These
days people are getting different types of notices/intimations from the Income
Tax department by different modes such as delivery by post or by an e-mail.
This
article aims to highlight the different situations in which income tax notices
can be received and how to respond to those notices if anyone receives the
same.
I)
Notice for
scrutiny assessments u/s 143(2) r/w section 142(1)
·
These notices
are generally received if you undertake a high value transaction or show some
point in the return of income which is unusual from the previous year.
·
Generally,
these notices are made out on the basis of a Computer aided scrutiny selection
system where the assesse meets the criteria as defined for issuing notice of
assessment.
·
The assessee
should immediately consult his CA/Tax consultant when he receives such a notice
in order to draft a proper reply to the same.
II)
Notice for
non-filing of income tax return
·
This type of
notice is generally received when a person fails to file the income tax return
for a particular year(s) when he had filed the same for the previous years.
·
This notice is
also given to people who enter into high value transactions but have failed to
file the return.
·
Also in case
of salaried individuals, many employees do not file returns in a belief that entire
tax is deducted from their salary hence they do not have file the return. This
leads to service of a notice from the ITD.
Ques: What to do if you
receive a notice for non-filing of Income Tax Return?
Ans: If
you have received the notice manually i.e by post or by hand etc., then you
have to draft a suitable reply to the income tax authority issuing the notice,
detailing the exact reasons why you did not file the return of income.
1) If you were filing the returns previously but have not filed it for
the current year due to income being below the taxable limit, then you should
clearly mention in the reply that the income was below the taxable limit and
that there was no need to file the return of income.
My suggestion would be to always file the income tax return even if
your income is below the taxable limit for particular year especially if you
were filing the income tax return previously. Discontinuation in filing the
return often leads to notice for non-filing of return.
2) Also often people enter into high value transactions but do not file
the return in that respect. Example when a person sells or buys a property
above Rs. 30 lacs, the information is given to the Income Tax Deptt. in the
form of AIR and if the assessee has not filed the return, a notice is given to
the assessee for filing such return.
Similarly such notice can be
given if the person enters into any transaction listed in the Annual
Information Return (AIR).
Some of the common
transactions to be taken care of are:
a) Cash deposit of 10 lakhs or more during the FY in savings account
with any Bank.
b) Payment made against bills of credit card of 2 lakhs or more during
the year
c)
Purchase of
Mutual funds worth Rs. 2 lakhs or more during the year.
d)
Purchase or sale by any person of immoveable property
valued at thirty lakh rupees or more.
Therefore, if any person enters into any of these transactions then
he/she must ensure that the return is filed in respect of income/losses from
such transactions otherwise receipt of notice is
inevitable.
3)
Also people often do not file
return of income when whole of their tds is deducted on salary income. This
often leads to notice for non-filing of return by the income tax department.
It is mandatory to file the return if
the total income exceeds the maximum amount not chargeable to tax whether or
not the whole of tds is deducted unless any specific exemption is given for not
filing the return. The return of income is to be filed to intimate the income
tax deptt. that there is no tax payable for the year.
If you have received such a notice
for non-filing of return where whole of tds is deducted and there is no tax
payable then you could have two alternatives as follows:
·
If the time for filing the
return has not passed, then you could file the return and can attach copy of
the acknowledgement alongwith a suitable reply to the notice stating that the
whole of tds was deducted and there was no tax payable and there was no tax evasion.
·
If the time for filing the
return is already over, then prepare a computation of income showing that there
was no tax payable and attach alongwith a suitable reply stating therein that
the whole of the tds was deducted and there was no tax payable and hence there
was no tax evasion.
4) If you have received notice
of non-filing by mail i.e compliance notice then you should do the following:
·
Login to your Income Tax Department website account.
·
Go to the compliance section
and select whether the return is filed or not.
·
If the return is filed, then
simply click the option that ‘the return is filed’.
·
If the return is not filed
then click the option that the ‘return is not filed’ When you click on
this option, there will be 4 options appearing from which you have to choose
the most appropriate option applicable to you. These are as follows:
§ Return under preparation
§ Business has been closed
§ No taxable income
§ Others
¨
After choosing the most appropriate option, go to the ‘Related
Information Summary’ tab where some information may be listed in respect of
which you may have received this compliance filing notice. Here in the ‘Information
relates to’ Tab, it asks for whether such information belongs to the person
who has received this compliance notice or to any other person. You could
choose the appropriate option depending on the person to which this information
relates to.
Mostly
the information will relate only to the person who has got the compliance
notice. The information relates to some other person only when there is a
transaction, income relating to which is clubbed in the income of the assesse
or the return of some other person is filed with the PAN of the assessee such
as is done in the case of a legal heir.
III)
Notice for
non-disclosure of income:
If you have not shown any income in
the ITR such as Bank Interest, Income from shares or Mutual funds then you will
get a notice from the IT Deptt. for that.
This generally arises due to income
not being shown on which tds is deducted or Income for which information is
supplied to the ITD in AIR.
Therefore always match the return of
income with the form 26AS relating to tax credits and ensure that all incomes
are shown as in form 26AS.
If the incomes are not shown as in
form 26AS, then file a revise return for the same if the time for filing the
revised return is not yet over. (Time limit for filing revise return is one
year from the end of the relevant assessment year to which the original return
relates).
If the time limit for filing the
revise return has already expired then file a revised computation alongwith a
suitable reply to the notice. Taxes if any that remain to be paid due to the revised
computation should be paid alongwith applicable interest and a copy of the
challan should also be attached with the reply.
IV)
Notice for belated
filing of return
If you have not filed the IT Return
by the due date, then you could receive a notice for filing the same. The ITD
selects a date upto which it analysis as to who has filed the return and who
has not done so and sends a notice to the non-filers.
If you have also received then do not
panic. Then Prepare a return of income and file as soon as possible.
If you cannot file the return very
soon then a simple reply that the return is under preparation and would be
filed soon before the due date will be sufficient.
V)
Notice for Tax Credit
Mismatch in the ITR
This intimation is generally given by
the Income Tax Deptt. when there is mismatch in the TDS claimed in the ITR
& Tds actually showing in the Form 26AS.
You need to identify the exact reason
for mismatch in TDS and file a rectification/ revise return accordingly. You
may need to get the tds corrected in the form 26AS first before filing any
rectification/revision.
VI)
Notice u/s 245 for
adjustment of refund with any demand due
Whenever you claim a refund in the
ITR, the Income Tax Deptt. can adjust this refund against any demand pending
for the earlier assessment years. Before adjusting the refund, the ITD gives an
intimation of the amount of refund & demands determined and provides a
period of 30 days to reply to the said intimation failing which the refund will
be adjusted with pending demands.
Whenever you receive such a notice,
the first thing to do is to examine the demands for the earlier years.
Once the reasons for the demands are
identified, then take steps to rectify such demands by filing
rectifications/revisions/payment of demand etc.
Once the above steps are taken, then
suitably reply to the ITD that you have taken steps for corrections of the
demands and that the demands are incorrect and so the refund amount should not
be adjusted against such incorrect demands. Make sure to reply within 30 days
of the receipt of the notice.
VII)
Notice u/s 139(9) for
filing defective return
This notice is generally received when there is a mistake or a
defect in the return filed. The assessee has 15 days to reply to such notice.
If the assessee does not reply within 15 days the return will be deemed as not
filed.
Whenever you get such a notice, first check what is the issue. Once
you know the problem/mistake then correct such mistake and file the response to
notice under section 139(9) by generating the xml file again and uploading in
e-file tab in the income tax login under the heading e-file in response to
notice u/s 139(9).
Here the filer has to select the assessment year and the form
number.
Following are also to be given for filing the response on the
e-filing website:
Acknowledgement number of the original return
Communication reference number of notice u/s 139(9)
Communication date as given in the notice
Date of receipt of notice by the taxpayer
Verification PIN/Password as written in the notice
If the time period of 15 days has already lapsed and you have not
filed the response then you could file the return again which will be deemed as
original return and if the time of original return has expired then it will be
deemed as the return is not filed in time.
VIII)
Notice for non-payment
of Self Assessment Tax:
From the AY 2014-15 onwards, the
return with tax payable is not allowed and will be deemed as a defective
return. Therefore do not file a return with tax payable. However, if you happen
to do so then you will receive a notice for defective return.
When you receive such a notice then
immediately pay the tax payable and file the return again in response to notice
under section 139(9).
Important Tip: Pay due taxes even if you cannot file return of previous financial
years.
The
author is a CA in practice at Delhi and can be contacted at:
Website: www.taxraasta.com
Mobile:
+91-9953199493
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