An income tax notice is a written communication from the Tax Department to a taxpayer indicating an issue with their tax account.
It may be sent for various reasons such as unfiled returns, assessment, or requesting specific information.
When received, the taxpayer must address it within the specified timeframe. Otherwise, you may have to face penalties or punishments.
Thus, it is important for you to know the different types of Income Tax.
Notice under Section 139(9) for ITR Filing Defectives
Individuals in companies, firms, or elsewhere must do income tax return filing if their earnings exceed the non-taxable limit.
If an Assessing Officer (AO) identifies issues in an individual’s filed return, they issue a notice under section 139(9), allowing a fifteen-day window, extendable on request.
Not fixing the issue within this timeframe invalidates the return, akin to not filing.
However, if rectification occurs after this but before the AO assessment, the delay may be excused.
Alternatively, if the timeframe for filing for that Assessment Year (AY) is open, a fresh return can be filed if rectification is not made, causing the return to become void.
Section 142(1) Inquiry Notice – Varieties of Income Tax Notices
This section authorizes an Assessing Officer (AO) to request a person’s income return if it’s outstanding or to obtain necessary documents for Assessment.
The goal is to gather details from the assessee before Assessment, streamlining the process.
The AO proceeds with Assessment only when content with the provided return and documents.
Even if the assessee deems requested documents irrelevant, compliance is mandatory.
Failure to comply with this notice can lead to:
- Assessment via best judgment under section 144 of the IT Act, 1961;
- Penalty under section 271(1)(b) of the IT Act, 1961;
- Prosecution under section 276D, with up to one-year imprisonment and a fine.
Section 143(1) Intimation Notice
This clause entails the AO’s evaluation of returns under sections 139 and 142(1). Typically, it takes the form of an intimation, and nearly all taxpayers get one.
This intimation compares the taxpayer’s data with the AO’s Assessment conclusions.
The AO adjusts for errors, incorrect claims, loss disallowances, deductions, expenditures, or unreported income.
It also alerts the taxpayer if a declared loss is adjusted, yet no tax, interest, or refund applies.
However, this intimation isn’t allowed after 1 year from the Financial Year (F.Y.) of return submission.
During return processing, the income tax department sends an intimation. It covers three scenarios:
- Tax increase, payable within 30 days.
- Extra tax refund.
- No action needed as return and AO’s Assessment align.
Section 143(2) Scrutiny Notice
A notice under this clause signals that the taxpayer’s income is chosen for a thorough examination.
When a return is submitted, but the AO isn’t content or suspects income understatement, insufficient tax payment, or excessive loss computation, this notice is issued.
It mandates the taxpayer’s presence at the AO’s office or submission of evidence supporting the filed return.
This notice is time-bound, valid within six months from the Financial Year (F.Y.) of return submission.
Notice under Section 148 Notice for Escaped Income Assessment
When the Assessing Officer (AO) suspects tax evasion in relation to an assessee’s income under Section 147, the AO can evaluate, reevaluate, or recalculate the return.
Notice under Section 148 Timeframes:
- Income evasion up to Rs. 1 lakh: Notice within 4 years from relevant Assessment Year (AY) end by Assistant Commissioner, Deputy Commissioner, or higher.
- Income evasion over Rs. 1 lakh: Notice between 4 to 6 years from relevant AY end by Chief Commissioner or Commissioner.
- Income evasion involving foreign assets taxable in India: Notice between 4 to 16 years from relevant AY end.
Section 156 Demand Notice – Income Tax Dues
- This notice is issued following a Court, Tribunal, or Authority’s order to pay taxes, interest, penalties, fines, or other dues.
- The Assessing Officer (AO) specifies the owed amount in the notice.
- The recipient must pay this amount within thirty days of the income tax notice date.
- No specific time frame is outlined for the notice issuance.
- Failure to pay results in the recipient being deemed a defaulter, liable for 1% per month simple interest (under section 220, subsection 2), and possibly subject to penalty (under section 221, subsection 1).
Section 245 Notice for Refund Offset
- This notice arises when an individual has unpaid tax liabilities from a prior fiscal year and eligible tax refunds in the current fiscal year.
- The AO, instead of refunding the amount, can adjust it against the payable sum.
- However, this adjustment only occurs after providing written notice to the individual.
- The notice will detail the adjusted amount and its impact on the remaining due amount.
- Thus, this notice functions more as an informative letter than a demand notice.
Conclusion
In conclusion, there are various functions of various Income Tax Notices. These notices are tailored to specific stages of assessment. Taxpayers must be aware of these notices in order to avoid any penalties and punishments. Furthermore, the taxpayers must not get scared of notices and with the help of our tax experts, taxpayers can get the right solution to reply to these notices.
Moreover, If you want any other guidance relating to How many types of Income Tax Notices, please feel free to talk to our business advisors at 8881-069-069.
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