Got an income tax notice? Here is what you should do!

NEW DELHI: Filing income tax returns by due date is important, but is also equally important to file the same with utmost care. If you don’t do it correctly, expect a notice from the Income Tax Department. But, if at all you get one, our first suggestion for you would be ‘don’t panic’.

Second, try to understanding the section under which you have received it from the Income Tax Department and what should you do after that. Here is the list of some of the common sections under which a person can get notices and what is the meaning of each:

SECTION 139 (9)

You will get a notice under this section in case of faulty filing of tax returns. The errors can consist of the following:

If you have used the incorrect ITR form, if you haven’t paid the complete tax due, if you have claimed a refund for deducted tax but have not mentioned the relevant income, if there is a discrepancy in the name on the form and PAN card, if you have paid taxes but not listed income.

Time frame within which one should respond: Within 15 days from date of intimation by assessing officer. You can request an extension by dropping a note to the local assessing officer. In case you fail to respond, the return will be considered invalid.

What to do? Go to the income tax filing site (https://incometaxindiaefiling.gov. in/e-Filing/) and download the right ITR form under the given Assessment Year. Then choose the option ‘In response to a notice under Section 139(9) where the original return filed was an incorrect return.’ Fill in the reference number and acknowledgement number, and fill the form by including the required rectification. Under ‘e-File’, select ‘e-File in response to notice u/s 139(9)’ and upload the rectified XML using the password in the notice.

SECTION 143 (1)

More than a notice, this is an intimation about the returns filed by you. Three types of notices are included under this section:

a) It can be simply the final assessment of your returns as your tax calculation matches that of the assessing officer.

b) It can serve as a refund notice, where the assessing officer’s calculation shows excessive tax paid by you.

c) It can be a demand notice, wherein assessing officer finds a shortfall in your tax payment.

Time limit to respond: If your tax is due, you will have to pay it within a time frame of 30 days.

What to do: If there is no inconsistency in the returns, you don’t have to worry. If a refund is due, it will be transferred in the bank account you have given. If it is not, you can always request a reissue of the refund. If tax is due, you will have to pay it within 30 days.

SECTION 143 (1A)

“Though this provision existed in the past, the computer-prepared notices are being sent to a large number of taxpayers only this year,” says Chetan Chandak, Head of Tax Research, H&R Block, India. This is basically a message on proposed adjustment, which simply means that if there is a inconsistency in the income mentioned in the return and Form 16, or deductions given under Section 80C or Chapter VIA and Form 26AS, then verification will be sought.

Time limit to respond: Within 30 days of issue of intimation (applicable from the AY 2017-18).

What to do: You will have to log in to the tax filing portal and, under the ‘e-Proceeding’ section, explain the discrepancy, besides uploading the supporting documentary proof.

SECTION 143 (2)

This is a scrutiny assessment notice that follows soon after initial assessment of returns. “This can be of three types, with the first two coming under computer-assisted scrutiny selection (CASS), while the third is a manual scrutiny notice,” says Chandak.

a) Limited purpose scrutiny: This is not a full-fledged scrutiny and is meant to highlight only one or two points.

b) Complete scrutiny: This entails a complete, detailed scrutiny as serious discrepancies have been identified in the returns.

c) Manual scrutiny: This notice is hand-picked by the assessment officer, but this need an approval of the Income Tax Commissioner before it is sent.

Time limit to respond: The taxpayer will have to be present in person or through a representative before the officer on the date specified in the notice.

What to do: Get all the documents and proofs to support your case and do not miss the hearing. If you fail to comply with the provisions of this section:

a) It may result in ‘best judgment assessment by the officer’, which means the officer will himself decides the tax liability as per his consent.

b) Penalty of Rs 10,000 for each failure or;

c) Prosecution up to one year with or without fine.

SECTION 234 (F)

This is a new section that has been introduced in the Income Tax Act, according to which a fee or penalty will be levied in case returns are not filed by 31 July of the relevant assessment year.

“So far, salaried taxpayers were lax about not filing returns by 31 July if taxes had been paid, but now it is mandatory to do so,” says Amit Maheshwari, Partner, Ashok Maheshwary & Associates. Till date, a penalty of Rs.5,000 was levied at the decision of the assessment officer if the return was not filed.

Starting with assessment year 2018-19, a fee of Rs 5,000 will be charged in case returns are filed after the due date but before December 31 of the relevant assessment year or Rs 10,000 if it is filed after December 31 of the relevant assessment year.

However, a maximum penalty of Rs 1,000 will be levied for those who are earning less than Rs 5 lakh a year

Not all tax notices are scary. Some notices are just for intimation.