Types of Income Tax Notices

Notice Under Section 131(1A)

If you've got a notice under section 131(1a), it means the assessing officer has reason to suspect that income has been concealed.

Notice Under Section 139(9) - Defective Return

Return can be considered as defective by the Assessing officer. The defect can be are as follows:

• Wrong ITR filed.
• Missing Information.
• Incomplete Return.

If the AO consider the return as defective return, then he will intimate the same and gave the opportunity to rectify the defect within 15 days from the date of such intimation.

If the defect is not rectified within the given period, then the return will be considered as invalid return and it will be deemed that no return has been filed.

Notice Under Section 142(1) - Inquiry before assessment

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

Notice 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 the 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 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 one year from the end of the year in which return has been filed. For example, if you have filed your returns for Assessment Year (AY) 2016-17 on 27 July, 2016, then an intimation can be issued anytime on or before 31 March, 2018.

Processing of return under this section has been made mandatory even if a scrutiny notice is issued from the AY 2017-18.

Notice Under Section 143(2)

The purpose of this notice is to notify the assessee, that the return filed has been picked for a 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 a detailed scrutiny, the assessing officer intends to be assured that you have not done any of the following:

• Understated your income;
• Claimed excessive loss; or
• 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 6 months after the completion of the assessment year to which it pertains.

For instance, Rohit filed his return on 20th May 2018 for the AY 2018-19. 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 2019.

Notice under this section can be served only before the expiry of six months from the end of the FY in which the return is furnished.

Notice Under Section 148 - Income escaping assessment

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 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.

Timelines for issuance of notice u/s 148 are as follows:

• Notice can be served within 4 years from the end of relevant AY if the income escaped assessment is Rs. 1 lakh or less than that. Notice cannot be issued by any officer below the rank of Assistant Commissioner or Deputy Commissioner.
• Notice can be served beyond 4 years but upto 6 years from the end of relevant AY if the income escaped assessment is more than Rs. 1 lakh. Notice can only be issued by the Chief Commissioner or Commissioner.
• Notice can be served beyond 4 years but upto 16 years from the end of relevant AY if income in relation to any asset located outside India is chargeable to tax in India but has escaped assessment.

Notice Under Section 156 - Notice of Demand

Where any tax, interest, penalty, fine or any other sum is payable in respect of any order passed, then the AO serve the notice u/s 156 to the assesse specifying the sum so payable.

Assessee can deposit the amount payable within 30 days from the date of Income tax notice.

There is no time limit to serve this notice.

In case of delay in payment of tax, the assessee shall be deemed to be in default and liable to pay simple interest u/s 220(2) @1% for every month or part thereof and further penalty u/s 221(1) may be imposed.

Notice Under Section 245 - Set off Refunds against tax remaining payable

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 a 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 a consent and proceed with the assessment. Therefore, it is advisable to respond to the notice at the earliest.

Summary