Income Tax Notice - How To Check And Authenticate ?

You may be surprised to receive an intimation/notice from the income tax department even if you have filed your income tax returns within the due date. You may not be sure about what it is and how to respond to it. Don’t worry, we will break it down for you to help you understand your notices in detail. 

First and foremost, it is important that you understand the difference between an intimation and a notice. There is a very thin line of difference between the two. An Intimation is to highlight the outcome of the processing of your return or conclusion of the assessment, and you may not be required to act upon it (although there are a few exceptions to it). 

However, when you receive a notice, you must act on it. Recently, the Central Board of Direct Taxes (CBDT) has notified a new scheme known as the Centralized Communication Scheme (CCS). The scheme states that, gradually, all communications will happen in an electronic mode.

Every communication by the Income Tax Department (ITD) on or after 1st October 2019 shall bear a unique Document Identification Number (DIN).

Let us understand various notices/intimations issued by the income tax department 

How To Authenticate Notice/Order Issued By ITD?

Before you respond to any communication received in the name of the income tax department, it is important to verify whether the notice/order issued is genuine and issued by the income tax authority.

You can authenticate the notice/order/letter issued by the income tax authority on the e-filing portal. Let us understand to verify the same.

Step 1: Go to income tax e-filing portal. On the home page, go to ‘Authenticate notice/order issued by ITD’ under ‘Quick Links’.

Step 2: You can authenticate using:

• PAN, document type, assessment year, issue date and mobile number (for notice/order/letter issued for AY 2011-12 and subsequent years only)
• Document Identification Number and mobile number (for all assessment years)

Step 3: If you want to authenticate by PAN, document type, assessment year, issue date and mobile number, select the option and enter all the details.

Step 4: After filling in all the details, you will receive an OTP. Enter the OTP received.
Once the OTP is validated, the DIN of the notice issued, along with the date of issue of the notice, will be displayed.

If the notice is not issued by the ITD, it will display a message – No record found for the given criteria.

Step 5: Another alternative is to authenticate using DIN and mobile number.

Step 6: Enter DIN and mobile number and continue. You will receive an OTP. Validate using OTP.

If the notice/order is issued by the income tax authority, it will display a success message, as shown below.

Otherwise, it will show- No record found for the given Document Number

Types Of Notices/Intimations

Notice Under Section 133(6) 

The Income Tax Department has enacted the E-Verification Scheme 2021 which involves calling for information from those taxpayers where material difference is observed between the ITR field and data available in form AIS. The reason for such notice can be as follows

1. ITR was not filed in spite of having income exceeding the basic exemption limit as per AIS.
2. Taxable Income in the form of Salary, Interest Income, and Capital gain exists in the Annual Information Statement (AIS). However, values are not entered correctly in the ITR Form.
3. Significant higher expenditure in the form of Purchase of immovable property, Foreign travel, and Purchase of Mutual funds/stocks in comparison to the Income declared in the ITR

Copy of Notice u/s 133(6)

Steps To Respond To Notice u/s 133(6)

1. Analyse the reason for receiving such notice and identify if there was any actual misstatement from taxpayer side or error from department
2. Login to the income tax portal >> Pending Action >> Compliance Portal >> E Verification

3. Provide detailed response along with necessary attachment in the questionnaire provided 

4. If the misstatement is from the taxpayer and additional liability is required to be paid, then such taxpayer can file the Updated return u/s 139(8A) along with the necessary penalty voluntarily and provide a response accordingly
5. However, if the error is from the department side you can provide the response in the insights portal along with supporting documents.

Notice Under Section 142(1)

A notice under section 142(1) can be issued under two circumstances:

• If you have filed your return, but the assessing officer requires additional information and documents; or
• If you have not filed your return but the assessing officer wants you to file it.

The information is called for to enable the officer to make a fair assessment. Being non-responsive to this notice has consequences,

• A penalty of Rs 10,000 can be levied for each such failure
• Prosecution, which may extend up to 1 year
• Both of the above.’

Copy of Section 142(1) Notice 

Intimation Under Section 143(1)

After having filed your returns, it is electronically processed by the Central Processing Centre (CPC). The income is computed after making the following adjustments to the total income in return :

• Any arithmetical error in the return
• An incorrect claim (provided the incorrect claim is apparent from the information filed)
• Disallowance of incorrectly claimed loss or expenditure
• Any income which has not been included in the return

Upon successful processing of the return, an intimation under section 143(1) is issued by the CPC under any of the three instances:

• There is a 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.

In case there is a tax demand, then the intimation must be issued within nine months from the end of the year in which the return has been filed. For example, if you have filed your returns for Assessment Year (AY) 2024-25 on 27 July 2024, then an intimation can be issued anytime on or before 31st Dec 2025. Processing of returns under this section has been made mandatory from AY 2017-18.

How To Analyse The Above Notice?

1. The notice provides a comparative analysis of the date provided in the ITR and Computed u/s 143(1).
2. Identify which line item is causing such additional liability
3. It can be a mismatch in Income, Deduction or Prepaid taxes
4. If such demand is due to an error, then Rectification return u/s 154 can be filed within a period 4 years from the end of such assessment year
5. If demand is accurate, then it can be paid off using the link provided

Notice Under Section 143(2) 

The purpose of this notice is to notify the assessee that the return filed has been picked for scrutiny. It is pertinent to note that the section under which it will be scrutinized is different from the one in which the notice has been issued. Via detailed scrutiny, the assessing officer intends to be assured that you have not done any of the following:

• Understated your income
• Claimed excessive loss
• Paid lesser taxes

Through this notice, the taxpayer is required to respond to the questionnaire issued along with the documents required by the income tax department. The assessing officer is supposed to service this notice within 3 months after the completion of the assessment year to which it pertains.

For instance, Rohit filed his return on 20th May 2024 for the AY 2024-25. Here notice under section 143(2) can be issued to Rohit within 3 months after completion of the AY to which it pertains, i.e. 31th July 2025.

How To Respond To Notice u/s 143(2)

1. Carefully go through the notice and identify the reason why such notice has been issued, which will be provided in the Annexure.
2. Prepare a response under a cover letter, providing a detailed explanation in a legitimate manner and answering truthfully to all the questions provided in detail.
3. Log in to your Income tax portal under e-proceeding, provide the response to such notice with the cover letter and also attach the necessary documents as requested.

Are you not sure about what to do with such an income tax notice? Use our Notice Upload Facility to allow us to help you out. Alternatively, you can even seek the help of a Tax Expert.

Notice Under Section 148

An assessing officer may have a reason to believe that you have not disclosed your income correctly and, therefore, you have paid lower taxes. Alternatively, you may not have filed your return at all, even if you must have filed it as per law. This is termed an income-escaping assessment. Under these circumstances, the assessing officer is entitled to assess or reassess your income according to the case. Prior to making such an assessment or reassessment, the assessing officer should serve a notice to the assessee asking him to furnish his return of income. The notice issued for this purpose is issued under the provisions of Section 148.

Previously the timelines to be adhered to for the issuance of notice under Section 148 were as below:

As per the amendment in the Finance Act 2021, with effect from 1st April 2021, the time limit up to which the assessing officer can re-open the assessment of the taxpayer is as follows;

• Up to three years from the end of the relevant assessment year in normal cases and 
• Beyond three years but not more than ten years from the end of the relevant assessment year, if the assessing officer has material evidence that income of Rs.50 lakh or more for a financial year has escaped assessment.

Time Limit To Issue Notice For ITR Filed Preceeding To Finance Act 2021.

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 for doing so. For AY 2017-18 notice under section 148 can be issued till 31st March 2022.

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 satisfied that income has escaped assessment. The amount of income which has escaped assessment should be more than Rs. 1,00,000. For AY 2017-18 notice under section 148 can be issued till 31st March 2024.

Beyond Four Years But Up To Sixteen Years From End Of 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 2017-18, notice under section 148 can be issued until 31 March 2034.

The Effect Of Amendment In Finance Act, 2021

As per the current provisions, the notice under section 148 can be issued for up to four years, up to six years or up to 16 years, as the case may be. But with effect from 1st April 2021, the new reassessment due dates shall be applicable. 

Let us understand the timelines for previous financial years after the amendment in the Finance Act 2021 came in force:

*Hence the assessing officer cannot issue notice for the AY 2015-16 in normal cases. Also, for the financial year 2016-17, the notice shall be issued before 31st March 2021.

Notice Under Section 245

If the assessing officer has reason to believe that tax has not been paid for the previous years and he wants to set off the current year's refund against that demand, a notice under Section 245 can be issued. However, the adjustment of demand and refund could be done only if you have been provided proper notice and an opportunity to be heard. The timeline to respond to the notice is 30 days from the day of receipt of the notice. If you do not respond within the aforesaid timeline, the assessing officer can consider this as consent and proceed with the assessment. Therefore, it is advisable to respond to the notice at the earliest.

What Should Be Done After Receiving An Income Tax Notice?

When you get a notice under any of the aforementioned sections, you should take the following steps:

1. Carefully read the notice to determine why it was sent.

2. Examine the notice's basic details to determine that it is intended for you. To ensure that the notice is sent to you, it should include your correct name, PAN number, address, and so on. Check the assessment year given in the notice as well.

3. Determine the mismatch in your income tax return that resulted in a notice being served, if any.

4. To avoid penalties and prosecutions, respond to the notice within the time frame specified.

5. Ensure that your response is backed by adequate information.

6. Also, make sure to check that the notice you received is reflected in your income tax account online.

What Are The Most Common Causes Of Notice? 

The most common causes for which you might receive an income tax notice include the following:

1. Inconsistency in the amount of TDS reported
2. An inaccuracy on your tax return
3. Failure to submit all required papers
4. Failure to file your tax returns
5. When you make investments in your spouse's name but fail to report them on your income tax returns.
6. If high-value transactions occurred during the fiscal year but were not correctly disclosed on the income tax return
7. If the assessing officer randomly examines your income tax return
8. When long-term capital gains from stock investments are not properly disclosed
9. If the taxpayer fails to declare any income
10. If the incorrect income tax return form is used to file the income tax return

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