Income Tax Notice: Tax notice received from Income Tax Department, what to do?


Income Tax Notice: The laws of the government related to filing income tax returns are strict. You may get a notice from the Income Tax Department even for a minor mistake in filing a tax return. However, a notice from the Income Tax Department does not always mean that you may face problems. There can be many reasons for sending such notifications. Let’s know about some common income tax notices, what they mean and what you should do if you get such notices.

Demand notice (section 156)

Under section 156, an income tax notice is issued against the outstanding amount, interest, penalty etc. Such information is usually sent after the assessment of income tax return. The notice is issued by the Assessment Officer who gives instructions for due amount and asks the taxpayer to deposit the outstanding amount on time to avoid any penalty. An interest rate of 1 percent per month (under section 220) is charged till the withdrawal of the total outstanding balance. Assessment officer can impose fine up to the amount of unpaid amount (under section 221).

What to do in this case

After receiving such notice from the Income Tax Department, the person has to deposit the outstanding amount within 30 days of receiving the notice. Apart from this, in special cases less than one month can be given for depositing the outstanding amount.

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Customary notice (section 145 (1))

If any such notice comes to you, then there is nothing to panic. A notice from the Income Tax Department under Section 145 (1) is a traditional notice given to the IT assessee as a part of the regular practice of the Department. Generally, this is just a notice that states that income tax returns have been successfully processed. This information can be sent by the tax department till the end of one year from the end of the financial year in which the return is filed.

What to do in this case

Generally, you do not need to give some answers for this unless there are some mistakes in the income or there is some kind of mismatch while filing the return. However, if there is any outstanding balance, it has to be paid within a month. In addition, if any improvement about the information is needed, it should be done immediately to avoid any complication or penalty.

Inspection notice [section 142 (1) and 143 (2)]

Such information is issued only when the Income Tax Department needs some kind of verification, clarification or re-assessment. The notice under Section 142 (1) can be issued by the Income Tax Department after the relevant assessment year is over. The notice under section 143 (2) is sent by the department for compliance with the notice sent under section 142 (1), if the Assessing Officer is not satisfied with the response or failure to submit the required documents.

What to do in this case

On receiving notice under section 142 (1), the person has to reply within the stipulated time given in the notice. For notice under Section 143 (2), which is a follow-up notice, a person may have to appear before the Assessing Officer either personally or through a representative.


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