Tax notices and Sections of Income Tax Act

Filing income tax returns by the due date is crucial, but equally important is to file these cor rectly. If you don’t do so, expect a notice from the Income Tax Department. What should you do if you get one? Firstly , don’t panic. Next, understand the section under which you have received it and how you should respond to it. Here are some of the common sections under which people get notices and what these mean.

Section 139 (9)

You will get a notice under this section in case of defective filing of tax returns.The errors can include the following: if you have used the wrong ITR form; if you haven’t paid the entire tax due; if you have claimed a refund for deducted tax but have not mentioned the relevant income; if there is a mismatch in the name on the form and PAN card, or if you have paid taxes but not listed income. In such cases, a notice under this section will be sent to you.

Find out which sections of the I-T Act you can get a tax notice under, and what to do about it

Time limit to serve notice:NA

Time limit to respond:

Within 15 days of date of intimation by assessing officer.You can seek an extension by writing to the local assessing officer. If you don’t respond, the return will be considered invalid.

What to do

Go to the income tax filing site (https: and download the right ITR form under the given assessment year. Then select the option `In response to a notice under Section 139(9) where the original return filed was a defective return.’ Fill in the reference number and acknowledgement number, and fill the form with rectifications. Under `e-file’, select `e-file in response to notice us 139(9)’ and upload it using the password in the notice.

Section 143 (1)

More than a notice, this is an intimation about the returns filed by you. You can get three types of notices under this section:

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

b) It can serve as a refund notice, where the assessing officer’s computation shows that an excessive amount of tax has been paid by you.

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

Time limit to serve notice:

Before the expiry of one year from the end of financial year in which the return has been filed.

Time limit to respond:

If tax is due, you will have to pay it within 30 days.

What to do

If there is no discrepancy in the returns, you don’t have to do anything. If a refund is due, it will be transferred to the bank account mentioned in the return. If it is not, 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 earlier, the computer-assisted 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 essentially a communication on proposed adjustments, which means that if there is a discrepancy 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 through this notice.

Time limit to serve notice:NA

Time limit to respond:

30 days from the date of issue of the communication.

What to do

You will have to log in to the tax filing portal and, under the `e-Proceeding’ section, explain the discrepancy along with the supporting documentary proof that will have to be uploaded.

Section 143 (2)

This is a scrutiny assessment notice that follows preliminary 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. “The timeline for the completion of this assessment is 18 months for assessment year 2017-18, down from 21 months in 2016-17, and is likely to be further brought down to 12 months from next year,“ he adds.

a) Limited purpose scrutiny:

“This is not a full-fledged scrutiny and is meant to highlight only one or two points and verification is sought on these,“ adds Chandak.

b) Complete scrutiny:

This entails a com plete, detailed scrutiny as serious discrepancies have been identified in the tax returns.

c) Manual scrutiny:

This notice is hand picked by the assessment officer, but it can be sent out only after receiv ing the Income Tax Commissioner’s approval.

Time limit to serve notice:

Before the expiry of six months from the end of the financial year in which the return is filed.

Time limit to respond:

The taxpayer will have to appear in person or through a representative before the officer on the date specified in the notice.

What to do

Get all the income and expense-related documents and other relevant papers, and do not miss the hearing.If you fail to comply with the section’s provisions, it may result in:

a) `Best judgment assessment’, which means the officer will confirm the assessment and decide the tax li ability as he sees fit, or;

b) Penalty under Section 271(1)(b), that is, `10,000 for each failure or;

c) Prosecution under Section 276D, which may extend up to one year with or without fine.

Section 148

You will get this notice if any income has escaped assessment or calculation.

Time limit to serve notice:

If the income that has escaped assessment is `1 lakh or less, it can be sent within four years of the end of the assessment year. If it is more than `1 lakh, the notice can be sent within six years.

Time limit to respond:

The return will have to be furnished within 30 days or in the specified duration as per the notice by the assessing officer.

What to do

You will have to file the returns for the relevant assessment year, as directed by the assessing officer.

Section 234 (f) New

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 `5,000 was levied at the discretion of the assessment officer if the return was not filed.Starting with assessment year 201819, a fee of `5,000 will be charged in case returns are filed after the due date, but before 31 December of the relevant assessment year, or `10,000 if it is filed after 31 December of the relevant assessment year. However, for those earning less than `5 lakh a year, maximum penalty of `1,000 will be levied.

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