After filing an Income Tax Return (ITR), many salaried taxpayers assume that the process is complete. However, it is important to regularly check your registered email address and the Income Tax e-filing portal for any communication from the Income Tax Department.
Receiving an income tax notice does not always mean that you have committed a serious mistake. In many cases, notices are generated to inform taxpayers about a mismatch, missing information, incorrect details or a proposed adjustment in the return. Some communications may simply require a clarification or a correction.
However, notices related to scrutiny, reassessment or unexplained income may require a detailed response. Taxpayers should therefore read every communication carefully and respond within the deadline mentioned in the notice.
Here are eight common types of income tax notices that salaried employees may receive after filing their ITR and what they generally mean.
Section 143(1)(a): Notice for Proposed Adjustment
A notice under Section 143(1)(a) may be issued when the Income Tax Department identifies an apparent mismatch or error while processing the ITR.
The issue may relate to deductions, exemptions, tax credits or information available with the department from employers, banks and other reporting entities.
How to Respond
Carefully review the proposed adjustment and compare it with your Form 16, Form 26AS, AIS, TIS and other relevant tax documents.
If the proposed adjustment is correct, you can accept it. If you disagree, submit an online response with the necessary explanation and supporting documents within the prescribed time.
Section 139(9): Defective Income Tax Return Notice
A notice under Section 139(9) is issued when the Income Tax Department considers an ITR to be defective.
This may happen because of incomplete information, missing disclosures, incorrect details or other defects specified under the Income-tax Act.
For example, there may be a mismatch in reported income and tax details, or certain mandatory information required in the return may be missing.
How to Respond
The taxpayer must correct the defect and submit the required response within the specified deadline.
If the defect is not rectified within the prescribed period, the Income Tax Return may be treated as invalid. Therefore, this notice should not be ignored.
Section 142(1): Notice Seeking Additional Information
A notice under Section 142(1) may be issued when the Assessing Officer requires additional information, documents or explanations to complete an assessment.
It may also be issued in certain situations where a person has not filed an income tax return despite being required to do so.
The department may ask for documents related to salary, investments, deductions, bank transactions or other financial information.
How to Respond
Submit all the requested information through the Income Tax Department’s e-proceedings system within the prescribed deadline.
Ensure that the information is complete, accurate and supported by relevant documents. Providing an incomplete response may lead to further queries.
Section 143(2): Scrutiny Assessment Notice
A notice under Section 143(2) generally means that the Income Tax Department has selected the return for scrutiny.
The purpose of scrutiny is to verify whether the income declared, deductions claimed, exemptions and other details mentioned in the ITR are correct.
A scrutiny notice does not automatically mean that the taxpayer has committed tax fraud. The department may simply require additional verification of the information reported in the return.
How to Respond
Review the notice carefully and provide all the documents and explanations requested by the department.
Maintain copies of salary slips, Form 16, investment proofs, bank statements and other documents supporting the claims made in your ITR.
In complex cases, professional tax advice may be useful.
Section 148: Notice for Income Escaping Assessment
A notice under Section 148 may be issued when the Income Tax Department believes that certain taxable income has escaped assessment, subject to the legal procedure and conditions applicable under the Income-tax Act.
This type of notice may involve income or transactions that were not properly disclosed or assessed earlier.
How to Respond
Read the notice carefully and understand the reason for the proposed reassessment.
The taxpayer may be required to file a return or provide information and explanations regarding the transactions under review. Since reassessment proceedings can involve complex legal and tax issues, professional assistance may be helpful.
Section 245: Notice for Adjustment of Tax Refund
A notice under Section 245 may be issued when the Income Tax Department proposes to adjust your current tax refund against an outstanding tax demand from another assessment year.
For example, if you are eligible for a refund for the current year but have an unpaid tax demand from a previous year, the department may propose to adjust the refund against that amount.
How to Respond
Check whether the outstanding tax demand is correct.
If the demand is valid, the proposed adjustment may be accepted. However, if the demand has already been paid, is incorrect or is under dispute, submit an objection along with the relevant supporting documents.
Section 154: Notice for Rectification of an Error
Section 154 deals with the rectification of mistakes that are apparent from the record.
These may include clerical errors, calculation mistakes or other obvious errors in an assessment order or tax record.
The department may issue a communication before making a rectification that could affect the taxpayer’s tax liability.
How to Respond
Review the proposed rectification carefully.
If the correction is accurate, no objection may be required. If the proposed rectification is incorrect, submit a response explaining the issue and provide supporting documents.
Section 263: Revision of Assessment Order
A notice under Section 263 may be issued when the Principal Commissioner or Commissioner considers an assessment order to be erroneous and prejudicial to the interests of the Revenue.
This provision allows the Commissioner to examine and potentially revise an assessment order passed by the Assessing Officer.
How to Respond
The taxpayer should carefully review the reasons mentioned in the notice and submit a detailed written response supported by relevant facts and documents.
As Section 263 proceedings can involve complex legal issues, seeking assistance from a qualified tax professional may be appropriate.
What Should You Do After Receiving an Income Tax Notice?
The first step is not to panic. Every notice has a specific purpose, and many notices are related to procedural issues or mismatches that can be resolved by providing the correct information.
You should follow these steps:
- Verify that the communication is genuine by checking the Income Tax e-filing portal.
- Read the section and reason mentioned in the notice carefully.
- Check the deadline for submitting your response.
- Compare the issue with your ITR, Form 16, Form 26AS, AIS, TIS and other financial records.
- Submit a complete and accurate response with supporting documents.
- Keep copies of the notice, response and documents submitted.
- Consider consulting a chartered accountant or tax professional if the matter involves scrutiny, reassessment or a significant tax demand.
Can an Income Tax Notice Be Ignored?
No. Taxpayers should not ignore a notice from the Income Tax Department.
Failure to respond within the prescribed deadline may lead to further action, depending on the nature of the notice. This could include adjustments to the tax return, additional tax demand, penalties, an assessment based on available information or other proceedings under the Income-tax Act.
The best approach is to verify the notice, understand the issue and submit the required response within the given time.
Final Word
Receiving an income tax notice after filing an ITR does not necessarily mean that a taxpayer has done something wrong. Many notices are issued because of data mismatches, missing information or routine verification.
Salaried employees should regularly check their email and Income Tax e-filing account after filing their return. Keeping records such as Form 16, AIS, Form 26AS, salary slips, bank statements and investment proofs can make it easier to respond if any clarification is required.
For complex notices involving scrutiny, reassessment or revision of an assessment order, professional guidance can help ensure that the response is accurate and submitted within the prescribed timeline.
