What Are The Types Of Income Tax Notices?

It is common for people to mistakenly believe that once they file their Income Tax Return, they have complied with all of their provisions, so they are surprised when they receive any notices from the Income Tax Department. To ensure compliance with the Income-tax Act, we will need to understand what other aspects need to be monitored.

In order to avoid or respond to Income Tax Department communications, we must first understand the different types, their reasoning, and how to avoid or respond to them.

E-Campaign:

In case you have not filed your Return of Income following a transaction whereby you purchased a house/invested in MF/FD, etc., this communication is received from the Department.

Departments send us such communications because they want to know where the funds for this investment came from. A yearly analysis is needed to determine if our total income exceeds the basic exemption limit to avoid non-compliance notices.

By logging into the income tax website –Pending Actions –Compliance Portal –E-Campaign, we will be able to respond to such communication.

Intimation under Section 143(1)

Secondly, we need to distinguish between an intimation and on income tax notice. We may not be required to act upon the intimation as it is merely the result of the return processing. However, there are a few exceptions. When the department gives you notice, you are required to act upon it.

The Department processes our return and issues an intimation under section 143(1) in any of the following three cases:

  1. There is a higher tax liability (taxes must be paid within 30 days of receiving a demand)

  2. Refunds are determined as needed.

  3. AO has assessed the return in accordance with its assessment, and no action needs to be taken.

The following points need to be kept in mind to avoid an Intimation with additional tax obligations:

  1. Error in arithmetic.

  2. There is an error in the claim.

  3. Losses or expenses that are incorrectly disallowed.

  4. Non-returnable income.

Time limit: Within one year from the end of the financial year in which the return is made.

Section 139(9) – Defective returns

There is a possibility that we will receive a defective return notice after filing a return of income because of the following reasons:

  1. Filled the wrong ITR form.

  2. Information that is missing.

  3. An incomplete return has been submitted

The AO will inform the customer if the return is defective and will provide 15 days from the date of such notice to rectify the defect.

It will be deemed that no return has been filed if the defect is not rectified within the given period.

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