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Received an income tax notice? Here are your next steps

Filing Income Tax Returns

and paying your income tax is part and parcel of every taxpayer’s duties. Failure to comply with these requirements can lead to negative consequences. If the tax authorities are not satisfied with the accuracy of your ITR submission, they may serve you a notice or letter. They may even summon you if matters are serious. So how can you best deal with such notice or letter? We provide you with a step-by-step guide.

Check the validity of the notice

First and foremost, you need to verify that this notice is valid. Any communication made to you by the Income Tax Authorities comes with a Documentation Identification Number (DIN). If the document does not carry the DIN, the Central Board of Direct Taxes (CBDT) treats it as invalid. If any communication comes to you and it does not carry a DIN, you do not need to respond to it at all. You can also check the validity online on the Income Tax Department's e-filing website. You need to find the Notice/Order Issued by ITD option and search for the relevant document.

Plan of Action

Once you have confirmed the authenticity of the tax notice, we will need to look at the type of notice you have received. Then we can move on to the best plan of action for the same.

Let’s look at them one by one:
  • If you have been served Notice 131(1A), it means that the assessing officer has reason to suspect you have concealed income. This categorises you as an Income Tax Defaulter. Gather all the evidence and documents proving that the ITR contains true and accurate information.
  • In the case of Notice 139(9), which is sent in the case of defective returns, you need to check if you filled the wrong form or if you or if you happened to make mistakes in your ITR filing. You should use the e-file in response to Notice under section 139(9) option within a period of 15 days.
  • If it is a Notice under section 143(1), there is likely a demand for some additional tax details or rectification for some error in calculation orinaccurate information. The notice is available under e-Proceeding for you to respond to within 30 days.
  • If it is a Notice under section 148, it is for reassessment in case some income has escaped assessment. File a return for the income under question. If you are not convinced of the claim, you can contest the notice.
  • If it is a Notice under section 156, it is likely a demand letter for you to pay your income tax, interest or penalty etc. Pay the relevant dues before 30 days are up and file it under the ‘Respond to Outstanding Demand’ option.If it is a Notice under section 156, it is likely a demand letter for you to pay your income tax, interest or penalty etc. Pay the relevant dues before 30 days are up and file it under the ‘Respond to Outstanding Demand’ option. 
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