Topic 1: Don't fear the Income Tax Notice! Know how to reply
The government’s laws are very strict in terms of Income Tax Return (ITR), so the assessee /person may get a notice even for a minor mistake in the filing of Income Tax Return (ITR). But income tax notice does not always mean that you have to face problems.
So, let us know about some common notices under the Income Tax Act, 1961
1.Notice under Section 156
Reason: It is issued by the Assessing Officer (AO) against the outstanding amount, interest, penalty, etc. Steps to be taken: The assessee has to deposit the amount within 30 days after receiving the notice. However, in special cases, the time limit can be reduced to less than 30 days.
2.Notice under Section 145(1)
Reason: Notice under this section is a traditional practice by the IT department, it states that ITR has been successfully processed. This can be sent by the IT department from the end of the financial year to the end of the year in which return has been filed. Steps to be taken: No response required from the assessee unless he has made any mistake in the ITR. If there is any outstanding amount or missing information, that should be corrected immediately to avoid any penalty.
3.Notice under Section 142(1) & 143(2)
Reason: Notice u/s 142(1) issued by the IT department only when AO needs some kind of verification, clarification and reassessment. Notice u/s 143(2) issued when AO is not satisfied with assessee response for notice u/s 142(1). Steps to be taken: For 142(1), assessee has to reply within stipulated time and for 143(2) he may need to be present before AO personally or through a representative.
4.Notice under Section 148 – show cause notice
Reason: When AO feels that assessee has not disclosed all sources of income with the intention to evade taxes. If amount withheld is less than Rs 1 lakh, notice issued within four years from the end of the assessment year. If amount withheld is greater than Rs 1 lakh or related to property situated outside India, notice under Section 148 can be issued within six years. Steps to be taken: The assessee is required to produce the details of information within the time limit specified by the AO.
5.Notice under Section 245
Reason: Primarily an intimation that department is adjusting assessee’s previous year tax payables with the current year’s refund. No time limit for issuance of notice under this section. Steps to be taken: Assessee has to reply according to the notice within 30 days. If he fails to respond within the stipulated time, the adjustments will be made automatically.
So, let us know about some common notices under the Income Tax Act, 1961
1.Notice under Section 156
Reason: It is issued by the Assessing Officer (AO) against the outstanding amount, interest, penalty, etc. Steps to be taken: The assessee has to deposit the amount within 30 days after receiving the notice. However, in special cases, the time limit can be reduced to less than 30 days.
2.Notice under Section 145(1)
Reason: Notice under this section is a traditional practice by the IT department, it states that ITR has been successfully processed. This can be sent by the IT department from the end of the financial year to the end of the year in which return has been filed. Steps to be taken: No response required from the assessee unless he has made any mistake in the ITR. If there is any outstanding amount or missing information, that should be corrected immediately to avoid any penalty.
3.Notice under Section 142(1) & 143(2)
Reason: Notice u/s 142(1) issued by the IT department only when AO needs some kind of verification, clarification and reassessment. Notice u/s 143(2) issued when AO is not satisfied with assessee response for notice u/s 142(1). Steps to be taken: For 142(1), assessee has to reply within stipulated time and for 143(2) he may need to be present before AO personally or through a representative.
4.Notice under Section 148 – show cause notice
Reason: When AO feels that assessee has not disclosed all sources of income with the intention to evade taxes. If amount withheld is less than Rs 1 lakh, notice issued within four years from the end of the assessment year. If amount withheld is greater than Rs 1 lakh or related to property situated outside India, notice under Section 148 can be issued within six years. Steps to be taken: The assessee is required to produce the details of information within the time limit specified by the AO.
5.Notice under Section 245
Reason: Primarily an intimation that department is adjusting assessee’s previous year tax payables with the current year’s refund. No time limit for issuance of notice under this section. Steps to be taken: Assessee has to reply according to the notice within 30 days. If he fails to respond within the stipulated time, the adjustments will be made automatically.