assessment years hasn’t been issued by the assessing officer within four years or six years (if income escaped is more than Rupees 1 lakh) from the end of relevant financial in which return is filed or due to file, then it cannot be issued as per the new provisions stated above.
- Notice of demand issued under section 156 of the Income Tax Act.
When any tax, penalty, interest, or any other amount is due from the assessee, then the assessing officer can issue a notice of demand under section 156 to the assessee and ask him to pay all his dues. The assessee should oblige and pay the amount due within 30 days from the date of receipt of such notice. The intimation or notices under sections 143(1), 200A & 206CB shall also be deemed as notice of demand.
If an assessee fails to pay his dues within the time after receiving notice of demand under section 156 then recovery proceedings shall be initiated against him and he will be liable to pay interest at the rate of 1% per month or part thereof under section 220 and penalty under section 221 as well.
- Notice/Intimation for refund adjustment issued under section 245 of the Income Tax Act.
In case an assessee has not paid any tax liability of earlier assessment years, then the assessing officer has the right to adjust the refund against that tax liability by issuing the intimation under section 245. Although, the adjustment of refund against demand refund could only be done only if the assessing officer has issued proper notice and provided a reasonable opportunity to be heard to the assessee.
If an assessee fails to respond within the time period of 30 days from the day of receipt of notice then the assessing officer can consider it as consent and adjust the refund amount with tax liability.
Hope, now you must have got a fair idea about various income tax notices issued by the assessing officer and the reason behind issuing them. If you still have any doubt or need any assistance in responding back to such notices in order to avoid any tax litigation then feel free to reach out to us. Our team of experts is always available to help you out.
