The Income Tax Act 1961 has a mechanism for ensuring compliance by issuing notices to assessees the department considers non-compliant. These notices can be a request for information or demand of tax payment/penalty for non-compliance.
However, it should be noted that all the notices should be issued according to the provisions of the act. If the notice is not issued per the act, it is rendered void, invalidating the tax demand and penal procedures. Therefore, as taxpayers, it is essential for us to understand the notices that can be issued under different sections of the act, as well as the time limits and other compliance aspects.
Notices are generally issued under section 142(1), 142(1), 143(2), 148, 139(9) and 156 of the act. This article explains in detail, the different types of notices issued under Income Tax Act and their respective time limits within which such notices can be issued.
Time limit for notice under the following two situations are explained below
The time limit is 3 years before the financial year.
E.g. If the notice is issued on 24-05-2025, it was issued in the previous year, 2024-25. The notice pertaining to the production of accounts should be pertaining to the year 2021-22 and not any earlier previous year.
Note:
The assessee is required to file the return or necessary information within the time limit prescribed in the notice.
Simply speaking, summary assessment is the processing of the return.
Under the act, it is not mentioned as ‘notice’ but as ‘intimation’. This notice is issued when the assessee has already filed the return on income. If the assessing officer finds certain inconsistencies, as mentioned below, he sends an intimation to the assessee.
Usually, these inconsistencies are not found out of deep scrutiny; they are obvious inconsistencies that appear apparently.
The intimation can be issued if the return is filed under section 139(1) or 142(1).
Notice under section 143(1) cannot be sent by the assessing officer after 9 months from the end of the financial year in which the return is filed.
For example, the return of income is filed for FY 2024-25. End of the financial year is 31-03-2025. 9 months from the end of financial year is 31-12-2015. It is the last date for issuing intimation u/s 143(1) in this case.
The assessee is supposed to file a response to the intimation received within 30 days of the date the intimation is issued.
His responses will be considered for the computation of income by the assessing officer. The assessing office would verify the correctness and validity of responses received before giving effect to the inconsistencies noted.
The assessing officer will proceed, giving effect to the inconsistencies noted. It might also result in penal consequences under section 271 or prosecution proceedings under section 276D, which might also result in imprisonment.
The assessing officer might require the assessee to furnish evidence to perform a scrutiny assessment. In this case, he issues a notice under section 143(2).
3 months from the end of the relevant financial year on which the return on income is furnished.
For example, the Return was furnished on 19/02/2025. The financial year ends on 31 March 2025, so the notice needs to be issued by 30 June 2025.
The response should be submitted by the assessee within the time limit specified in the notice.
Note:
Anyway, we can make a requisition under section 119(2) to the CBDT to relax the time limit. The assessing officer can relax the time limit at his discretion.
The assessee would not have furnished certain income in the returns and it would have been missed out by the assessing office on his regular assessment. In this case, the assessing officer has the power to re-assess the income of the assessee in the particular financial year.
It could also be that the assessing officer has not conducted any assessment on the return under question, and the time limit for normal assessment under section 143 has elapsed. In these situations, he has the power to re-open the return under question and conduct assessment.
This is the concept of income escaping assessment.
A Show Cause Notice is issued to the assessee, allowing him to explain himself under section 148A. If the assessing officer is still unsatisfied, a notice under section 148 is issued.
It is to be noted that notice for income escaping assessment can be issued only when the assessing officer has information indicating that the income has escaped the assessment.
Notice under this section cannot be issued for cases that are already under an appeal.
Illustration:
Notice u/s 148 is issued on 15th January 2025. The end of Jan is 31st Jan. 3 months from 31st Jan - 30th April 2025. Return to be within 30th April 2025.
Particulars | Upto 31st August 2024 | After 31st August, 2024 |
If the income escaped assessment is ₹. 50 Lakhs or more as per the information available with the Assessing Officer | 3 years from the end of the Relevant Assessment Year | 3 years and 3 months from the end of the Relevant Assessment Year |
Example: For income of Rs.30,00,000 escaped in FY 2020-21, Relevant Assessment Year is Rs.2021-22. Since this is before 31st August 2024, the time limit is 31st March, 2025 | ||
If the income escaped assessment is less than ₹. 50 Lakhs as per the information available with the Assessing Officer | 10 years from the end of the Relevant Assessment Year. | 5 years and 3 months from the end of the Relevant Assessment Year |
Example: For income of Rs.60,00,000 escaped in FY 2020-21, Relevant Assessment Year is Rs.2021-22. Since this is before 31 August 2024, the time limit is 31 March 2032. | Example: For income of Rs.60,00,000 escaped in FY 2024-25, the Relevant Assessment Year is Rs.2025-26. Since this is before 31 August 2024, the time limit is 31 March 2031. |
In the notice under section 148, the assessing officer requires the assessee to file a return of income within 3 months from the end of the month the notice is issued.
At the end of the assessment by the assessing officer, an assessment order is passed, determining the amount of tax, interest, and penalty payable by the assessee. Wherever it is found that an amount is recoverable from the assessee as tax, interest, and penalty, the assessing order must be sent along with a demand notice.
The assessee should pay the demand notice within 30 days of the notice. In exceptional cases, the assessing officer, with the prior approval of the Joint Commissioner, can reduce or extend the period or allow payment by installment.
If the assessment order is not accompanied by a demand notice, the assessee does not need to pay tax, interest, or penalty.
After the assessee files the return of income, when the assessing officer finds the return filed defective, he sends an intimation to the assessee. Therefore, the assessee is provided with an opportunity to rectify the defect.
If the assessee does not file a response within the specified time limit, the return that was filed will be treated as invalid. It will be considered as if the assessee has not filed a return at all.
It is important to maintain accurate records and file the returns accurately to avoid notices, penalties, and assessments. It is also essential that the taxpayer be aware of situations, conditions, and time limits for notices under different sections of the act to effectively comply with notices.
Related Articles
Section 148A of the Income Tax Act
Section 148 of the Income Tax Act
Intimation under section 143(1)
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