Income Tax notices explained: Types of notices, time limits and other key details

A defective notice 139(9) can be issued by the IT department if your return is found to be defective due to missing information, incorrect details, filing the wrong ITR form, errors in tax calculation, etc. Generally, the taxpayer gets 15 days to give a response to this notice. Under the Income Tax Act, 1961, the IT department can take various steps to ensure compliance, including issuing notices to the taxpayer in case of any discrepancy. These notices can be to request more information, to demand more tax, or even to notify a penalty for non-compliance. Let’s look at types of income tax notices. Notice under Section 142(1): Inquiry before official assessment If there is any mismatch between the information you provided in your ITR and the information available to the assessment officer (AO), you will receive a notice under this section asking you to furnish more information before the AO makes the final assessment. It is sent before your tax return is officially assessed. This notice can be issued at any time before the assessment of your ITR is complete. Compliance with this notice is necessary even if a taxpayer thinks that the information/documents asked by the AO are irrelevant. If they fail to comply, penalties and prosecution may be applicable. One must reply to this notice within the time mentioned (usually 15-30 days) to avoid penalties or further notices. Note: This notice can also be issued if the taxpayer hasn’t filed ITR and the AO is asking to do the same. Notice under Section 143(2): Scrutiny Assessment If the AO isn’t satisfied with the documents or information you provided against the income tax notice under Section 142(1), he/she can send another notice under Section 143(2). If you receive a notice under this section, it means that the IT department has selected your ITR for detailed scrutiny. This notice can be issued within three months from the end of the financial year in which the return was filed. Notice under Section 148: Income escaping If the AO finds any discrepancy in your income details, in case you have not disclosed the entire income or have paid lower taxes, the AO will serve this notice for income escaping assessment. Note that the AO needs to conduct an inquiry under Section 148A with the prior approval of the specified authority, in which the taxpayer will be allowed to explain before issuing this notice. The taxpayer gets seven to 30 days to provide their explanation. In case the AO is not satisfied with the response, he/she can reopen the case and issue a notice under this section. This notice can be issued within three years and three months from the end of the relevant assessment year. However, if the evidence points to an evaded tax of over ₹50 lakh, a notice can be issued within five years and three months from the end of the relevant assessment year. Notice under Section 156: Demand After the assessment is complete by the AO, an assessment order is passed, which highlights if there is any tax, interest or penalty due to be paid by the taxpayer. The assessment order is sent with a demand notice. The taxpayer should pay the demand notice within 30 days of receiving the notice. After 30 days, a 1% interest is charged per month (or part thereof), and additional penalties can be imposed. Notice under Section 139(9): Defective Notice If the AO finds the ITR to be defective due to missing information, incorrect details, filing the wrong ITR form, errors in tax calculation, etc., he/she can send a notice under this section. Generally, the taxpayer gets 15 days to give a response to this notice. Without any response within the specified limit, the ITR becomes invalid, and the taxpayer will have to file again. Other than these notices, the IT department also issues intimation on summary assessment under Section 143(1), which acts as a preliminary assessment. It is sent to inform you about the arithmetical errors and other obvious mistakes. Read more about it here. What to do after receiving a notice If you have received any notice from the IT department, you must not take it lightly and respond within the specified time period, or else you’ll be subject to penalties and further prosecution. In case you have received a tax demand, you can also dispute it, but remember that you will have to pay at least 20% of the tax due before appealing to higher authorities.