VARIOUS NOTICE UNDER INCOME TAX ACT
REASONS FOR NOTICE FROM INCOME TAX DEPARTMENT
Some common reasons leading to notice from Income Tax Department may include;
- Escaped Income:
If the taxpayer has knowingly or unknowingly left some part of income from the income tax return, he or she may get a notice from the department,
- Not filing returns if income is above exemption limit :
As per income tax provisions, it is mandatory to file income tax return if the income is above the exemption limit for the relevant year.
- Not declaring income from all sources:
Tax payer is required to pay taxes on total taxable income during the year. Therefore it is necessary to include salaries etc. from all employers and other taxable income from all relevant sources in the income tax return. For example, there may be income from interest earned on bonds, fixed deposits, recurring deposits etc. which should be included in the total income.
- Mismatch in TDS details as per Form 26AS and details filed in income tax return:
There may be difference between TDS details as per Form 26AS and details filed in income tax return. Both should be reconciled and differences should be rectified before filing the income tax return.
- Mismatch in income, expenses and investments:
Generally, investments and expenditure of the tax payer should match with his or her income. Otherwise, it may create suspicion of escaped income which may lead to notice from the department.
VARIOUS SECTIONS UNDER WHICH NOTICE CAN BE SENT
There are various sections under which Income Tax Department may send notice. These sections include;
NOTICE UNDER SECTION 131
Income Tax Department has got power under this section related to discovery of escaped income and production of evidence etc. The department under this section may ask a tax payer to submit further documents to verify income source and investment details.
NOTICE UNDER SECTION 139(9) : Defective Return
Under this section, the tax payer receives intimation of probable defect in the income tax return and he or she is given an opportunity to rectify the same within 15days from the date of such intimation or within such extended period as may be allowed. If the defect is not rectified within the aforesaid period, the return may be considered as an invalid return and accordingly the assessee may be deemed to have furnished no return.
NOTICE UNDER SECTION 142 (1)
This notice is usually served to call upon documents and details from the tax payers, and this is basically done to take a particular case under assessment. By serving a notice u/s 142 (1) the assessing officer, in appropriate circumstances, may call upon the assessee:-
- To furnish a return of his income or the income of any other person in respect of which he is assessable, where he has not filed his return of income within the normal time allowed or before the end of the relevant assessment year.
- To produce or cause to be produced accounts or documents which the AO may require for the purpose of making an assessment under the Act.
- To furnish in writing any information on any point of matter including statement of the assessee
Compliance with this notice u/s 142(1) is mandatory even if the tax payer is of the opinion that the accounts/documents requested are irrelevant.
INTIMATION UNDER SECTION 143 (1) Summary Assessment
This is intimation cum notice for processing of income tax return filed. This intimation is usually received via email from centralized processing centre, Bangalore. The income tax return would be processed in the following manner:
- The total income or loss shall be computed after making adjustments with regard to any arithmetical error in the return or an incorrect claim, if such incorrect claim is apparent from any information in the return or, an incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,
- The tax and interest, if any, would be computed on the basis of the total income computed, and the amount of refund due to the taxpayer would be determined.
- In case where no sum is payable or refundable and where no adjustment has been made, the acknowledgment of the return shall be deemed to be the intimation and no further intimation shall be sent.
NOTICE UNDER SECTION 143 (2) :Regular Assessment
This is a service of notice for regular assessment.. It is mandatory for carrying out scrutiny assessment. It can be served only if a return has been filed.
It has to be served within the time limit of 6 months from the end of the Financial Year in which return of income is filed.
NOTICE UNDER SECTION 147
If the AO has reason to believe that any income chargeable to tax has escaped assessments, he may assess or reassess such income, other than the income involving matters which are the subject matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.
To initiate proceedings under 147 the AO is required to have a reason. This tangible reason should give him a belief that there is income which has expected assessment. The Supreme Court has clarified that the act nowhere states that the belief should ultimately culminate into escaped income in order to be valid reason.
To conclude – Getting notices are common these days and needs to be handled with proper care so that we don’t have any further problems.
Startups should look to engage professional expert in this field so that they do not miss out anything and the matter can be handled with utmost care as these can be a barrier for growth of startup businesses.
Notice under section 245:
Set off of refunds against tax remaining payable:
Where under any of the provisions of this Act, a refund is found to be due to any person, in lieu of payment of the refunded or any part of that amount, against the sum, if any, remaining payable under the Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.
NOTICE UNDER SECTION 156 :
Where any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed, the department may serve upon the assessee a notice of demand under this section, specifying the sum so payable.
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2 thoughts on “VARIOUS NOTICE UNDER INCOME TAX ACT”
Sir my ITR 2013_14 defective but I did not receive any notice .PL send fresh notice.
Dear Devendra Ji, Please check mail inbox as you mentioned in ITR
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