The income tax department may send you the notice under several provisions of income tax and sometimes we, as a professional will also face the problem to response such notices. In case, you also have received the notice from the department then there is no need to get panic because when you had to file your ITR then to verify the accuracy of the figures in your return, the IT department may send you the notice. Here, we will understand and discuss all the possible scenarios in which the Assessing officer may send you the notice and also provide the solution of how you can respond to such notices.
Section 139(9): Filing of defective Return
The return is deemed as a defective return if any of the following information or documents are not specified at the time of filing of your return:
- Filing of return under the prescribed form as specified on Income tax portal.
- There should be proof of tax claimed to be TDS/TCS, advance tax, or self-assessment tax.
- Tax Audit Report under section 44AB
- Copies of Audited financial statements and auditors’ reports.
- If books of accounts are not kept by the taxpayer, then he should also attach a statement in which he should display the gross receipts, turnover, expenses, cash balance, bank balance, creditors balance, debtors balance, net profit, etc.
- The name mentioned in the return should be matched with the name as specified in the PAN card.
If you have made an error or omission in any of the above-specified documents while filing the computation of income, then your assessing officer shall send you the notice under section 139(9) and direct you to rectify your return within the period of 15 days from the date of receiving of such notice.
Dealing with such notice:
If you have received the notice under the above section, then the only thing you have to do is to reply to such notice within 15 days from the date of receiving. Even though, you can also reply for an extension of 15 days. Though, it will compulsory for you that you have to respond because if in case, you didn’t respond to such notice, then it shall be considered that the ITR shall be invalid and it will be treated as if you have not filed any return.
Steps for reply:
- Go to the website https://www.incometaxindiaefiling.gov.in/home ;
- Download the income tax return and then log to your account in the portal;
- Select the option of e-file and then click on “In response to notice under section 139(9)
- Uploaded it within the time frame.
Section 245: Adjustment of a refund due with outstanding demand
If In case, wherever any unresolved tax is payable and the assessee was also entitled to the refund for different assessment year or years which is due to him, then in such cases, the IT department may send an intimation to the taxpayer and direct him to pay the outstanding demand within the time period as mentioned in the notice unless his refund adjusted with the outstanding demand.
Dealing with such notice: When intimation is received, firstly you will have to confirm the outstanding demand amount and then only the amount of refund that could be adjusted with the demand as per the sum specified in the intimation. Though, no time limit has been defined for issuance of such intimation however you have to prepare a reply within the time period as mentioned in such intimation.
Steps for reply:
- Login to your account at website https://www.incometaxindiaefiling.gov.in/home;
- Select the response to outstanding tax demand and then submit your reply. You can reply by clicking on any of the following options
- Demand is correct
- Demand is partially correct
- Disagree with the demand
You can refer to this point in detail in my earlier articles.
Section 143(1): Intimation for the proposed adjustment as per the software scrutiny
When you have filed a return under section 139 or send a response to notice as per section 142(1), then firstly return will be checked through software which computes total income or total loss after taking consideration of any or all of the following list of adjustments:
- Any mathematical error in ITR;
- An inappropriate claim, if such incorrect claim is clear from any evidence in the return;
- Non-Allowability of loss claimed, if the return of the current year for which set off of loss is claimed was furnished outside the maturity date specified under section 139(1);
- Non-Allowance of expenditure specified in the audit report but not taken in computing the total income in the return;
Non-allowance of deduction claimed U/s 10AA, 80IA, 80IAB, 80IB, 80IC, 80ID, or section 80IE i.e., if any return is filed beyond the last date specified under section 139(1)
Before making any of the above adjustments, the AO will send you the intimation of the proposed adjustment and ask you to reply to the notice within 30 days from the date of receipt of the notice.
Dealing with such notice:
when you received an intimation then first you have to check whether such intimation was received within the time limit as prescribed. The due date for issuance of intimation U/s 143(1) is one year from the end of the current year in which your ITR was filed.
Practically, the intimation under section 143(1) will be issued in every case when you have filed the return or in reply to the notice under section 142(1).
So, if in an intimation, no difference was found between the calculation of the total income as per software and total income as per your ITR, then there is no need to take any action for this.
Though, if any difference is there and you are not admitting with the excess demand shown in the ITR, then you may file rectification under section 154 or you can also file an appeal to the commissioner of income tax (CIT) appeals within 30 days. Though, you are not eligible to file for the revision under section 264, because revision can be filed only if no intimation has been filed or the time limit of intimation has been expired.
The intimation is considered as notice of demand so if you have not filed the response against the intimation then you will have to pay the tax amount as mentioned in the intimation else you shall be considered as an assessee in default and responsible for the interest and penalty under section 220 and 221 of the income tax act, 1961.
Steps for reply:
- Login to your account at website https://www.incometaxindiaefiling.gov.in/home;
- Select an e-proceeding option and clarify the inconsistency with the documentary evidence.
Section 143(2): Notice for Assessment Scrutiny
The notice under section 143(2) may be issued by the Income-tax department to ensure that the taxable person has not been
- Claimed excessive loss or
- understated the income
- Underpaid the taxes
Dealing with such notice:
Here also, firstly you have to check the due date of issuing of notice. The due date to issue the notice U/s 143(2) is 6 months from the end of the financial year in which the ITR has been filed.
Steps for reply:
- Generally, in the 1st notice, the assessing officer shall direct you to appear before him along with few details as prescribed in the notice.
- Also, Provide the information as stated in the notice.
- You may appear before AO by yourself or you can also have options to send the representative. Though, it is prudent to appoint your statutory auditor as representative for handling these issues.
- Though, with faceless assessment, now it is also possible to respond to such notice through the income tax portal.
Section 148: Notice for income escaping Assessment
The notice under section 148 of the income tax act, 1961, will be sent to the assessee for the purpose of assessment or reassessment under section 147 when the AO has a reason to believe that assessee has an escaped income of earlier year or years.
Dealing with such notice:
Like above, here also check whether the notice is issued within the time as mentioned in section 153A.
Note: In case, if the assessment has begun under the above section, then AO has the power to assess or reassess any other income which has comes to his notice after issuing the notice under section 148, during the course of the proceeding.
Steps for reply:
The notice U/s 148 will be issued to the assessee and ask him to file the ITR covering all the details of the income including which was not prescribed in the return filed under section 139 or in reply to section 142(1), within the period of 30 days or time as specified in the notice.
You have to file the ITR for such assessment year as specified in the notice within the time limit mentioned in the notice.