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How to Respond to a Notice Issued for Non Compliance or Non Filing of Returns?

Updated on: May 31st, 2024

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3 min read

In a year if your income does not exceed the basic exemption limit, then it is not mandatory to file a tax return. However, you should keep in mind that filing taxes even if your income does not exceed the basic exemption is necessary. If you are familiar with the Income tax department issuing a notice under section 143(2), in case of non-compliance. 

In this article, you will learn the procedure to respond to the notice issued by the Income tax department. 

How IT Dept Tracks Non-compliance and Non-filing of Returns?

The income tax department has initiated a Non-filers Monitoring System (NMS) project to take quick action on non-filers of income tax returns with potential tax liabilities. The identified non-filers are informed by SMS, e-mails, and letters in batches. 

In case a notice is issued, the assessee can view detailed information on the income tax e-filing portal by logging into the account. You can also file a response on the portal.

Responding to the Notice for Non-Filing of Return

Step 1: Log In

Open the income tax portal and enter the User ID and Password to log in to your account.

Step 2: Compliance Portal

Upon logging in, under the pending actions section you can find the compliance portal. It provides two options:

  • View  and submit my compliance
  • View my submission

The ‘view and submit my compliance’ tab will show all the details for the assessment years for which:

  • the return has not been filed as per the department record; or
  • The department requires third-party information

Step 3: Return Filed

The taxpayer can choose from the following options:

  • The return has been filed
  • The return has not been filed

In case you receive a notice despite filing the return, you can click on ‘Return has been filed’ and provide the corresponding information such as the acknowledgement number and/or date of filing the return. In case the return has been e-filed, the details will automatically update. If the taxpayer chooses the option that it has not filed then the taxpayer must select from the drop-down options:

  • Return under preparation
  • The business has been closed
  • No taxable income
  • Others (on selecting the others tab, it mandatory to file remarks)

Step 4: Submit 

On filling in all the relevant information, click on the ‘Submit’ tab.

Responding to a Notice for Related Information

Related information is in reference to the different third-party information received in the case of taxpayers is shown separately.

Step 1: Log In

Log in to your account by clicking on https://www.incometaxindiaefiling.gov.in/home and entering the login ID and password.

Step 2: Compliance Portal

On successfully logging in, there is a compliance tab on the dashboard. It provides two options:

  • View  and submit my compliance
  • View my submission

The ‘view and submit my compliance’ tab will show all the details for the assessment years for which

  • the return has not been filed as per the department record; or
  • The department requires third-party information

Step 3: Related Information

The taxpayer can choose one of the following options from the drop-down:

  • Self-Investment/ expenditure is out of exempt income
  • Self-Investment/ expenditure is out of accumulated savings
  • Self-Investment/ expenditure is out of gifts/ loans from others
  • Self-Investment/ expenditure is out of foreign income
  • Self-Income from transaction is exempt
  • Self-Income from transaction is below taxable limit
  • Self-Income from transaction relate to different AY
  • Self-Not Known
  • Other PAN
  • Not Known
  • I need more information

Step 4: Submit

On selecting the option which best suits your response, click on ‘Submit’.

Processing the Response

The responses submitted online by the taxpayers will be verified by the ITD. If found satisfactory, the case will be closed. The taxpayer can check the updated status by logging in to the e-filing portal. In case the taxpayer does not file Income Tax return, the information will be pushed to the field formation for further action.

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Frequently Asked Questions

What is the penalty for non-compliance of income tax notice?

For non-compliance with the income tax notice, the penalty is Rs. 10,000.

Is it mandatory to reply to a non-compliance notice?

It is advised to respond to the notices that are received from the Income tax department.

How will I receive a non-compliance notice?

You will initially be communicated through SMS or email regarding the non-compliance or non filing of returns.

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