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 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:
In case there is a tax demand, then the intimation must be issued within one year 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) 2020-21 on 27 July, 2020, then an intimation can be issued anytime on or before 31 March, 2022. Processing of return under this section has been made mandatory from AY 2017-18 even if a scrutiny notice is issued.
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:
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 6 months after the completion of the assessment year to which it pertains.
For instance, Rohit filed his return on 20th May 2020 for the AY 2020-21. Here notice under section 143(2) can be issued to Rohit within 6 months after completion of the AY to which it pertains i.e. 30th September 2021.
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 as 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 assesses 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 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;
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 to do so. For AY 2017-18 notice under section 148 can be issued till 31st March 2022.
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.
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 till 31st March 2034.
As per the current provisions, the notice under section 148 can be issued 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.
| The financial year for which income escape assessment | Timeline if notice to be issued up to three years | Timeline if notice to be issued beyond three years by up to ten years |
|---|---|---|
| 2020-21 | 31.03.2025 | 31.03.2032 |
| 2019-20 | 31.03.2024 | 31.03.2031 |
| 2018-19 | 31.03.2023 | 31.03.2030 |
| 2017-18 | 31.03.2022 | 31.03.2029 |
| 2016-17 | 31.03.2021 | 31.03.2028 |
| 2015-16 | - | 31.03.2027 |
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 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.
A notice under section 142(1) can be issued under two circumstances:
The information is called for, to enable the officer to make a fair assessment. Being non-responsive to this notice has consequences,
IT departments collate income information from different sources and match that against disclosures made in the ITR. In case the disclosed income is found to be less than the actual income, a notice under section 139(9) or 143(1) is sent to the assessee.
Automated reminders, under section 139(1), are sent to assesses to file returns before the due date. In case the ITR is not filed within the due date, the IT department may issue a notice under section 142(1)(i), demanding the assessee to file the return.
If you have invested in your spouse’s name but forgotten to include the income earned from such investments, your taxable income would be understated. The IT department looks at this as possible tax evasion and may issue a notice under section 143(2).
In case any order is passed requiring the assessee to pay tax, interest, or penalty, a notice of demand under section 156 is issued. The assessee must pay the applicable amount withinthe period specified in the notice.
When there is a due payable by the assessee, the IT department has the power, under section 245, to offset any refunds against such dues. An appropriate notice will be issued intimating the assessee.
| Intimation under Section 143(1) | This is an intimation sent to the taxpayer after the Income Tax Department processes the return. It contains details of the income and deductions claimed by the taxpayer and the tax liability calculated by the department. |
|---|---|
| Notice under Section 139(9) | If there are any discrepancies in the return filed by the taxpayer, the Income Tax Department may issue a notice under Section 139(9) asking the taxpayer to rectify the errors. |
| Notice under Section 143(2) | This notice is issued by the Income Tax Department when it wants to scrutinize the taxpayer's return in detail. The taxpayer may be asked to produce documents or other evidence to support the claims made in return. |
| Notice under Section 148 | This notice is issued when the Income Tax Department believes that income has escaped assessment and wants to reopen the assessment for a particular year. |
| Notice under Section 245 | If the taxpayer has any outstanding tax liability, the Income Tax Department may issue a notice under Section 245 to adjust the refund due to the taxpayer against the tax liability. |
| Notice under Section 271(1)(c) | This notice is issued when the taxpayer is found to have concealed income or furnished inaccurate particulars of income. |
| Notice under Section 143(3) | This notice is issued after the completion of the assessment proceedings and contains the final outcome of the assessment. The taxpayer is required to pay any tax liability, along with interest and penalty, if applicable. |
The required documents vary depending on the type of income tax notice received.
After uploading the income tax notice copy, our tax experts will review it and suggest the necessary documents to provide a solution.
The most common causes for which you might receive an income tax notice include the following:
TaxAbide is a reliable platform that assists individuals and businesses facing income tax notices in India. Here are some reasons why you should choose TaxAbide for handling your income tax notice: