What is Income Tax Notice and What Are Its Different Types?

This is perhaps the most common type of notice from the IT department usually referred to as an “Intimation u/s 143(1). This is a preliminary notice sent after your returns have been processed. This type of notice could imply any one of the following:

• Your tax calculation matches with the department: No action is required.
• You have paid excess tax for the fiscal. The excess will be refunded with interest, if applicable, using the applicable income tax refund mechanism.
• You have underpaid due tax as per tax authorities. The balance tax amount needs to be paid with penal interest, if applicable using the applicable Income Tax Challan.

These two types of notice are closely related. An income tax notice u/s 143(2) is issued by tax authorities as part of the scrutiny assessment process u/s 143 (3). This type of scrutiny assessment may be undertaken by assessing officer in order to ensure that the tax payer has not understated income, paid lower tax or shown excessive loss to reduce tax liability. While you do not need to take action on receiving such a notice, if closer scrutiny reveals discrepancies you might receive another income tax notice u/s 156 subsequent to the scrutiny assessment.

Notices issued u/s 156 or any of its subsections are typically a demand notice for payment of due tax. If you have unpaid taxes, the Income Tax Department will send you a notice under this section, specifying the amount of tax you owe and the date by which you need to make the payment. Usually such tax payment demands also feature a commensurate fine and penal interest charges that are clearly mentioned in the notice. If you have received such a notice, it might be advisable to seek the help of a tax expert or CA for figuring out the next step.

This type of income tax notice may be issued after you have filed your income tax returns when the Assessing Officer (AO) seeks clarification or additional documentation related to your filed ITR. Examples of such additional income tax documents may include a statement of assets and liabilities, produce accounts/documents to support income or tax saving investment claims, etc. Additionally, a tax notice under Section 142(1) may also be issued if one has filed belated returns i.e. ITR was filed after the due date.

A tax notice u/s 139(9) is often referred to a ‘defective return’ notice. If the IT department finds errors or omissions in your tax return, you’ll get a notice under this section. It could relate to missed income declaration, incorrect personal information, using the wrong ITR form, mismatch between TDS and tax paid, etc. On receiving a Section 139(9) notice, you have a stipulated time period, usually 15 days, to respond and file a revised return, if required.

An income tax notice u/s 148 is issued with respect to ITR that have been filed at an earlier date. The Income Tax Department can send this type of notice if the assessing officer believes some income has escaped assessment in a previously filed tax return. In such a situation you may be asked to furnish income details again for a specific financial year along with any other supporting documents such as proof of tax saving investments made during the specified period.

If you receive an income tax notice under Section 131 or its sub-sections such as 131 (1A), it means that you have been summoned in-person by tax authorities. Common reasons for issuing such a summons include:

• For conducting inquiry by the IT Department for discovery, inspection and/or verification of different documents or people
• In order to ensure attendance of a person for examination under oath
• To demand the production of key documents such as book of accounts, Form 16, home loan amortisation schedule, etc. from the assessee

It is mandatory to respond to such as summons request as non-compliance might lead to legal action from the tax authorities along with potentially hefty fines.

This intimation notice is issued by the IT department in order to seek confirmation from the assessee that pending tax dues for any previous FY can be offset using the income tax refund issued in the current assessment year. On receiving an income tax notice u/s 245, you can respond with agreement or disagreement with corrective action such as filing a revised return within a period of 30 days. If you do not provide a response within the stipulated time, the tax authorities will complete the adjustment automatically and issue the balance refund amount.

While there is no rule against responding to an income tax notice on your own, it might be advisable to seek expert help from a tax expert or chartered accountant. This can help ensure that your response is appropriate and you are aware of the correct course of action to resolve the issue at hand.