ITR Filing FY 2024-25: Have you got an Income Tax notice? Don't ignore it! Top types of tax notices & actions required
ITR filing FY 2024-25: As the Income Tax Return filing season for FY 2024-25 (AY 2025-26) begins, it's important to understand that merely filing your ITR does not end your responsibility.
In some cases, the
Income Tax Department
might issue notices even after you have submitted and verified your returns.
Whilst this can be concerning, most notices are standard procedures that can be handled systematically. A proper understanding and appropriate response to these notices can help you avoid penalties, conserve time and remain stress-free.
Consider these essential guidelines if you receive a notice, as listed by Sudhir Kaushik, Founder & CEO of Taxspanner.com in a column in ET Wealth:
* Never Ignore:
Every notice has a deadline; missing it can result in penalties.
* Importance of 26AS & AIS:
These will help you to verify and reconcile your income and TDS data.
* Accuracy:
Mismatches can lead to additional scrutiny or tax demands.
* Prompt action:
Even minor notices can lead to complications if unaddressed.
* Expert help:
For complex notices, consult a chartered accountant or a tax professional immediately.
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Here is a straightforward guide regarding common income tax notices and their appropriate handling procedures provided by Sudhir Kaushik:
Section 245: Adjustment against Previous Dues
When you qualify for a tax refund whilst having outstanding tax liabilities from earlier assessment years, the tax authorities retain the right to offset it.
Required Actions:
* Review the notification available in your account under 'e-Proceedings'.
* Within 15 days, you must either accept or contest the stated grounds.
* Should you fail to respond, your refund will be automatically adjusted against the dues.
Section 142(1): Initial Assessment Investigation
This represents a preliminary verification process initiated when tax returns remain unfiled or additional information is required by the tax authorities.
Required Actions:
* Submit your pending tax return.
* Provide all requested documentation within the specified time frame.
* Non-compliance may result in financial penalties or detailed examination.
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Section 143(1): Assessment Notice Post Return Processing
This notice is commonly issued by the tax department to verify your submitted return against their database. The Income Tax department sends this when they detect discrepancies in TDS, mathematical errors, claims for deductions that appear incorrect, or when returns are submitted late.
Required Actions:
* Access your account on the income tax website to examine the notice
* No response required if the assessment is accurate
* Clear any tax dues within 30 days if applicable
* Submit a correction request with supporting evidence if the assessment contains errors
Section 139(9): Defective return
When a tax return contains errors or lacks required information, the tax authorities classify it as defective. The primary concerns typically involve incomplete income information and inaccurate entries related to deductions.
Required Actions:
* A period of 15 days is provided to make corrections and submit again.
* Access your account, locate the notice in the 'e-Proceedings' section, and submit your response.
* Non-compliance within the stipulated time frame could result in invalidation of your return.
Section 133(6): Information Request for Financial Details
This formal notice requires explanation regarding specific financial activities, including substantial cash deposits and real estate acquisitions.
Required Actions:
* Provide supporting documentation, including banking records and contractual papers.
* Ensure timely submission to prevent additional investigation.
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HRA and TDS Discrepancy Notifications
These notifications are issued when discrepancies are detected between your claimed house rent allowance (HRA) or TDS information and the tax department's database.
Required Actions:
* Verify that TDS requirements are met for monthly rent payments above Rs. 50,000
* Maintain proper documentation including rent receipts and landlord's PAN details
* Should the discrepancy be confirmed, submit a revised return and safeguard all supporting documents for future reference
Section 143(2)
Detailed Review Notice under Section 143(2):
This notification indicates that your tax return requires comprehensive verification through detailed scrutiny.
Required Actions:
* Submit all supporting documentation to validate your income, claimed deductions and expenses
* If summoned, attend the scheduled hearings or provide responses via the online portal
* Failure to respond could result in estimated tax assessments being made by authorities
Section 148: Assessment of Undisclosed Income
This notice is issued when tax authorities have reason to believe that certain income was not disclosed in previously filed returns.
Required Actions:
* Submit an updated return or provide clarification as requested in the notice.
* Present evidence to validate the income source and attach supporting documentation.
* Non-compliance may result in reassessment of previous years and monetary penalties.
Section 271AAC(1): Penalty for Undisclosed Income
When substantial unexplained deposits are discovered during assessment proceedings, authorities may issue this notification.
Required Actions:
* Submit supporting documents that establish the origin of funds.
* Failure to justify the income source can result in penalties amounting to 60% of the undisclosed amount.
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