Reasons You May Receive an Income Tax Notice: Even if you have paid your taxes and filed your returns, you may still receive a notice. This section explains why and how to respond.
Let’s see for which reasons you might receive an IT notice-
1) Inaccurate Information on Assets or Income in The Income Tax Return
The Income Tax Department actively works to prevent tax evasion. You may receive a notice requesting disclosure of all income and assets, both in India and abroad.
Additionally, you should carefully complete your income tax return document by ensuring your tax return includes accurate details such as your name, address, and PAN. Incorrect information may result in a notification.e a notice for non-reportage if the income tax authorities suspect that not all your income from various sources has been reported.
You should gather all your financial documents and proof of all your income sources,To avoid non-disclosure issues, gather all financial documents and proof of income, such as pay stubs, bank statements, and invoices, before filing your return.ax department will be on a constant lookout in the event of a sudden substantial decrease in income or a steep increase in income levels.
You may receive a notice if you acquire high-value assets or conduct large transactions. Investments made in the names of your spouse or child may still be considered your income and should be reported accordingly.
Failure to report such income on your tax return may result in a notice.
4) TDS Inconsistencies or Incorrect TDS Claims
Your TDS at the time of filing should match the amounts on Forms 26AS and 16 or 16A. Discrepancies may result in a notice under Section 143 (1).
Employers, banks, and bond issuers may deduct TDS. Errors in TDS deductions or reporting of income and interest can lead to a notice from the tax department.
5) For Review & Evaluation
You may receive a notice under Section 143 (2) if your ITR is selected for scrutiny, often due to discrepancies or incorrect reporting.
You should also be conscious that the Income Tax Department Be aware that the Income Tax Department may impose penalties. Respond to notices promptly. to reply to an Income Tax Notice
6) Delayed Income Tax Return Filing
You must file your tax return by the deadline each assessment year. If the deadline is approaching and you have not filed, you may receive a reminder notice.
Under Section 142(1)(i) of the Income Tax Act, you may receive a notice requiring you to file your return. Filing and payment are separate processes, so paying tax without filing a return can still result in a notice.
You must submit tax returns, even if your business experienced a loss for the fYou must file tax returns even if your business incurred a loss. After uploading your return online, you have 120 days to submit the ITR. Filing after the deadline may result in penalties and a notice from the tax department.Tentionally, you may have failed to include some interest income that you have accrued; however, since the interest is credited to your bank account or reinvested in your assets, the department can quickly identify you as the source of the overstatement. You may receive a notice for failure to pay taxes.
The assessing officer may notify you that any outstanding dues will be deducted from your income tax refund, if applicable.
8) For Prior Years of Tax Evasion
The Income Tax Act empowers the Internal Revenue Service to re-evaluate prior filed tax returns. The department may issue a notice to the taxpayer under section 147 of the Income Tax Act. Based on predefined criteria, an Assessing Officer can select tax returns for reassessment.
Only when the tax officer seems to have reason to suspect that A notice for reassessment is issued only if the tax officer has reason to believe taxable income has not been assessed.
Also read: Section 143(3) Scrutiny Assessment