The Income Tax Department recently sent out a communication about an Information Mismatch Campaign for the financial years 2022-23 and 2021-22. Many assesses received this communication regarding a mismatch in Interest Income. The discrepancy arose from disclosing interest on fixed deposits and interest income from loans under different line items in the ITR under Income from other sources. The response tab does not provide an option to explain that the difference in interest shown as a mismatch is already disclosed under a different line item. If the AI system of the Income Tax Department is not improved and directed properly, it may lead to a lot of litigation in the future despite the proper discharge of tax liability.
Income Tax as usual Mass communication will be an headache for many : Latest Communication from Income Tax Department: The email has been sent by Income tax department to many assessee on 24/02/2024 as communication regarding Information mismatch campaign for FY 2022-23 and FY 2021-22.
On opening the same through compliance portal, it is observed that the department has issued notice for mismatch of Interest Income. on further scrutiny it is found that mismatch has been occurred in the department system due to disclosure of Interest on Fixed deposit and Interest Income from loan under different line item in ITR under Income from other sources (which is general practice of disclosing by many one). Moreover In response tab there are no option to mention that the difference of interest shown as mismatch/under reported is already disclosed under different line item as any other interest income.
If AI system of Income tax department is not further improved/directed properly, a lot of litigation will arise and pile up in near future resulting to harassment to the asseee even after proper discharge of their tax liability.
Income Tax as usual Mass communication will be an headache for many : Latest Communication from Income Tax Department: The email has been sent by Income tax department to many assessee on 24/02/2024 as communication regarding Information mismatch campaign for FY 2022-23 and FY…
There is good news for taxpayers with outstanding direct tax demands up to a specified limit. The Central Board of Direct Taxes (CBDT) has initiated the remittance and extinguishment of eligible old tax demands outstanding as of January 31, 2024. The ceiling limit of tax demand for individuals is set at Rs 1,00,000 for specific taxpayers/assessees, covering the principal tax demand, interest, penalty, fee, cess, or surcharge. Remission and extinguishment of entries of outstanding demand will not require the calculation of interest, providing significant relief to taxpayers. Additionally, different thresholds for remission and extinguishment apply to various cut-off dates in the past. For example, old petty income tax demands up to Rs 25,000 from the inception of the statute till FY 2009-10 and up to Rs 10,000 from FY 2010-11 to FY 2014-15 have been extinguished. The status of these extinguished demands can be viewed on the income tax portal under the tab ‘Response to outstanding demand.
Income Tax Raid: Income tax raid has been conducted at the house of an accountant in Haribaug Colony, Panipat, Haryana. The Income Tax Department has sealed the house. Seeing the Income Tax team in action mode, there was panic among the people nearby. The action of Income Tax Department is still going on. Further details are awaited. You stay with us.
The Income Tax (IT) department has reached out to approximately 3 million salaried taxpayers nationwide via text messages and emails, pinpointing disparities between their claimed refunds in revised tax returns and the TDS (Tax Deducted at Source).
An official mentioned, “Given that December 31, 2023, marked the deadline for revised returns, we’ve issued alerts probing into discrepancies within their filings for assessment years 2023-24.”
This surge in alerts marks a significant increase, partly credited to a specialized unit established in Mysuru in October 2022. This unit centralized the process of matching and cross-verifying documents, contributing to heightened monitoring efforts.
The department provided taxpayers with a chance to rectify any errors in their reported income, deductions, bank information, personal details, missing income, or discrepancies between their original return and Form 26AS/Annual Information Statement by filing revised returns.
In a post on X dated December 26, the department clarified that the alerts sent were aimed at assisting taxpayers and informing them about the information held by the department regarding transactions reported by entities throughout the year.
“It’s not a blanket notice to all taxpayers; rather, it’s guidance sent only in cases where there’s an apparent mismatch between the ITR disclosures and the information received from reporting entities,” stated the post.
The official further highlighted that if taxpayers overlook the alert, the department will issue notices to them on an individual basis.
Experts suggest that the typical discrepancy often arises from the variance between the investments declared to the employer and those disclosed by the employee in their tax return.
Frequently, employees face challenges in making timely investments due to financial constraints and may claim tax deductions during the filing process, resulting in potential tax refunds.
These discrepancies commonly stem from factors like house rent allowance, medical insurance, home loan repayments, and tax-saving investments under Section 80C, among others. Additionally, notable disparities might arise due to property sales during the year or significant transactions like fixed deposit renewals.
IT Authorities Seek Support from Artificial Intelligence to Find Out the ITR Issues.
Moreover, utilizing its authority as per Section 133C of the Income Tax Act, tax authorities also issue notices requesting information from companies to corroborate the data they possess regarding any employee.
Ahmedabad: Income tax department has issued notices to institutional taxpayers to file returns, but notices have gone even to those who have completed the procedure before the due date.Chartered accountants said a mistake has led to the situation but have demanded that notices be sent only to those who have not filed the returns.CA Jainik Vakil, chairman of GCCI’s direct tax committee said, “Over the past few days, the income tax department has been issuing notices to taxpayers to file their income tax returns for the 2022-23 financial year. However, the department has issued notices to even those taxpayers, who have filed their returns before the deadline. This has created panic among many. The department should rectify this mistake.”
We also published the following articles recently
Indian taxpayers prefer old income tax regime over new tax regime; heres why
PB Fintech’s survey on income tax regimes in India reveals that 63% of taxpayers follow the old regime, while 37% have switched to the new one. Women tend to choose their tax regime more meticulously than men. The most preferred long-term investment plans under the old regime are provident fund (PF) investments, followed by life insurance. 80% of individuals consciously choose their tax regime based on tax liability, reflecting financial prudence. The survey found that one-third of participants did not calculate before selecting their regime, while 38% relied on advice from financial advisors. The default income tax regime from 2023-24 is the new one.
Income Tax Department has sent notices to hundreds of property buyers under new rules
The Income Tax Department has sent notices to hundreds of property buyers under new rules. According to the Income Tax Act, buyers purchasing property worth Rs 50 lakh or more must pay 1 percent TDS to the central government. If the buyer’s Aadhaar card and PAN card are not linked, they may end up paying 20 percent TDS instead of 1 percent. The department has found cases where the PAN of property sellers is not linked to an Aadhaar card, resulting in inactive PAN cards. Buyers with inactive PAN cards are receiving notices to pay outstanding TDS on properties worth more than Rs 50 lakh. It is mandatory to link Aadhaar in ITR, and the deadline for linking Aadhaar and PAN card was March 31, 2022. However, you can still link PAN and Aadhaar by paying a late fee of Rs 1000.
If your Aadhaar card and PAN card are notlinked, you may end up paying TDS of 20percent on the purchase of property insteadof 1 percent. The Income Tax Departmentsent notices to hundreds of property buyersunder the new rules.
According to the Income Tax Act, a buyerpurchasing any property worth Rs 50 lakh ormore will have to pay 1 percent TDS to thecentral government and 99 percent of thetotal cost to the seller.
Nearly six months after the deadline forlinking Aadhaar and PAN ended, the IncomeTax Department has sent a notice to buyerspurchasing a property worth more than Rs50 lakh saying they have to pay 20 percentTDS on the purchase of the property.
Chief officer of Margao Municipal Council (MMC) issued a show-cause notice for revocation of the trade licence issued for a commercial unit housed in an unsafe building on Isidiro Baptista Road, Margao. The notice is in response to the order by the South Goa magistrate to demolish the dilapidated building. The trader has been given 48 hours to respond to the notice or appear before the chief officer on December 14. Several old and unsafe buildings in Margao pose a serious threat to occupants and the public.
‘Largest haul of black money’: Income Tax department raid on Odisha distillery has turned up Rs 290 crore so far, counting still on after 3 days
The Income Tax department’s raid on an Odisha-based distillery group and its associated entities is set to turn up a staggering Rs 290 crore in “unaccounted” cash, making it a record-breaking haul by any agency in a single operation. The notes are largely of the Rs 500 denomination. This is the highest-ever cash seizure made by an agency as part of an action against a single group and its linked entities. Almost Rs 230 crore in cash was seized from about 8-10 almirahs kept on a premises of the company in Bolangir district, while the rest was recovered from locations in Titlagarh, Sambalpur and Ranchi.
Income-Tax officials on Tuesday carried out searches in cotton ginning mills as well as residences and offices of some rice mill owners in Kagaznagar in Adilabad district, Asifabad and Huzurabad Assembly constituencies. According to sources, Rs 5 crore in cash and some documents were reportedly seized during the searches.
As part of their searches, I-T officials focused on people closely associated with BRS leader Raffeeq Jeevani, Kagaznagar Market Committee chairman Kasam Srinivas and certain rice millers. Sources said these people have strong ties to BRS candidate and sitting Sirpur MLA Koneru Konappa.
Simultaneously, searches were conducted at the residence and offices of Congress candidate Vivek Venkataswamy in Chennur. The focus was the reported `8 crore transaction to Vigilance Security Service Ltd. The searches concluded within an hour, with officials seizing some documents from Vivek’s residence.
In Huzurabad, I-T sleuths raided the residences of two rice millers, reportedly on suspicion of illegally shifting money for Assembly elections.
The Income Tax Department on Friday (Nov 10) carried out raids in the Indian state of Rajasthan. According to the news agency ANI, the raids were underway at the Ganpati Plaza in the capital city of Jaipur.
ANI reported that in the first phase of the raids, two lockers were cut open and a huge amount of cash was recovered from one of the lockers inside the plaza. A sack full of currency notes was found in a second locker and counting was on.
Here’s a look at the video:
#WATCH | Rajasthan | Income Tax search underway at Ganpati Plaza in Jaipur, related to black money. In the first phase, two lockers were cut opened and Lakhs of cash was recovered from one of the lockers. A sack full of currency notes was found from the second locker and counting… pic.twitter.com/ilWGWVwp0n
Several high-net worth individuals (HNIs) and salaried tax-payers, among others, are in a tizzy after having received notices from the income-tax (I-T) department recently.
Reportedly, the tax authorities have sent out 22,000 notices seeking explanations for discrepancies between Form-16, Form 26AS, Annual Information Statement (AIS) and their returns filed for the financial year 2022-23.
Deductions under section 80C, 80G in focus
Quite often, salaried tax-payers forget to – or are unable to – submit proof of investments made to claim deductions under section 80C, to their employers before the deadline. As a result, their employers deduct excess tax, but employees can claim a refund of this amount at the time of filing their income tax returns (ITR). Since the deductions do not reflect in Form-16, it is bound to differ from actual returns. This could be flagged off as a discrepancy by the I-T department’s scrutiny mechanisms.
“The issue at hand revolves around discrepancies in deductions claimed, such as those related to Section 80C, 80D and 80U, in comparison to what’s reported in their Form 16. These notices pertain to tax returns for the FY 2022-23 (assessment year 2023-24). In essence, taxpayers are being questioned if they’ve claimed higher deductions under Chapter VI-A than what’s reported by their employers in Forms-16,” says Vertika Kedia, Co-founder, Tax2Win, a tax consultancy portal.
Likewise, if the I-T department feels you have claimed deductions under section 80G on donations that seem suspicious, you would have received notices to furnish proof. “Those who have claimed exemptions/deductions on house rent allowance (HRA), and housing loan interest deductions, but have not mentioned it in their Forms-16, have also received notices,” adds Kedia.
Discrepancies in foreign asset declaration
If you maintain foreign bank accounts or own stocks or properties abroad, you need to declare the assets in schedule FA (foreign assets) while filing your returns. The catch here is that you are required to disclose assets held during the previous calendar year. That is, if you are filing income tax returns for the financial year 2022-23, you will have to furnish details of foreign assets held between January to December 2022.
“We have come across cases of several individuals who have received notices for non-disclosure of foreign investments made after December 2022 (that is, in calendar year 2023). The notices were issued after they claimed refund of tax collected at source (TCS) on these investments,” says Mayank Mohanka, Founder, TaxAaram.com. Until September 30, 2023, investments in foreign assets beyond Rs 7 lakh will attract a TCS of 5 percent. You can claim a refund of this amount at the time of filing returns.
“Such taxpayers claimed refund of tax collected at source (TCS) on investments made between January and March 2023, at the time of filing returns. They are not required to disclose these investments in the FY 2022-23 returns. Instead, they have to be reported in the returns to be filed for FY 2023-24, as per the income tax department’s rules. This is an error on the part of the department and will have to be appealed against,” explains Mohanka. Earlier, tax authorities had erroneously sent out notices to tax-payers for claiming deductions under section 80P.
How to respond to notices
In many cases, the notices would have been sent based on artificial intelligence-based (AI) algorithms that the tax department uses. “Some are clearly erroneous. In some cases that we have come across, deductions are completely legitimate, yet tax-payers have received notices citing discrepancies. If you fall in this category, ensure that you send your response through the e-filing portal. Explain your position and make it clear that the discrepancies mentioned in the notices are factually misconceived and the ITR details, in fact, are accurate,” says Mohanka.
The key is to remain calm and frame a response justifying the deductions claimed if you believe the notice is unwarranted. “Visit the official I-T portal. Look for the specific notice that you received, as it should be available there. Within the notice, you should find an option to respond or submit your explanations along with any supporting documents,” says Kedia.
In case of any doubts, reach out to your chartered accountant to draft an appropriate response. “If your notice is related to a refund claim, and it has been flagged by the I-T department’s risk management process, you can choose the option that states, ‘The claim of refund is correct to the best of my knowledge and belief’,” says Kedia.
Mohanka believes that despite providing carefully framed responses and submitting the necessary proof to justify deductions and other claims, the I-T department often sticks to its stand. In such cases, the only option is to go in for an appeal, which is bound to be time-consuming.
“Automation and standardisation in scrutinising tax returns is welcome. However, in some cases, deeper scrutiny and manual intervention is required. AI needs to be more intelligent and machine learning tools need to learn for better results and fewer hassles to honest tax-payers,” he says.
Fraudulent claims bound to face the music
Finally, do not give in to the temptation to claim deductions that you are not eligible for under the mistaken assumption that you won’t face scrutiny. The tax department is employing AI and machine learning tools to flag discrepancies and you could land yourself in a soup in an attempt to make quick savings.
You could end up having to pay penalties if you have erred. “Taxpayers will have to revise their ITR and pay the tax on extra income reported in the ITR. If the tax department finds any problems or differences in the documents provided by these taxpayers in the future, they have the authority to impose a penalty. This penalty could be up to 200 percent of the amount of tax the person should have paid based on their actual income,” explains Kedia.
The Income Tax Department is sending notices to many taxpayers regarding tax payments up to 15 years old. Taxpayers say that these taxes have been paid.
Income Tax Department: A shocking case has come to light from the Income Tax Department. Notice is also being sent for the taxes which have already been paid. Notice has also been issued to the people regarding 15-15 years old tax demand. The Income Tax Department has sent this notice during the last few weeks and has said that this amount should be paid within a week.
Taxpayers say that this tax demand has already been paid and there is no dues of the tax department. According to ET, some of these notices have been sent regarding taxes for assessment years 2003-04 and 2004-05.
Why was the notice sent?
Many taxpayers are troubled by this notice of the Income Tax Department and do not know what to do now, because the challan for the old tax payment has been lost. Whereas some had chosen the option of payment without challan. It has been said in the report that this mistake of the Income Tax Department may be due to the transfer of the department to a new system.
This could also be the reason
According to the ET report, CBDT spokesperson says that it is possible that in this case, refund is due to the taxpayers, but tax is also due during that assessment year. In such a situation, notice is being sent to issue refund to these taxpayers.
It is noteworthy that in the last few years, the Tax Department has made many changes including developing a new portal for issuing payments and refunds. Refunds are being issued for assessment year 2023-24. However, some taxpayers have not received the refund yet and are waiting for the refund.
The taxman never ceases to surprise. Now, it’s the season of ghost demands: old tax demands going back more than 15 years, long paid and closed, are popping up as new claims.
In the past few weeks, several individuals have been slapped with notices from the Income Tax (I-T) department asking them to cough up the amounts within a week.
While the department’s records show the demands as ‘unpaid’, taxpayers who have received the notices are confident they have no such outstanding with the tax office.
Some of the notices pertain to assessment years 2003-04 and 2004-05. Many are clueless about how to go about handling the notices as the old payment challans and rectification orders, which can serve as proof of tax payment, have been misplaced. The errors, sources believe, are probably a consequence of the department migrating to a new system.
The Income Tax Department on Tuesday emphasized its commitment to processing Income Tax Returns (ITR) speedily and efficiently. In the assessment year 2023-24, 6.98 crore ITRs have been filed out of which 6.84 crore ITRs have been verified and more than 6 crore ITRs have been processed as per the Income Tax Department.
The department informed that more than 2.45 crore refunds for AY 2023-24 have already been issued.
“The Department’s efforts to provide seamless and expeditious taxpayer services are being continuously strengthened. In line with the same, the average processing time of ITRs (after verification) has been reduced to 10 days for Returns filed for AY 2023-24 compared to 82 days for AY 2019-20 and 16 days for AY 2022-23,” Central Board of Direct Taxes (CBDT) said in a release.
Unable to process two categories of ITRs
The Income Tax Department is not able to process two kinds of ITRs- one where the verification is due and the second where the department has sought additional information from the taxpayer and is waiting for the response.
The release mentioned 14 lakh ITRs for AY 2023-24 which are filed but not verified by the taxpayers and 12 lakh ITRs are such that the Income Tax Department is waiting for the response to the request of additional information it sought.
The Income Tax Department also mentioned some cases where refunds are determined but the department is unable to issue them as taxpayers have not validated their bank details.
“There are several cases in which the ITRs have been processed and refunds have also been determined but the Department is unable to issue them as taxpayers have not yet validated their bank account in which the refund is to be credited. Taxpayers are requested to validate their bank accounts through the e-filing portal,” the press release added.
When a person receives a notice from the income tax department, there appears an immense sense of nervousness that goes along with it. Mere looking at such envelopes may bring thoughts of impending fines, adding stress to daily life. However, not all notices contain bad news. While some of them bear good news, such as tax refunds and others are more of an announcement or statement of facts with no positive or negative implications. One such notice is the intimation under Section 143 (1) of the Income Tax Act, 1961 (“the Act”).
What is assessment
Every taxpayer is required to furnish the details about their income to the income tax department. These details are to be furnished by providing the details about his income in the form of a tax return. Further, the income tax department processes the income tax return filed by the taxpayer and examines the correctness of the income return. The process of examining the return of income by the income tax department is called assessment. This preliminary assessment is also known as a summary assessment. The process of the preliminary assessment, which is fully automated and computerized, is delegated to the Central Processing Centre (CPC).
Centralised processing centre
Due to the rapid increase in the number of income tax returns and the jurisdiction-based processing model used for all of the returns filed, the tax department faced many issues which caused the delay in processing the income tax returns. Therefore, the Central Board of Direct Taxes (CBDT) was empowered by the Finance Act, 2008, to create a scheme for the centralised processing of returns with the aim of determining the tax due from or the refund owed to the taxpayers. The department, based on the recommendations of the technical advisory group, decided to use a centralised processing centre in Bangalore to process paper and electronic returns without interacting with taxpayers and in a jurisdiction-free manner.
The returns of the assessee are then processed by the centralised processing centre in Bangalore without any involvement of the taxpayer or the jurisdictional officer. Once the processing is complete, the department then sends an intimation to the taxpayer. This intimation provides the taxpayer with an opportunity to respond to the department. The response will be against the adjustment made by the centralised processing centre in the intimation. The taxpayer has to respond to the adjustment within 30 days from the date of the communication. If the taxpayer fails to respond to the department within that period, then the department proceeds with the adjustments.
Scope of Section 143(1) of Income Tax Act The process of filing an income tax return (ITR) is not finalized at the verification stage once the information has been confirmed by the income tax department. As soon as a person verifies their tax returns, the income tax department starts processing the ITR. Following the processing of the ITR, the income tax department issues an intimation notice. This intimation notice is sent in accordance with Section 143(1) of the Act, 1961 to draw attention to any discrepancy that may have resulted from paying less tax than what was intended to be paid. In case less tax is paid, the taxpayer is obligated to pay the balance amount and resolve the issue. And in cases where the excess amount is paid, the department will transfer the tax refund to the bank account of the assessee, which is linked specifically for this purpose. The notice for the same will be delivered by the tax department to the taxpayer’s email ID. Further, an SMS will also be sent to the taxpayer’s registered phone number informing them that the notification has been sent to their email ID.
Generally, this kind of notification will be a computer-generated message which states any errors made or any interest found to be payable or refundable. These notifications are frequently sent through email within one year of the fiscal year in which the return was filed and there is no human intervention in the creation of this message.
The Madras High Court while determining the case filed by the co-operative societies questioning the validity of the orders of assessment passed by the assessing officer in Veerappampalayam Primary Agricultural Cooperative Credit Society Limited v. DCIT observed that “the scope of an intimation under Section 143(1)(a) of the Act extends to the making of adjustments based upon the errors which are apparent from the return of the income on record”. Further, it was observed by the court that an apparent incorrect claim can be disallowed while processing a return under section 143(1)(a) of the Act.
Contents of the intimation notice
The intimation notice under Section 143(1) could consist either of the following:
When the income details, deductions claimed and tax calculations match with the assessment and calculations made by the tax department: This type of intimation notice will show that there is no additional tax payable by the taxpayer. Further, both tax payable and refundable will be shown as zero in the notice.
Additional tax demand: There may be certain situations where a taxpayer has to pay an additional amount if he fails to report a particular income on his income tax return, or has wrongly claimed deductions, or calculated his taxes incorrectly in such situations, the taxpayer has to pay an additional amount. In such cases, the tax department sends him an assessment and demands the additional tax amount along with interest.
Income tax refund: After the assessment of the income tax department, if the taxpayer has paid the additional tax as compared to his actual liability, then in such situations income tax refund will be shown as due in the intimation notice.
Adjustments under Section 143 (1) of the Income Tax Act
When the taxpayer files a return under Section 139, an intimation will be sent to the assessee if any unpaid interest or tax is found due. The same is also applicable if the assessee is entitled to any refunds. This usually happens when the tax that has already been paid by the taxpayer is in excess of the amount which was required to be paid. The total income of an assessee is calculated under Section 143(1) of the Income Tax Act after making the following adjustments:
Disallowance of the deductions if the return has been filed after the specified date under Section 139(1) which are claimed under Sections 10AA, 80IA to 80-IE.
Further, while computing the total income in the return the addition of income appearing in Form 26AS, Form 16A, or Form 16 is not included.
The assessee will be given an opportunity to respond to the changes proposed by the department before making any such adjustments.
An incorrect claim under this Section means a claim on the basis of an entry in the return,
Which includes an item that is inconsistent with another entry of the same or some other item in the return.
Where the information which is necessary to be provided under this Act to substantiate such entry has not been provided.
Assessment procedure under Section 143(1) of Income Tax Act
After the correction of any arithmetical errors or incorrect claims, as mentioned above, the tax, interest and fee (if any) shall be computed based on the adjusted income.
The taxpayer has to be informed of any amount due or refund that is owed to him. The amount determined to be payable to the taxpayer or the amount of a refund due to the taxpayer must be specified in an intimation that is prepared or generated and sent to the taxpayer. The taxpayer must also receive notification if the loss reported in his income tax return is changed but no additional tax, interest, or refund is owed to him.
If there is no amount due from the assessee or no refund is due or no adjustment is made to the returned income, the acknowledgement of the return of income is regarded as the intimation.
Section 234F of the Income Tax Act, 1961 provides that a fee will be levied if the income tax return is not furnished within the specified period as prescribed under Section 139(1). A fee of Rs. 5,000 will be charged if the income tax return is submitted after the deadline prescribed in section 139 (1). If the total income of the assessee is less than Rs. 5 lakhs then the amount is Rs. 1,000.
Kinds of intimations under Section 143(1) of Income Tax Act
The possible kinds of intimation under Section 143(1) of the Income Tax Act, 1961 are as follows
This kind of intimation is issued when the department finds any discrepancy and tax liability with regard to the tax return in case any adjustments are made under Section 143(1) of the Income Tax Act, 1961.
Intimation determining refund
This intimation is issued when the department determines that there is tax to be refunded. Where no discrepancy in the return is found, a refund check may be issued either without adjustments as described in Section 143(1) or after adjustments and after providing credit for taxes and interest paid by the taxpayer.
When does one receive intimation under Section 143(1) of the Income Tax Act
An intimation under Section 143(1) of the Income Tax Act may be generated for a number of reasons, which include the following:
The amount of tax that was paid by the taxpayer is more than what they were actually liable to pay in accordance with the provisions of the Income Tax Act, 1961. The intimation notice will mention the amount of the tax refund. If the total amount of the refund is more than Rs. 100, then the taxpayer will get the refund, whereas if the refund amount is less than Rs 100 then there will be no refund.
The taxpayer has paid taxes which are short-paid based on his actual liability. In such a situation, the intimation notice will include the balance to be paid by the taxpayer. This will include both the actual liability and the interest component.
A simple notice states that the tax returns concur with the calculation of the assessment officer. In this case, an intimation notice is not necessary to inform the assessee.
What can a taxpayer do if they receive a notice under Section 143(1) of the Income Tax Act
The taxpayer has to check the particulars mentioned (such as name and PAN number) whether it is for him or to the other person with a similar name.
The taxpayer has to record the time and receipt of the notice and must respond to it within the specified time in order to avoid fines and legal action.
Officials of the Income Tax Department on Wednesday raided the properties of several businessmen and doctors over suspicions of tax evasion.
The raid happened across the city.
Officials raided more than 15 places, including Sadashivanagar, BTM Layout, Vijayanagar, Hulimavu, JC Road, and Shantinagar. More than 100 I-T officials from Chennai and Delhi joined the team in Bengaluru and launched the operation simultaneously on Wednesday morning.
Among the places raided were the residences of two jewellers in Sadashivanagar. I-T sleuths also visited the stores of a popular jeweler on Palace Road. They also searched the houses of a few real-estate moguls.
Among the individuals on target was a dentist, who owns a house in Vijayanagar. A tyre businessman who owns several outlets on JC Road was also raided.
An I-T department source said that the raids were carried out on suspicions of evading tax payment.
Scrutiny assessment under Section 143(3) is a detailed assessment of an income tax return filed by a taxpayer. In a scrutiny assessment, a tax officer would perform various tests and processes to confirm the correctness and genuineness of various claims, deductions, and so on, made by the taxpayer in the income tax return. The objective of a scrutiny assessment is to ensure that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner.
An income tax return has been filed under Section 139 or in response to an income tax notice under Section 142(1).
The Assessing Officer or Income Tax Authority deems it necessary or expedient to ensure that the taxpayer has not understated the income or has not computed excessive loss or has not under-paid income tax in any manner.
Income Tax Notice u/s 143(2)
To initiate a scrutiny assessment, the concerned Income Tax officer must first issue an income tax notice under Section 143(2). In the income tax notice under Section 143(2), the Assessing Officer would request the taxpayer to appear in person or complete the process through e-Assessment and/or produce information and documents which the tax officer ascertains to be important for determining the taxable income and tax payable. An income tax notice under Section 143(2) should be served within a period of six months from the end of the financial year in which the return is filed. For example if an income tax return is filed on 2nd November 2018, notice under Section 143(2) can be served on the assessee up to September 30, 2019. If the notice is issued on 29th September 2019 and is received by the assessee after 30th September 2019, it is not a valid notice.
The taxpayer or his/her authorised representative can appear before the Assessing Officer and will place his arguments, supporting evidence, and so on, on various matters/issues as required by the Assessing Officer.
Scrutiny Assessment Hearing
While conducting a scrutiny assessment, the concerned tax officer will provide ample opportunity for the assessment to be heard and to produce documents or evidence to support the information filed in a tax return. In case of failure to produce information or non-cooperation by the taxpayer, the tax officer is empowered to complete the best judgement assessment under section 144.
In case of co-operation of the taxpayer and submission of information, after hearing/verifying such evidence and taking into account all the information produced by the taxpayer, the Assessing Officer would pass an order. On the passing of the order by the Assessing Officer, the assessee has one of the choices below:
To agree with the order passed by the Income Tax authority and pay any tax demand or receive a refund or accept the loss determined
Make an application for a refund under Section 154, if any clerical error persists
Can make a revision application to Commissioner of Income Tax under section 263/264
Receiving an income tax notice can be an unnerving experience for anyone. However, proactively responding to it is crucial instead of panicking or ignoring it.
The first step is to carefully read and understand the notice, determining the reason behind its issuance. Look for any discrepancies in your income tax return that might have triggered the notice. Additionally, ensure that all the essential information in the notice, such as your name, PAN Card number, mobile number, and email address, is accurate and belongs to you. This verification step ensures that the notice is genuinely meant for you and not a case of mistaken identity.
Upon receiving an income tax notice, staying calm is the first and most crucial step. Avoid the temptation to ignore it or act impulsively. Take a moment to carefully read the notice, understanding the sections it refers to and the reason behind the notice. Notices can be about various issues, such as discrepancies in income, unreported transactions, or mismatched TDS entries. A clear understanding of the issue is vital for the subsequent steps.
Seek Professional Advice:
While some tax notices might be straightforward, others can be complex, requiring expert guidance. Consulting a qualified chartered accountant or tax professional is a smart move. They possess in-depth knowledge of tax laws and can provide valuable insights into your situation. A professional can also help you gather and prepare the necessary documents and responses, reducing the chances of errors and ensuring compliance with tax regulations.
Review Your Tax Return:
After understanding the reason for the notice and consulting a tax expert, review your tax return thoroughly. Cross-check the income, deductions, and exemptions you claimed with your submitted documents. Look for any discrepancies or errors that may have triggered the notice. Honest mistakes can happen, and identifying them at this stage will help you rectify the situation efficiently
Respond Promptly And Accurately:
Ignoring an income tax notice can lead to more significant problems in the future. Ensure you respond to the notice within the specified timeframe, usually 30 days. Craft your response carefully, addressing the specific issues raised in the notice. Be truthful and provide accurate information supported by relevant documents. If you require additional time to gather information or seek professional help, promptly request an extension from the tax department,” adds Dasari.
Maintain Proper Documentation:
While responding to the income tax notice, maintain a record of all communications and documentation exchanged with the tax authorities. This includes the notice itself, your response, any additional documents submitted, and acknowledgement receipts. A well-organized file will help you track the progress of your case and serve as evidence if needed.
Receiving an income tax notice might seem intimidating, but you can handle it efficiently with the right approach. Remember, staying proactive is the key to successfully navigating income tax notices and maintaining your financial peace of mind.
Suddenly a transaction of Rs 4.30 crore took place in the account of Chandrabhan, a resident of Ganeshpur ward of Farenda Nagar Panchayat. He had no knowledge about this. When the notice from the Income Tax Department came, he was stunned.
Chandrabhan earns his living by working as a labourer. He told that Aadhar and PAN card were given to a person for a pension of Rs 1000 every month. He was the one who opened the account. When the Income Tax Department sent a notice and asked for an answer to the transaction, Chandrabhan started sweating. He complained about this to the Chief Minister. After this a case was registered against the fraudster.
Chandrabhan told that transactions worth Rs 4 crore 30 lakh 15 thousand have taken place in the account, the Income Tax Department is asking for the details of the same. Notices have been received for this several times.
The FMGC company Lux Industries has been raided by the Income tax department over the tax evasion allegation worth Rs 200 crores in several locations. The department is currently conducting the investigations in multiples cities at premises linked to the company including Kolkata.
On raids by the Income Tax Department, Lux Industries say, “We would like to submit that survey is being conducted at our premises and the company is extending its full cooperation to the authorities. We would like to further inform that as the survey is yet to be concluded we are unable to make an assessment of its impact. Once the survey concludes, the Company will update the Stock Exchanges, in case there is any material impact resulting from the above survey.
Form 10B is to be furnished by a charitable or religious trust or institution that has been registered u/s 12A or who has submitted an application for registration by filing Form 10A. Form 10B is an audit report which is provided by a CA upon nomination by the taxpayer. Form 10B can be accessed and submitted in the online mode only and it is to be filed on or before the specified date referred to in Section 44AB, i.e., a month prior to the due date for furnishing the Return of Income under sub-section (1) of Section 139.
2. Prerequisites for availing this service
Taxpayer and CA are registered users of the e-Filing portal
Status of PAN of taxpayer and CA is Active
Taxpayer has added CA for Form 10B through My CA service
Valid, registered and active Digital Signature Certificate (DSC) of the CA
Taxpayer must have applied for registration or already obtained registration as charitable or religious trust / institution under section 12A by filing Form 10A and accordingly Form 10B is made available under the login of the taxpayer
3. About the Form
3.1 Purpose
Audit Report u/s 12A(1)(b) has to be filed by a charitable or religious trust or institution who has been granted registration under Section 12A or which has submitted an application for registration by filing Form 10A.The Audit Report is required to be filed if the total income of the entity for the relevant previous year has exceeded the maximum amount which is not chargeable to tax, to claim exemption under Sections 11 and 12 of the Act.
The accounts of such trust or institution must have been audited by an accountant as defined in the Section 288(2) of the Act. The report of such audit at present is required to be furnished before the specified date referred to in Section 44AB, i.e., a month prior to the due date for furnishing the Return of Income under sub-section (1) of Section 139.
Form 10B is accessed and submitted by a registered CA upon nomination by a taxpayer.
3.2 Who can use it?
CA who has been added by the taxpayer and assigned the said form under the My CA service can access and submit Form 10B.
4. Form at a Glance
Form 10B has five sections that the CA needs to fill before submitting the form. These are:
Annexure I
Annexure II
Annexure III
Verification
Attachment
4.1 Annexure I The Annexure I section is where the details of the income for charitable or religious purposes is outlined.
4.2. Annexure II In the Annexure II section, details of income or property for the benefit of persons referred to in Section 13(3) is outlined.
4.3Annexure III The Annexure III section concerns the details of previously held investments in which persons referred to in Section 13(3) have a substantial interest.
4.4. Verification The Verification page is where the CA provides assurance of all details provided in the form.
4.5. Attachment The Attachments page allows attaching documents and files as per the inputs provided by the CA.
5. How to Access and Submit
You can fill and submit Form 10B through the following method:
Online method – through the e-Filing portal
Follow the below steps to fill and submit Form 10B through online mode.
5.1. For CA to file Form 10B (Online Mode)
Before the CA can login and access the form, the form has to be assigned to the CA by the taxpayer. The process for assigning forms to CA can be viewed in the My CA user manual.
Step 1: Log in to the e-Filing portal with valid CA credentials.
Step 2: Click Pending Actions > Worklist to view all the forms assigned to you by taxpayers.
Step 3: You can accept or reject (by providing a reason that will be sent to the taxpayer) the forms assigned to you. Accept Form 10B from the list against the relevant taxpayer.
The accepted successfully message is displayed.
Step 4: In the Worklist, click File Form against Form 10B.
Step 5: Verify the details and click Continue.
Step 6: On the Instructions page, click Let’s get Started.
Step 7: Fill all the required details and click Preview.
Step 8: On the Preview page, click Proceed to e-Verify.
Step 9: Click Yes to submit.
On clicking Yes, you will be taken to the e-Verify page. Verify the form using DSC.
While the deadline to file the original income-tax return (ITR) was July 31, individuals can still file a belated, revised, or updated return, based on their circumstances and timing.
If you have not yet filed an ITR for the 2022-2023 financial year (FY23), you can file a belated return.
If you have already filed your ITR, but now realise that there was a mistake or you misreported your income, you can file a revised return.
An individual taxpayer who is eligible to file an updated return can do so even if she has not filed an original or a belated return.
Who can file
An updated return can be filed if the return was not filed, income was inaccurately reported, the incorrect tax rates were applied, to reduce carried-forward losses, or to correct the wrong income category.
If a taxpayer is liable to file an ITR under Section 139, s/he can comply with this requirement by filing an ITR-U, thereby protecting herself/himself from penalties for misreporting or underreporting income.
Says Prateek Goyall, partner at law firm MV Kini, “Filing ITR-U helps evade scrutiny assessment under Section 143 (3), best judgement assessment under Section 144, and income escaping assessment under Section 147.
Taxpayers can also protect themselves from surveys, search and seizure proceedings by filing ITR-U.
As for the cons, Pallav Pradyumn Narang, partner, CNK points out, “This return can’t be filed to claim refunds, losses, or a refund in excess of what was claimed in the original or belated ITR.
If you missed the July 31, 2023, deadline for filing your ITR for FY23, you have the option to file a belated return.
Says Ankit Rajgarhia, principal associate, Karanjawala & Company, Advocates, “A belated return allows you to file your ITR after the deadline, but there are a few consequences.
Furthermore, losses under certain heads of income, such as capital gains and business income, can’t be carried forward to future years if you file a belated return.
If you’ve not filed the original ITR, instead of waiting to file an updated return, go for a belated return.
Says Bajaj, “If someone missed the July 31, 2023 deadline to file their ITR for the year 2022-2023, it is better to file a belated ITR rather than an updated ITR.
Filing a belated ITR by March 31, 2024, is a way to fulfil tax obligations and reduce the risk of having to face any consequences.
Says Narang, “When there is an error, additional income has to be disclosed, or if there is any mistake in the original or belated ITR, which may result in a refund also, a taxpayer can file a revised return until December 31 of the relevant assessment year.
Filing income tax returns can sometimes be complex and prone to errors, leading to a tax notice from the income tax department, which is often perceived negatively. However, it is essential to remember that it doesn’t always signify trouble; sometimes, it might just be an indication for you to correct a mistake on your tax return. One frequently asked question is whether taxpayers can revise their income tax return after receiving a tax notice. The answer is yes.
Under Section 139(5), the Income Tax (IT) Act entitles taxpayers to revise their IT returns. taxpayers can use this provision to correct the discrepancies in their IT returns, should there be any unintentional errors or omissions, even after receiving a tax notice. You can revise it prior to the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier.
Suresh Surana, Founder, RSM India, said, “Revised return u/s 139(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘IT Act’) can be filed by taxpayers who discovers any error, omission or any wrong statement furnished either in their original return u/s 139(1) or belated return u/s 139(4) of the IT Act. It is pertinent to note that such revised return can be furnished at any time three months before the end of the relevant assessment year (For instance, 31 December 2023 in respect of Assessment Year 2023-24, i.e. for Financial Year 2022-23) or before the completion of the assessment, whichever is earlier.”
Echoing similar views, Divakar Vijayasarathy, Founder and CEO of DVS Advisors, said, “Section 139(5) provides that a return may be revised at any time before three months before the end of the relevant Assessment Year or before the completion of the assessment, whichever is earlier. The word assessment refers to assessment under sections 143(3) and 144. Assessment is said to be completed only on the date of service of order. Mere issue of notice shall not be considered as completion of the assessment, and hence revised return shall be filed, provided the time limit of filing, i.e., December 31 of the AY, has not elapsed.”
As a taxpayer, you must pay meticulous attention to the tax notice. Depending upon the severity of the error or omission in your original return, the tax authority may issue different notices under different sections of the Income Tax Act. For instance, a notice under Section 143(1) could be for trivial discrepancies. In contrast, a notice under Section 143(2) might indicate the need for scrutiny assessment, implying that your tax return requires comprehensive review.
Surana said, “Receipt of intimation u/s 143(1) of the IT Act does not refer to the completion of the assessment, and as such, a taxpayer would be eligible to file their revised return after receipt of such intimation. However, in the case where the taxpayer received scrutiny assessment order u/s 143(3) of the IT Act or Best judgment assessment order u/s 144 of the IT Act, the same would constitute completion of the assessment, the taxpayer would not be eligible to furnish a revised return with respect to such year in accordance with Section 139(5) of the IT Act. However, a taxpayer would be able to furnish their revised return in case only a notice u/s 143(2) is received since receipt of such notice does not constitute completion of the assessment.”
In case of a tax notice due to a mismatch of income or improper deduction of taxes, a revision of your ITR might be a good solution to rectify the error. You can revise both online and offline income tax returns, ensuring you keep a revised return receipt for reference. It’s essential to engage a tax expert if you need clarification on any aspect of revising your tax return.
Alok Agrawal, Partner at Deloitte India, said, “An “updated return” as introduced by Finance Act 2022 can be submitted within two years following the end of the relevant assessment year (AY), if there is additional income subject to taxation resulting in an increased tax liability, subject to payment of additional amount (25% or 50% of tax and interest depending upon the timelines). However, it is important to note that the updated return cannot be filed in certain situations including where any proceeding for assessment is pending for the said tax year.
However, one should understand that receiving a tax notice should not necessarily be a cause for panic or worry. Instead, you must view it as a chance to amend mistakes made in your original income tax return.
Taxpayers Receive Notices from Income Tax Department: Exploring Deduction Discrepancies
SUMMARY
This year, 22,000 taxpayers have received notices from the Income Tax Department because their deductions don’t match the information on their Form 16
All these intimation notices were sent for the tax returns filed for the assessment year 2023-24, and all the notices were sent in the last 15 days
In general, the department’s primary data analytics have identified irregularities and anomalies in the returns filed by about 2 lakh taxpayers
This year, 22,000 taxpayers, including high-net-worth individuals, salaried individuals, and trusts, have received notices from the Income Tax Department because their deductions don’t match the information on their Form 16 or Annual Information Statement (AIS).
According to a report in The Economic Times, all these intimation notices were sent for the tax returns filed for the assessment year 2023-24, and all the notices were sent in the last 15 days.
After finding a disparity of more than Rs 50,000 between tax deductions claimed in returns and departmental statistics, the department sent around 12,000 of these notices to salaried taxpayers.
The department has also sent out a notice to about 8,000 taxpayers who have filed returns under Hindu Undivided Family (HUF) segment where income disparity between the return filed and data with the department was over Rs 50 lakh.
The I-T Department also sent out notices to 900 high net-worth individuals (HNIs) where disparity was Rs 5 crore and above and 1,200 trusts and partnership firms where disparity was over Rs 10 crore and above.
In general, the department’s primary data analytics have identified irregularities and anomalies in the returns filed by about 2 lakh taxpayers whose income declarations, expenditures, or bank account details do not match the information the department has gathered based on the transaction linked to their bank or UPI account.
This is the first intimation notice. Only if taxpayers do not respond to it or fail to provide any clarification, a demand notice would be processed,” an income-tax department official told ET.
Taxpayers can pay the due tax with an updated return with interest or provide a detailed explanation about it, the official said, adding that in some cases, taxpayers are yet to include capital gains, dividend income, and some have entirely excluded the information about their other bank accounts.
Another official said that a more detailed sector-wise data analysis was being conducted in the case of corporates, trusts, partnership firms and small businesses, reported ET.
Digitisation of the economy has made it easier for them to track any wilful evasion, and going forward, better syncing of account aggregators will make evasion more difficult,” the second official said, adding that work is already on to make AIS more comprehensive and detailed.
Income Tax Notice – How To Check And Authenticate ? You may be surprised to receive an intimation/notice from the income tax department even if you have filed your income tax returns within the due date. You would not be sure about what it is and how to respond to it. Don’t worry, we will break it down for you to help you understand your notices in detail.
First and foremost, it is important that you understand the difference between an intimation and a notice. There is a very thin line of difference between the two. Intimation is to highlight the outcome of the processing of your return or conclusion of assessment, and you may not be required to act upon it (although there are a few exceptions to it).
However, when you receive a notice, it requires you to act on it. Recently, the Central Board of Direct Taxes (CBDT) has notified a new scheme known as Centralized Communication Scheme (CCS). The scheme states that, gradually, all communications will happen in an electronic mode.
Every communication by the Income Tax Department (ITD) on or after 1st October 2019 shall bear a unique Document Identification Number (DIN).
Before you respond to any communication received to you in the name of income tax department, it is important to verify whether the notice/order issued is genuine and issued by the income tax authority.
Step 1: Go to income tax e-filing portal at www.incometax.gov.in. In home page, go to ‘Authenticate notice/order issued by ITD’ under ‘Quick Links’.
Step 2: You can authenticate using:
PAN, document type, assessment year, issue date and mobile number (for notice/order/letter issued for AY 2011-12 and subsequent years only)
Document Identification Number and mobile number (for all assessment years)
Step 3: If you select want to authenticate by PAN, document type, assessment year, issue date and mobile number, select the option and enter all the details.
Step 4: After filling all the details, you will receive an OTP. Enter the OTP received. Once the OTP is validated, the DIN of the notice issued along with the date of issue of the notice will be displayed.
If the notice is not issued by the ITD, if will display a message – No record found for the given criteria.
Step 3(1): Another alternative is to authenticate using DIN and mobile number.
Step 3(2): Enter DIN and mobile number and continue. You will receive an OTP. Validate using OTP.
If the notice/order is issued by income tax authority, it will display a success message as shown below.
After having filed your returns, it is electronically processed by the Central Processing Centre (CPC). The income is computed after making the following adjustments to the total income in the return:
Any arithmetical error in the return
An incorrect claim (provided the incorrect claim is apparent from the information filed)
Disallowance of incorrectly claimed loss or expenditure
Any income which has not been included in the return
Upon successful processing of the return an intimation under section 143(1) is issued by the CPC under any of the three instances:
There is no refund or demand, but there is an increase or reduction in the amount of loss
In case there is a tax demand, then the intimation must be issued within one year from the end of the year in which the return has been filed. For example, if you have filed your returns for Assessment Year (AY) 2020-21 on 27 July, 2020, then an intimation can be issued anytime on or before 31 March, 2022. Processing of return under this section has been made mandatory from AY 2017-18 even if a scrutiny notice is issued.
Notice Under Section 143(2)
The purpose of this notice is to notify the assessee, that the return filed has been picked for scrutiny. It is pertinent to note that the section under which it will be scrutinized is different from the one in which the notice has been issued. Via detailed scrutiny, the assessing officer intends to be assured that you have not done any of the following:
Through this notice, the taxpayer is required to respond to the questionnaire issued along with the documents required by the income tax department. The assessing officer is supposed to service this notice within 6 months after the completion of the assessment year to which it pertains.
For instance, Rohit filed his return on 20th May 2020 for the AY 2020-21. Here notice under section 143(2) can be issued to Rohit within 6 months after completion of the AY to which it pertains i.e. 30th September 2021.
An assessing officer may have a reason to believe that you have not disclosed your income correctly and therefore, you have paid lower taxes. Alternatively, you may not have filed your return at all, even if you must have filed it as per law. This is termed as income escaping assessment. Under these circumstances, the assessing officer is entitled to assess or reassess your income, according to the case. Prior to making such an assessment or reassessment, the assessing officer should serve a notice to the assessee asking him to furnish his return of income. The notice issued for this purpose is issued under the provisions of Section 148.
Previously the timelines to be adhered to for the issuance of notice under Section 148 were as below:
As per amendment in the Finance Act 2021, with effect from 1st April 2021, the time limit up to which the assessing officer can re-open the assessment of the taxpayer is as follows;
Up to three years from the end of the relevant assessment year in normal cases and
Beyond three years but not more than ten years from the end of the relevant assessment year, if the assessing officer has material evidence that income of Rs.50 lakh or more for a financial year has escaped assessment.
Up to four years from the end of the relevant AY
Notice cannot be issued by any officer below the rank of Assistant Commissioner or Deputy Commissioner. An assessing officer can only issue a notice under Section 148 on the direction of the Joint Commissioner after recording the reasons to do so. For AY 2017-18 notice under section 148 can be issued till 31st March 2022.
Beyond four years but up to six years from the end of the relevant AY
Notice can only be issued by the Chief Commissioner or Commissioner is satisfied that income has escaped assessment. The amount of income which has escaped assessment should be more than Rs. 1,00,000. For AY 2017-18 notice under section 148 can be issued till 31st March 2024.
Beyond four years but up to sixteen years from the end of the relevant AY
Notice under section 148 can be issued if income in relation to any asset (including financial interest in any entity) located outside India, is chargeable to tax in India but has escaped assessment. For AY 2017-18 notice under section 148 can be issued till 31st March 2034.
The Effect of Amendment in the Finance Act, 2021
As per the current provisions, the notice under section 148 can be issued up to four years, up to six years or up to 16 years, as the case may be. But with effect from 1st April 2021, the new reassessment due dates shall be applicable.
If the assessing officer has reason to believe that tax has not been paid for the previous years and he wants to set off the current year refund against that demand, a notice under Section 245 can be issued. However, the adjustment of demand and refund could be done only if you have been provided proper notice and an opportunity to be heard. The timeline to respond to the notice is 30 days from the day of receipt of the notice. If you do not respond within the aforesaid timeline, the assessing officer can consider this as consent and proceed with the assessment. Therefore, it is advisable to respond to the notice at the earliest.
Notice Under Section 142(1)
A notice under section 142(1) can be issued under two circumstances:
If you have filed your return, but the assessing officer requires additional information and documents; or
If you have not filed your return, but the assessing officer wants you to file it.
The information is called for, to enable the officer to make a fair assessment. Being non-responsive to this notice has consequences,
A penalty of Rs 10,000 can be levied for each such failure
Prosecution which may extend up to 1 year
Both of the above
What should be done after receiving an income tax notice?
When you get a notice under any of the aforementioned sections, you should take the following steps:
1. Carefully read the notice to determine why it was sent. 2. Examine the notice’s basic details to determine that it is intended for you. To ensure that the notice is sent to you, it should include your correct name, PAN number, address, and so on. Check the assessment year given in the notice as well. 3. Determine the mismatch in your income tax return that resulted in a notice being served, if any.
4. To avoid penalties and prosecutions, respond to the notice within the time frame specified.
5. Ensure that your response is backed by adequate information.
6. Also, make sure to check the notice that you have received is reflecting in your income tax account online.
What are the most common causes of notice?
The most common causes for which you might receive an income tax notice include the following:
1. Inconsistency in the amount of TDS reported 2. An inaccuracy on your tax return 3. Failure to submit all required papers 4. Failure to file your tax returns 5. When you make investments in your spouse’s name but fail to report them on your income tax returns. 6. If high-value transactions occurred during the fiscal year but were not correctly disclosed on the income tax return 7. If the assessing officer randomly examines your income tax return 8. When long-term capital gains from stock investments are not properly disclosed 9. If the taxpayer fails to declare any income 10. If the incorrect income tax return form is used to file the income tax return
Taxpayers are in a frenzy in many parts of the country owing to notices received by the Income Tax department.
According to a Moneycontrol report, tax notices under Section 143 (1) have been sent to taxpayers across Maharashtra and Gujarat questioning why they have claimed deductions under Section 80 P.
Notably, only cooperative societies can claim deductions of around ₹15,000-20,000 if they earn income from a banking or credit facility, agricultural activity and cottage industry
An Ahmedabad-based chartered accountant Raju Shah while informing about the situation told Moneycontrol, “Incorrect notices regarding proposed adjustments under Section 143 (1) (a) are being sent for claiming Section 80 P deductions. But we haven’t claimed these deductions for our clients as they aren’t eligible to claim them. These are sent not for returns filed by cooperative societies, but individual,
The notices emailed state that deductions under Section 80 P cannot be claimed for the assessment year 2023-23 and asked the concerned taxpayers to respond to them in a 15-day timeline.
The Moneycontrol report while quoting another Chartered accountant noted that many high-net-worth individuals have received scrutiny notices for the 2022-23 assessment year. This is owing to the individuals who have claimed several deductions being alerted by an artificial intelligence software which detects if some deductions are prima facie not possible.
The deadline for submitting a belated ITR for the fiscal year 2022-23 (Assessment Year 2023-24) is December 31, 2023. However, it’s important to bear in mind that a fine will be imposed for filing an overdue ITR. The penalty amount varies based on an individual’s total income.
For individuals with a total income of ₹5 lakh or less, the penalty for an overdue ITR filing is ₹1,000. Meanwhile, for those with a total income surpassing ₹5 lakh, the penalty is ₹5,000.
On top of the penalty associated with filing an overdue ITR, you will also be liable to pay penal interest on any outstanding income tax due. The penal interest accrues at a rate of one per cent per month or part thereof, based on the unsettled tax liability.
It is advisable to ensure timely ITR filing to evade penalties and interest charges. However, if the deadline is missed, you can still file a belated ITR by settling both the penalty and the accrued penal interest.
Switching regime while filing belated tax returns
Filing a belated ITR follows a comparable process to that of an original ITR, albeit with a few distinctions. When considering a shift in tax regime during the process of filing a belated ITR, there are specific prerequisites that must be met.
You are eligible to transition to a different tax regime only if you earn income from salary, house property, or other sources, but do not have income derived from business or profession.
Furthermore, this switch in the tax regime is permissible only when you are filing your belated ITR within the same financial year. For instance, if you intend to alter the tax regime for FY 2022-23, the option is available only by submitting your belated ITR prior to March 31, 2024.
Crucially, it’s important to understand that upon changing the tax regime, you will be subject to the new tax framework for the entire financial year. Thus, even if you had business or professional income in the initial portion of the financial year, transitioning mid-year would result in taxation under the new regime for the full year.
An individual who filed an ITR under the old tax regime for FY 2021-22 and earned business or professional income in the initial segment of FY 2022-23, but not in the latter part, can switch to the new tax regime while filing a belated ITR for FY 2022-23. Individuals possessing income from business or profession have the flexibility to choose to join or depart from the new tax regime by conveying their tax regime preference to the income tax department through the submission of Form 10-IE.
Transitioning to a different tax regime while filing belated ITR
The choice to opt for the new tax regime for individuals with business or professional income for FY 2022-23 (AY 2023-24) necessitates the submission of Form 10-IE on or before the due date prescribed for filing the original income return as per section 139(1) of the Income Tax Act.
Upon the timely filing of Form 10-IE within the specified deadline for the original ITR, the selection for the new tax regime can be endorsed in the original ITR under section 139(1) or in a belated return under section 139(4).
Moreover, the effect of Form 10-IE extends to subsequent years unless countermanded by the filing of another Form 10-IE that rescinds the consent for a regime change.
Consequently, if an individual has already submitted Form 10-IE for FY 2021-22 within the stipulated original ITR deadline to opt for the new tax regime, they can persist in filing ITR (whether original or belated) under the new tax regime for FY 2022-23 (AY 2023-24). Highlighted below are additional noteworthy points:
Form 10-IE can be submitted either online or offline.
The online submission can be accomplished through the official Income Tax Department website.
Business individuals and professionals are permitted to alter tax regimes on a singular occasion throughout their lifetime.
Switching tax regimes allowed for businesspersons allowed only once
For individuals earning income from business or profession, the capacity to elect a tax regime isn’t an annual privilege. Once they choose the new tax regime within a given fiscal year, they have a single opportunity to switch back to the old tax regime. Subsequent to reverting to the old tax regime, opting for the new tax regime again in the future is precluded.
This holds significance particularly in the context of FY 2022-23 (AY 2023-24) due to the alteration in legislation concerning the default tax regime starting from FY 2023-24 (AY 2024-25) onward.
Commencing from FY 2023-24 (AY 2024-25) onward, the default tax regime for individuals with income from business or profession will be the new tax regime. Consequently, individuals will need to explicitly opt for the old tax regime if they wish to be taxed under its provisions.
However, those who chose the new tax regime in FY 2022-23 (AY 2023-24) will remain subject to the new tax regime in FY 2023-24 (AY 2024-25) unless they actively select the old tax regime. Highlighted below are supplementary points to take note of:
The option to revert to the old tax regime is accessible only once in an individual’s lifetime.
Executing the switch back to the old tax regime can be accomplished by submitting Form 10-IE.
Form 10-IE can be submitted either online or offline.
The online version of the form can be filed via the official Income Tax Department website.
The offline form can be downloaded from the Income Tax Department website or obtained from a certified tax consultant’s office.
Income Tax Appellate Tribunal Sets Aside Penalty on 83-Year-Old Woman for Not Filing Tax Return
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has set aside a penalty imposed on an 83-year old woman for not filing her Income Tax Return.
based super senior citizen, who had never filed an I-T Return as she was a According to a report by TOI, the Gurgaon homemaker and did not have taxable income, was shocked when she received a demand of Rs 5,000 – a penalty imposed under (erstwhile) section 271F of the IT Act for not filing the tax return within due date.
The penalty was levied for the year 2011 12. However, no proper direction was provided on the matter by the commissioner (appeals) regarding this penalty.
She had filed an appeal against this order and submitted that she was not liable to file a return for the financial year in dispute, the Commissioner (Appeals) under the faceless appeal mechanism, did not consider this fact. She then submitted to the ITAT that this order was bad in law on various grounds, the TOI report mentioned.
In her appeal, the octogenarian pointed out that the penalty under section 271F is directory and not mandatory as she had a ‘reasonable cause’ for not filing the IT return. She also termed the order arbitrary, illegal and without jurisdiction.
In her submission before the ITAT, she said that the Income Tax Officer made an error in framing the assessment order under section 144 read with section 147 of the IT Act and a proper procedure was not followed. Her submission also said that orders passed under this section are ex parte, and the assessment is carried out according to the ‘best judgement’ of the IT office based on the available material, TOI reported.
The two member ITAT bench composed of C M Garg, judicial member and BRR Kumar, accountant member, reviewed the wording of the order issued by the Commissioner (Appeals) and quashed the penalty of Rs 5,000 in their order.
Income tax department in India examines the filed tax returns, and if there are any reasons to believe that the information provided by the taxpayer is incorrect or incomplete, the case is selected for scrutiny assessment. The taxpayer is then issued a notice by the department and is required to take necessary actions as communicated by the department in response to the notice. This blog discusses Tax Return Scrutiny in detail.
Understanding About Income Tax Scrutiny
After the assessee has filed their income tax return, whether within the due date or in response to a notice, the tax department has the authority to initiate scrutiny proceedings if there is a reason to believe that income has escaped assessment. This means that the department suspects that the income declared by the assessee is understated or the expenditure is overstated. In such cases, the department issues a notice to the assessee, requesting them to visit the department’s office and provide any additional documents that may be required.
Understanding the Process of Scrutiny
It is important to note that receiving a notice does not imply any wrongdoing or crime on the part of the assessee. It simply signifies that an investigation is being conducted to determine if any income has indeed escaped assessment. The notice indicates a difference of opinion between the Assessing Officer (AO) and the assessee, and the scrutiny proceedings aim to resolve this difference and arrive at a correct assessment of the income.
Manual Scrutiny Cases
In manual scrutiny cases, the selection for scrutiny is done by the assessing officer based on case-specific reasons. The assessing officer may have identified certain aspects or discrepancies in the taxpayer’s return or financial information that warrant a closer examination. These cases can be avoided or minimized by ensuring accuracy and consistency in the tax filings, maintaining proper documentation, and responding promptly and comprehensively to any queries or notices from the tax authorities. By being diligent and proactive in fulfilling tax obligations, taxpayers can reduce the likelihood of being selected for manual scrutiny.
Tax Return Scrutiny: Reason for Income Tax Scrutiny Notice
Form 26AS, which is your tax credit statement, provides details of the TDS deposited on your behalf. It is important to check if all the TDS payments have been correctly credited to you and rectify any discrepancies. You can view Form 26AS through NSDL, the income tax department’s website, or your bank’s online portal before filing your income tax return.
Reconcile your Form 26AS with the taxes paid to ensure that there is no difference between the claimed TDS amount in your return and the TDS actually updated in Form 26AS. Verify if your employer, vendors, or deductors have paid TDS to the government account and check with your banks to ensure they have paid TDS on your interest. Only after confirming everything is in order should you claim the TDS amount.
Failure to Declare Exempted Income
Certain types of income are exempt from income tax, but they must still be mentioned in your income tax return. For example, long-term capital gains tax from equity, dividends received on equity shares of Indian companies, interest from a savings bank account up to Rs. 10,000, or gifts received from parents or relatives. Although these incomes are exempt, they should not be omitted from your return as the income tax department needs to be informed of them.
Claiming a higher refund may also attract scrutiny from the income tax department. To minimize the amount of interest payable on delayed refunds, the department may prioritize returns with higher refund claims for assessment. They might scrutinize the data and question the reasons behind the higher refund claim.
The income tax department receives information about high-value transactions from relevant institutions, increasing the likelihood of scrutiny. Engaging in high-value transactions for investments or spending, such as using a credit card for more than Rs. 2 lakhs per year, investing over Rs. 5 lakhs in fixed deposits, depositing more than Rs. 10 lakhs in your bank account, investing over Rs. 2 lakhs in mutual funds or Rs. 1 lakh in shares, or buying or selling property over Rs. 30 lakhs, may attract scrutiny by the income tax department.
Tax Return Scrutiny: Types of Scrutiny Assessments
There are two types of scrutiny assessments,
Manual scrutiny cases
Compulsory scrutiny cases
Compulsory Scrutiny Cases
The following types of cases are compulsorily selected for scrutiny, and it may not be possible to prevent them from being selected. However, it is important to understand the reasons for selection and take measures to minimize the likelihood of scrutiny:
Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a substantial and recurring question of law or fact, which is confirmed in appeal or is pending before an appellate authority, may come under compulsory scrutiny.
Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs. 10 crore or more on a substantial and recurring question of law or fact, which is confirmed in appeal or is pending before an appellate authority.
All assessments pertaining to Survey under section 133A of the Act, excluding cases where there are no impounded books of accounts/documents and the returned income (excluding any disclosure made during the Survey) is not less than the returned income of the preceding assessment year. However, if the assessee retracts the disclosure made during the Survey, it will not be covered by this exclusion. Cases where there is information about concealment of income, based on an enquiry report, survey report, or any other source, can also be selected for scrutiny with the approval of higher authorities.
Assessments in search and seizure cases made under specific sections of the Act, along with returns filed for the relevant assessment year. These assessments are made based on the information gathered through search, survey, or enquiry and follow the same process as other scrutiny assessments.
Returns filed in response to a notice under section 148 of the Act, which allows for the reopening of cases where there is reason to believe that income has escaped assessment. Assessments in these cases are framed under section 143(3) after following due procedure.
Cases where the approval under section 10(23C) of the Act has been denied or withdrawn by the Competent Authority, but the assessee is still claiming tax exemption under that provision.
Computer Aided Scrutiny Selection (CASS): Cases are selected under CASS using broad-based selection filters. The list of such cases is separately intimated by the DGIT(Systems) to the jurisdictional authorities. The selection process is mostly computer-assisted, eliminating subjectivity.
It is important to note that these are the criteria for compulsory scrutiny selection, and the selection process involves adherence to the provisions and guidelines of the Income Tax Act.
Cases, where a notice has been issued under Section 148 to the taxpayer, are also subjected to scrutiny, irrespective of whether the tax return has been filed in response to the notice. This provision ensures that potential instances of tax evasion are thoroughly investigated.
Cases where search and seizure operations have been conducted by the income tax authorities, either before or after April 1, 2021, fall under the purview of scrutiny. These operations typically target instances of undisclosed income or assets. Get in touch with our CA and know more about the tax scruitnity.
Cases involving recurring issues of law or fact (including transfer pricing) will be selected for scrutiny if they meet specific monetary thresholds and have become final or have been upheld by appellate authorities in favour of revenue. Pending further appeals by the assessee will not affect the selection.
Approval from Higher Officials
Before initiating the scrutiny process, approval from higher-income tax officials must be obtained. This ensures a higher level of scrutiny and enhances the credibility of the process.
Utilising Extensive Data Resources
The guidelines emphasise the government’s intention to leverage extensive data resources, including information from the Goods and Services Tax (GST) and other agencies. By cross-referencing this data with tax returns, the income tax department aims to assess the accuracy and adequacy of income reporting. This approach allows the government to identify potential discrepancies and ensure compliance with tax regulations.
Moonlighting professionals are facing notices from the Income Tax Department. Moonlighting professionals are those individuals who are earning a living from their main job as well as from a second job. Due to work from home, many people did two jobs, but they did not pay tax on the second job.
If you have also received this type of notice, you will have to prove that it is not your livelihood. If that is your livelihood, you should pay tax on it. If the notice is correct, you will have to pay the demanded tax along with interest.
Can’t escape the penalty
Apart from this, if you have paid tax late, you may also be charged a penalty. Due to this penalty, you may have to pay additional amount and it will not be possible for you to avoid it.
The deadline for filing an original ITR for FY 2022-23 (AY 2023-24) was July 31, 2023. However, if an individual has missed this deadline, there is no need to worry for one can still file ITR by paying a penalty. This ITR, which is filed after expiry of the deadline of the original ITR, is called a belated ITR. The last date to file belated ITR for FY 2022-23 (AY-2023-24) is December 31, 2023.
To file a belated ITR an individual has to pay a penalty of Rs 5,000 if net taxable income is above Rs 5 lakh or Rs 1,000 if net taxable income is below Rs 5 lakh. Penal interest on the income tax due, if any, will also have to be paid.
A belated ITR is filed in a similar manner as an original ITR with some differences.. But if you want to switch the tax regime (from that chosen in the previous year), while filing a belated ITR, then it is a different matter and is dependent upon your source of income. For example, there could be a case where a person who filed ITR under old tax regime for FY 2021-22 wants to file a belated ITR for FY 2022-23 under new tax regime.
Can salaried people opt for new tax regime for FY 2022-23 in belated ITR?
If an individual has income from salary, house property, or other sources but no income from business or profession in FY 2022-23, then the only way one can opt for new tax regime for FY 2022-23 (AY 2023-24) is by filing their ITR by July 31, 2023 (original ITR)
If a individual is filing belated return under section 139(4) for FY 2022-23 (AY 2023-24), then new tax regime cannot be opted
Who can switch to the new tax regime in belated ITR for AY 2023-24?
“The decision to opt in (for new regime) for individuals having business/profession income for FY 2022-23 (AY 2023-24) has to be made by furnishing Form 10-IE on or before the due date for filing original return of income under section 139(1). Once Form 10-IE is filed within the due date for filing original ITR , the claim for new tax regime can be made in original ITR under section 139(1) or belated return under section 139(4),” according to Amarpal S. Chadha, Tax Partner and Mobility Leader, EY India, a consultancy company.
According to CA Manas Chugh, head, regulatory services, Osgan Consultants, a Delhi based tax and business consultancy company, “Once Form 10-IE is filed, it is applicable for subsequent years, unless another Form 10-IE is filed withdrawing the consent of regime change. Hence if an individual has already submitted Form 10-IE in FY 2021-22 by the original ITR due date to opt for new tax regime, he can continue to file ITR (original or belated) in new tax regime for FY 2022-23 (AY 2023-24).”
The due date for ITR filing is July 31, 2023 for those tax filers who are not required to get their accounts audited for income tax purposes. For those who are required to get their accounts audited, the ITR deadline is October 31, 2023.
Switching from new to old tax regime in belated ITR may not be possible in all cases
Experts say that the Income Tax Act mentions that to opt out of the old tax regime and go into the new tax regime, Form 10-IE has to be filed before the ITR deadline. However the law relating to the opposite i.e. to opt out of the new tax regime and switch to the old tax regime is not clear.
According to Mitesh Jain, Partner, Economic Laws Practice, a Delhi based law firm, “The provision of the Income-tax Act, 1961 permitting withdrawal from the new regime does not specifically provide a time limit for opting out of the new regime.”
“Therefore, on a plain reading of the provisions, the assessee may exercise the said withdrawal option under original or revised or belated return by filing Form 10-IE before filing ITR,” says Jain.
Income Tax Notice on Moonlighting: The Income Tax Department has recently sent notices to some people who were moonlighting along with their jobs. This notice is between 2019-2020 and 2020-2021. The Income Tax Department found that there are many employees who had filed income tax returns on their regular salary but their income was more than their regular salary from different sources. That is, such employees who were earning income through moonlighting but were not giving information about it to the Income Tax Department.
The tax notices were sent to individuals who earned extra from the ‘moonlighting’. Over 1,000 notices were sent for the financial years 2019-2020 and 2020-2021, as per the report published in ET.
What is Moonlighting?
Moonlighting means taking up another job in addition to one’s primary employment. The second job is typically taken without the employer’s consent at their regular job. The debate around moonlighting grabbed headlines in the IT industry ever since Wipro Chairman Rishad Premji red-flagged the issue.
In Budget 2021, the government introduced Section 148A in the Income Tax Act. Explaining this clause, Balwant Jain said that if the income tax officer receives some information that the taxpayer has escaped income for any assessment year on which tax is payable. “Under section 148A, the assessee gets a chance to be heard by the officer
Tax implications from moonlighting
The income from moonlighting might result in complicated tax situations that the taxpayer needs to be aware of.
“If taxpayers receive their moonlighting income as salary, it can complicate the tax calculations and the taxpayer may have to be extra careful while filing their returns. For deducting TDS, employers draw up an estimated taxable income figure. In such an estimation, both employers consider the standard deduction of Rs. 50,000, whereas the taxpayer can claim it only once. They may also consider the 80C deduction, which may exceed the maximum limit of ₹1.5 lakhs in total. While filing taxes, the taxpayers will have to make these changes and bear the brunt of additional taxes and interests. To avoid this, the taxpayers must compute the total taxes, subtract the tax deducted(TDS) by the employer and pay the balance as advance tax instalments
Notice from the Income Tax department brings about lots of stress. But it does not always has to mean bad tidings.Sometimes, it could be informing you about some tax refunds too!The important thing to remember is to understand the reason for receiving the notice and replying to it timely and correctly!
Also, the IT department is currently busy tightening its noose around the black money hoarders. Therefore, a lot of taxpayers are going to be receiving these notices in the near future.
How will you Receive the Notice from the Income Tax Department
The intimation from the I-T department would be sent on the email id provided during the e-filing of Income Tax Returns.
If CPC is processing the returns, the sender’s email id would be: intimations[@]cpc.gov[dot]in.
The Notice would arrive by Post to the address as per PAN details.
Verify the address associated with the PAN number by:
Visiting the e-filing ITR site.
Logging in with your PAN number as the User ID and a secure password.
Filling in your date of birth details and verifying the captcha.
Under ‘Profile Settings’ you can then opt for the ‘PAN details’ from the dropdown menu and confirm.
Income Tax Notices are Sent Under which sections
Five different types of Notices are send under different sections of the I-T Act of 1961.
Notice Under Section
Reason
142
The Notice is sent under this Section to the taxpayer to scrutinize the documents and accounts that were submitted by him in support of the filed ITR.
143(1)
The taxpayer receives an intimation under this Section if there is a requirement to adjust or demand additional tax in situations where a calculation error or an incorrect information has been detected in the filed ITR.
143(2)
The Notice under this Section is for scrutiny assessment after the assessing officer has done a detailed inquiry.
148
The intimation under this Section is sent for reassessment purposes if the income tax officer thinks that a particular income escaped assessment.
156
The Notice under this Section intimates the taxpayer regarding some payable dues. It includes fine, penalty, interest, tax, or any such sum.
What to do when you Receive the Notice
First and foremost, never ignore the tax notice from the Income Tax department!
Panicking and stressing would not help you out either. Therefore, remain calm and work out the details for complying with the Notice.
Because non-compliance to the requirements of the notice could cost you Rs.10,000 as penalty.
This is over and above the balance amount that you have to pay as overdue taxes and the penalty interest on paying late taxes!
What you should do is:
Check your Personal Details
Verify your details on the Tax Notice, your name, address, PAN number, etc. It could be that the Notice was meant for a similarly named person!
Especially cross-check the PAN number because the I-T notices are issued based on PAN details.
For e-notifications, check the ‘document identification number’. It is used by the tax department for all its external communications!
Check the Sender’s Details
The Notice from the Income Tax department would always have the details of the sending tax officer.
His name, designation, stamp, signature, official address, and most importantly the income tax ward and circle, would be mentioned in the Notice.
Understanding the Notice
You have to understand why you have received the Notice for the I-T department.
Save the Envelope
The envelope would have the Speed Post number which can tell you when the Notice was sent to you
This can become a crucial piece of evidence in case of any dispute
Keep Copies of the Notice
This is an important communication from the tax department. Therefore, avoid losing it by making copies of it or saving its scanned image on your PC.
Verify its Validity
An I-T Notice served for scrutiny assessment purposes under Section 143(3), had to be issued within 6 months of the assessment year of the financial year for which the tax returns was filed.
Check for the validity of the Notice issued, because if served outside of those first 6 months of the assessment year, the Notice is considered invalid!
In case the tax assessor has suspicions regarding incorrect income reporting and tax evasions, a Notice can be issued u/S 148.
The case can be reinvestigated up to 6 years after the relevant assessment year has ended!
If the amount under scrutiny is below Rs.100,000, than a maximum of 4 years returns need be examined.
What Response should you Give When you Receive an Intimation from the I-T Department
Let us present your reply to the Notices from the Income Tax department in a tabular form:
I-T Act Sections
Reason
Your Response
143(1)A
No Claim or Refund Return
You don’t need to take any action. Just take a print out for your records.
143(1)B
Informing you about a Refund
Again, this requires no action. Just take a print out for your records. Periodically check your bank statement for the refund credit.
143(1)C
Intimating you of your due tax liability
Verify it against your Form 26AS. Once you have paid the requisite tax, e-file the revised returns.
143(2)
Your tax file got selected for random scrutiny
First check the validity of the Notice. If valid, appear before the I-T officer at the prescribed time and date with all the relevant documents and answer all questions honestly.The requested details could be regarding all your sources of income, relief received from a claim of loss, allowances, exemptions, and deductions.
143(3)
Income Tax department has information regarding income concealment
You would be requiring professional services of a Chartered Accountant.
142(1)
Not filed tax returns or a tax enquiry intimation for scrutiny
In case you are yet to file your income tax returns, do so as soon as possible. If you have already filed then, take your documents to the assessing officer for further scrutiny.
148
Income has escaped assessment
E-file revised returns with necessary documents.
156
Additional tax on income
If you think that this demand is viable, you can pay the amount, e-file revised returns with the challan of tax paid.If you think that this demand is unjust, you can file for rectification.
154
Rectifications for mistakes in filing Income Tax Returns
You can seek professional help for the same or file for rectification at the I-T department’s official site.
When should you Ask for an Expert’s Advice
Not every Notice received from the I-T department needs an intervention from a certified Chartered Accountant.
If the intimation is about simple matters like deduction amount or TDS mismatch, mathematical error, and likes, the taxpayer can respond to the I-T Notice on your own.
But when the Notice is regarding serious matters like scrutiny or reassessment u/S 148, it is advisable that you seek a professional’s help.
Hiring a CA to respond to your tax Notice on your behalf would be costly but the issue will be resolved in a timely and correct manner.
But it is essential that you understand the reason for receiving the Notice, action taken on your behalf, and its implications, thoroughly.
You cannot leave the entire matter on the CA only!
Things to Remember
Just make sure that the response is sent within the stipulated time. Send over the information or documentation that is ready and if needed, request for some more time.
For example, the scrutiny Notice can ask for documents like brokerage statements, rent receipts, payslips, bank statements, etc. Collecting and submitting all the documents together within the given time frame may be difficult.
You can submit the documents you have gathered already and convey them to the I-T officer and request for a time extension.
This would also convey your intent to comply with the demands of the department!
Once you have collected all the relevant information, write a cover letter cataloguing all the documents that you are submitting.
Make a few copies of the entire set. Get the copy of the cover letter acknowledged and file it for future reference and proof that the documents were duly submitted.
For random scrutiny under Section 143(2), no specific documents are specified. In such cases, gather all the necessary documents like loan details, income information, major expense, bank statements, etc.
In the End
Receiving an I-T Notice does not signify an end of the world scenario! You just need to stay calm and think about the steps you need to take next to respond to the Notice.
Do not consider not replying to the Income Tax Notice because then you will be penalized further!
You just need to consider all the factors and decide whether you will be responding to the Income Tax department Intimation on your own or will you be hiring a chartered accountant or a tax professional to handle the issue for you
