As the deadline to file income tax return (ITR) expired on July 31, one could receive a notice from the tax department for a variety of reasons.
The income tax (I-T) department has reportedly issued nearly one lakh notices recently. The assessment of these notices will be completed by March next year.
This time, the tax department has focussed only on those cases where income is more than ₹50 lakh and these cases date back to four to six years.
Although income tax notices are not usually taken casually by a regular assessee, some of these notices should not frighten you either.
Chirag Chauhan, a Mumbai based chartered accountant explains that there are two kinds of notices. The first category includes a simple intimation of filing of income tax return (ITR) under section 143(1) of the I-T Act.
“When it is 143(1) notice, the taxpayer can open the mail and see what this is about. There is nothing to worry if the details are same as submitted in the return. However, if there is a discrepancy, then one can approach a professional to resolve it,” says CA Chauhan.
The other category of notices, he says, could relate to scrutiny i.e., 143(3) and everything else barring 143(1). In such cases, it is highly recommended to seek professional advice before the notice is replied to.
How to reply?
After receiving a notice from the income tax department, it is imperative that the notice be replied to within the given timeframe.
Experts suggest that a response should not be hurried through. “It’s necessary that you reply to the notice with facts and proofs via necessary documents. At the same time, one should ensure to reply to the notice within the given time frame,” explains Deepak Aggarwal, a Delhi-based chartered accountant and financial advisor.
Essentially, there are two ways to deal with an income tax notice. The first is to agree to the notice where you simply pay the tax demanded in the notice, and intimate the same to the department. The other alternative is to disagree to the notice, and respond accordingly via tax portal.
But it is noteworthy that if one does not respond within the stipulated time frame, the income tax demanded by the department is confirmed, and further penalty can be imposed.
Either way, it is advisable to seek an expert’s advice who can suggest the best course forward based on the category and content of notice.