What To Do When You Receive An Income Tax Notice

Receiving a notice from the Income Tax Department can make you feel anxious and paranoid. The IT department can send a notice for many reasons, but if you are clean with nothing to hide, you don’t need to worry! If you receive a notice from the IT department for any reason, here’s help with what you should do.

Stay calm!

As basic as this advice might sound, don’t fret over the notice. Most people get flustered when they see a notice sent by the Income Tax department. The IT department has several complex layers and sub systems. Even a slight mismatch of data or a small mistake including a clerical one, can invite a notice from the department.

So if you receive a notice from the IT department, take some time off and understand the reasons for the notice instead of assuming the worst.

You can even take advice from a tax consultant or your chartered accountant if you are not sure about the reasons for the notice. Remember that, all it takes to counter a notice from the IT department is, to respond to the associated Assessment Officer or AO as per the details sought in the notice within the stipulated period.

Things to do when faced with a notice from the IT Department

So you have received a notice from the Income Tax department? Here’s a checklist you should follow to respond appropriately and within the time frame.

1. Check the basic details on the notice

• Check your name and PAN: First things first! Check your name on the notice and confirm the PAN number to make sure that the notice is meant for you and not someone else. IT department sends notices corresponding with the PAN number, so if the PAN number is missing, the notice may be a fraud or malicious.
• Find the assessment year: Check the assessment year for which the notice is meant.
• Scan the notice for the issuing officer and the officer’s designation: Find out the details of the issuing officer of the notice and the officer’s designation.  This will give you an idea about whom to respond to for the notice.
• Find out the document identification number of the notice: The Income Tax department now sends notices in electronic form via email. Note down the document identification number of the notice as it will be useful for any further communication with the IT department.

2: Check the section under which the notice has been sent

Once you have all the general information in place, find out the section under which the notice has been issued.  The common sections under which the IT department issues a notice include:

• Section 131 (1A): TheIT department sends a notice under section 131 (1A) if it suspects that you have hidden any part of your income from the authorities.
• Section 142 (1):  A notice under Section 142(1) is issued when you fail to file your Income Tax Return for an assessment year on time.
• Section 143 (1): A notice is issued under Section 143 (1) if the calculation of computation of Income Tax by the IT department does not tally with your calculations in your IT return.
• Section 143 (3) & 147: Notices are issued under sections 143 (3) & 147 when the IT department wants to further scrutinise your case in detail as per the submitted IT return for any reason.

3: Do not ignore the notice!

If you think ignoring a notice from the IT department is a good idea, you are sadly mistaken. If you fail to respond to any IT notice within the stipulated time period, you run the risk of being imposed with a heavy penalty depending on the reason the notice was sent. Be ready to shell out Rs. 5,000 and above for lack of response to the IT department’s notice.

How to respond to an IT notice?

• Gather the required documents:  Collect all the information sought by the IT department as per the section under which the notice has been sent to you.
• Prepare a cover letter: Add the documents and prepare a cover letter informing the assessment officer of your submission against the notice.
• Offer timely submission: Submit your notice timely before the last date as listed in your IT notice.  You may also take an acknowledgment of your submission for your personal record.

Getting a notice from the IT department is a routine affair and nothing to worry about. Make sure to tackle the notice in a professional manner as suggested.

Description: Receiving a notice from the Income Tax Department can make you anxious. If you receive a notice from the IT department, here’s help with what you should do.