Income Tax Notices

Types of Income Tax Notices

1. Section 139(9): Defective Income Tax Return
2. Section 131(1A): Income is concealed or likely to be concealed
3. Section 142(1): Initial Enquiry before an assessment
4. Section 143(1) Intimation
5. Section 143(2): Follow up to the notice u/s 142(1)
6. Section 148: Income escaped assessment
7. Section 156: Notice of Demand
8. Section 245: Refund adjusted against the tax demand

This is very true as taxpayers get scared without understanding the type of income tax notice and reason/s for the same. As every person whose income is chargeable to tax has to furnish income tax return. Once a return is furnished by the assessee, the next step is the processing of return by the Income Tax Department. If the department finds any discrepancy it issues Notice for the same, for that there is nothing to worry about just visit any good tax consultant who can help in that case because there are some sections that are not readily known by everyone.

As there are various types of income tax notice, as well as reasons for them.

1. Section 139(9): Defective Income Tax Return

In the following case, the Assessing Officer is of the opinion that ITR filed by the assessee is defective. The finest part is that a proper error description is shared and the AO also suggests a probable solution to rectify the same. The assessee must be provided with an opportunity to respond within 15 days from the date of intimation or before it is assessed. If the assessee doesn’t respond within 15 days then your return will be rejected by the AO. The defect u/s 139(9) can be the wrong ITR filed, incomplete return, missing information, etc.

2. Section 131(1A): Income is concealed or likely to be concealed

If in the opinion of the Assessing Officer, that assessee concealing the income or likely to conceal income then assessee will receive income tax notice u/s 131(1A). This notice is basically an intimation that the Assessing Officer is initiating an inquiry or investigation into the matter. The assessing officer can seize the books of account by providing reasons for the same. There is NO specific time limit to provide this notice.

3. Section 142(1): Initial Enquiry before an assessment

In this case, Assessee will get a notice of initial inquiry in case the return is not filed on time. Moreover, if the AO would like to go through the documentary proof to verify your claim in the Income Tax Return then he may ask you to furnish the documents for assessment purposes. The time limit to provide the notice u/s 142(1) is before the end of the relevant assessment year. 

4. Section 143(1) Intimation 

After filing returns and processing by the IT Department. The income is recomputed after providing  the following adjustments, by a software, to the total income in the return:

• Any arithmetical error in the return;
• An incorrect claim 
• Disallowing any incorrect claim for loss or expenditure;
• Any income which skipped to be included in the return

• Tax liability to be paid;
• A refund has been determined;
• There is no refund or demand, but there is an increase or reduction in the amount of loss

The intimation must be issued within one year from the end of the year in which return has been filed in case of tax demand. Processing of return under this section has been made mandatory from the AY 2017-18 even if a scrutiny notice is issued.

5. Section 143(2): Follow up of notice u/s 142(1)

If the Assessing Officer is not satisfied with the response of the assessee or assessee fails to provide the documents against income tax notice u/s 142(1) as explained in the previous point then a notice u/s 143(2) will be issued to you. This is called Detailed Scrutiny. The Assessing Officer may ask the assessee to either attend his office in person or produce supporting, particulars, and evidence in support of his claim. The time period to serve to notice u/s 143(2) is before the expiry of six months from the end of FY in which the return is furnished. 

6. Section 148: Income escaped assessment

If in the opinion of the Assessing Officer there is some income of the assessee escaped assessment then income tax notice u/s 148 can be issued. In this case, an assessee may be asked to file the income tax return for the relevant assessment, reassessment, or recomputation.

The notice can be served within 4 years from the end of the relevant assessment year if the income escaped assessment is Rs 1L or less than that. Otherwise, the notice can be served within 6 years from the end of the relevant assessment year. 

Up to four years from the end of the relevant AY:

Notice cannot be issued by any officer below the rank of Assistant Commissioner or Deputy Commissioner. An assessing officer can only issue a notice under Section 148 on the direction of the Joint Commissioner after recording the reasons to do so.

For AY 2018 -19 notice under section 148 can be issued till 31st March 2023

Beyond four years but up to six years from the end of the relevant AY:

Notice can only be issued by the Chief Commissioner or Commissioner is content that income has escaped assessment. The amount of income which has escaped assessment should be more than Rs. 1,00,000.

For AY 2018 -19 notice under section 148 can be issued till 31st March 2025

Beyond four years but up to sixteen years from the end of the relevant AY:-

Notice under section 148 can be issued if income in relation to any asset including financial interest in any entity located outside India, is chargeable to tax in India but has escaped assessment.

For AY 2018 -19 notices under section 148 can be issued till 31st March 2035.

7. Section 156: Notice of Demand

If any tax, penalty, fine, or any other amount is due from the taxpayer to the income tax department then income tax notice u/s 156 is served. Normally this notice is served after the assessment of Income Tax Return. The taxpayer can deposit the amount payable within 30 days from the date of the notice. There is no time limit to serve income tax notice. Income tax notice under section 143(1) and 200A are also known as Notice of Demand.

8. Section 245: Refund adjusted against the tax demand

It is basically an intimation from the Income Tax department. This notice is issued when the tax refund (full/partial) for an assessment year is adjusted against the tax demand due to the taxpayer. The assessment year of refund and tax demand can be unlike. There is no time limit to serve income tax notice/intimation u/s 245.

Mainly, the taxpayer gets confused between Income Tax Notice and Assessment Intimation. If Assessee received intimation u/s 143(1), 143(3), 144, or 147 then these are not income tax notice.