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Expert Assistance with Income Tax Notice Responses
Got an Income Tax Notice? Let Covering Taxes Handle It!
Simply upload your income tax notice to us via WhatsApp for a swift review by our experts. We’ll take it from there, ensuring a seamless and hassle-free resolution.
Reasons For Receiving Income Tax Notice
- TDS Mismatch -Discrepancies between your Tax Deducted at Source (TDS) details and the information filed in your return.
- Income Discrepancy-Differences between the income declared in your tax return and the income reported in Form 26AS.
- Non-Disclosure of Income-Failure to disclose all sources of income in your tax return.
- High-Value Transactions-Large transactions that do not align with the income you have reported.
- Late or Non-Filing of ITR-Delayed submission or failure to file your Income Tax Return (ITR).
- Random Scrutiny Selection-Being selected for random scrutiny by the Income Tax Department.
- Excessive Deductions or Exemptions-Claiming deductions or exemptions that are higher than usual or deemed unreasonable.
- Unreported Investments or Savings-Failure to report or mismatches in your declared investments or savings.
- Undisclosed Foreign Assets or Income-Not declaring foreign assets or income as required by tax regulations.
- Excessive Cash Deposits-Depositing cash amounts that exceed the specified limits without proper reporting.
- GST and Income Discrepancies-Mismatches between your declared GST details and reported income.
- ITR Errors or Incorrect PAN Details-Errors in your Income Tax Return or incorrect Permanent Account Number (PAN) details.
- Property Sale or Purchase Reporting Failure-Not reporting the sale or purchase of property in your tax return.
- Significant Income Changes-Major variations in income compared to previous years without proper explanation.
- Routine Verification or Assessment-Receiving a notice for standard verification or assessment purposes by the tax authorities.
Methods of Serving Income Tax Notices
The Income Tax Act of 1961 outlines several authorized methods for delivering income tax notices, ensuring that taxpayers receive clear and legal communication. Notices are addressed to individuals, guardians of minors, or key representatives in groups and entities. The primary methods include:
Direct Mail
Notices are sent via registered post to ensure secure and verifiable delivery. This method guarantees that the notice reaches the taxpayer's registered address, providing an official and traceable record of the communication.
Property Posting
If a taxpayer is unresponsive or cannot be reached through direct mail, the notice is posted prominently at their known residence or place of business. This method ensures that the taxpayer is aware of the notice even if they are not present at the location.
Group Notices
For Hindu Undivided Families (HUFs), firms, or associations, notices are directed to the heads or key representatives. This approach ensures collective responsibility and accountability within the group, making sure that the notice reaches the relevant members.
Closed Businesses
Notices are issued to individuals, partners, or directors who were associated with a business at the time of its closure. This ensures compliance and accountability even after the business operations have ended, maintaining legal obligations beyond the lifespan of the business.
Common Types of Income Tax Notices
Notice Under Section 131
This notice is issued by the assessing officer when there is a suspicion that the taxpayer has concealed their income, either in full or in part.
Notice Under Section 139(9)
A defective income tax return can trigger a notice under Section 139(9). Common errors include missing information and selecting the incorrect ITR form.
Notice Under Section 142(1)
If there is a discrepancy between your Income Tax Return and the information available to the assessing officer, you may receive a notice for preliminary investigation under Section 142(1).
Intimation Under Section 143(1)
All taxpayers receive an intimation under Section 143(1), which is a computer-generated initial assessment. This is not a demand notice but may indicate a potential refund or adjustments.
Notice Under Section 143(2) for Scrutiny Assessment Under Section 143(3)
To scrutinize your Income Tax Return, the tax department may issue a notice under Section 143(2). This notice is typically issued within six months from the end of the financial year in question.
Notice under section 156
Receiving a notice under Section 156 indicates a formal demand from the Income Tax Department. This notice signifies that you owe additional taxes, penalties, fines, or other dues to the department. It is crucial to address this notice promptly to avoid further complications.
Experts Guidance In Related Notices
Notice Under Section 142
If the assessing officer suspects that you have underreported your income or failed to file your Income Tax Return (ITR) as required by law, you may receive a notice under Section 142. This notice is typically issued for preliminary investigation purposes.
Notice Under Section 245
You might receive a notice under Section 245 if the assessing officer identifies that you have an outstanding tax liability from a previous financial year. This notice aims to inform you of the tax dues that need to be settled.
High-Value Transactions (HVT) Notice
Engaging in significant financial transactions, such as substantial cash deposits or purchasing property, can trigger a High-Value Transactions (HVT) notice. This notice is issued to verify the source of funds and ensure compliance with tax regulations.
Risk Management Notice
A Risk Management Notice is served when there are discrepancies or omissions in reported income, deductions claimed, or refund confirmations. The tax authorities issue this notice to rectify and address these concerns.
Form 67 Defects Notice
If you have claimed a deduction for foreign income and there are errors in the submitted Form 67, you may receive a notice from the tax department. This notice seeks to correct the inaccuracies and ensure compliance.
Form AS-AIS/TIS Mismatch Notice
A discrepancy between your Form 26AS and Annual Information Statement (AIS) or Tax Information Statement (TIS) can result in a notice. The department issues this notice to clarify and confirm the proper credit of taxes paid.
Relief Under Sections 90/90A/91 Notice
Taxpayers with foreign income who claim relief under Sections 90, 90A, or 91 to avoid double taxation may receive a notice to validate their claim. The tax authorities issue this notice to ensure the legitimacy of the claimed relief.
Reasons You Should File an Income Tax Return
Before you worry about receiving a notice from the tax department, it’s important to determine if you are required to file an income tax return. Here are some scenarios that necessitate filing:
- Income Over the Basic Exemption Limit: If your annual income exceeds the basic exemption limit set by the government, you must file a return.
- Large Deposits in Current Account: Depositing more than Rs 1 crore in your current bank account within a financial year requires you to file a return.
- Significant Savings Account Deposits: If you have deposited more than Rs 50 lakh in your savings bank account, filing a return is mandatory.
- High TDS or TCS Deductions: When your Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) exceeds Rs 25,000, you need to file a return.
- Substantial Business Turnover: Business owners with a turnover exceeding Rs 60 lakh must file a return.
- High Professional Income: If your professional income surpasses Rs 10 lakh, you are required to file a return.
- Significant Electricity Expenses: Annual electricity expenses exceeding Rs 1 lakh make it necessary to file a return.
- Large Expenditure on International Travel: Spending more than Rs 2 lakh on international travel in a financial year requires you to file a return.
Ensure compliance and avoid potential notices by understanding and meeting your tax filing obligations.
Detailed Assessment and Inquiry Notices
Information and Scrutiny Notices
Information and scrutiny notices are issued based on previous tax filings and require thorough verification of the claims made. These notices fall into various categories, each with specific requirements for taxpayer response and documentation.
Information Requests
The Income Tax Department may issue a notice requesting verification of specific details or claims from previous tax returns. This notice necessitates that taxpayers provide additional information or clarification to support the reported figures and claims.
Limited Scrutiny
Limited scrutiny involves a focused examination of particular aspects of the tax return. Taxpayers are required to submit supplementary documentation or explanations to substantiate certain claims or entries made in their returns. This process ensures that the selected areas are accurate and compliant with tax regulations.
Appeals and Ex-Parte Order Notices
Disagreements between taxpayers and tax authorities regarding tax-related decisions often lead to appeals. This legal process aims to resolve disputes and ensure fairness, with appeals sometimes influencing the interpretation of tax laws and setting precedents for future cases. Taxpayers can file appeals for various reasons, including:
- Ex-Parte Orders: Orders made without the taxpayer’s presence due to non-response.
- Incorrect Penalties: Challenging penalties erroneously imposed by the IT department.
- Incorrect Demands: Contesting incorrect tax demands raised by the department.
- Unaddressed Rectifications: When rectification requests are ignored.
- Apparent Mistakes: Addressing clear mistakes evident from the tax records.
- Disallowances by CPC: Challenging disallowances by the Centralized Processing Centre (CPC) that are factual.
The appeal process begins with filing at the Commissioner of Income Tax (Appeals) [CIT(A)]. If the outcome is unfavorable, the taxpayer can escalate the appeal to the Income Tax Appellate Tribunal (ITAT). Further appeals can be made to the High Court and the Supreme Court if necessary.
Once an appeal is filed, it is crucial to respond promptly to any notices under the “E-proceedings” tab. Failure to respond can result in an ex-parte order, where decisions are made in the taxpayer’s absence, often to their detriment.
By engaging in the appeals process, taxpayers ensure their rights are protected and that they receive fair treatment under the law.
Types of Notices: Appeals, Ex-Parte Orders, and Rectifications
In the course of tax administration, various notices are issued to address specific situations and actions required by taxpayers. These include:
Appellate Notices
When a taxpayer disagrees with a decision made by the tax department, they have the right to file an appeal. Upon filing, they will receive an appellate notice. This notice indicates the initiation of the appeals process, providing details on the steps needed to challenge the decision. It serves as a formal acknowledgment that the taxpayer is seeking a review or reversal of the initial ruling.
Ex-Parte Orders
Ex-parte orders are issued when a decision is made without the taxpayer's participation, often due to non-compliance or failure to respond to previous notices. These notices signify that the tax authorities have proceeded with making a determination based on available information, without the taxpayer's input. Such orders can have significant consequences, and it is crucial for the taxpayer to take immediate action to address the situation.
Seeking Rectification
Rectification notices are sent to correct errors or omissions identified in previous proceedings. These notices request the taxpayer to submit supporting documents or additional information to amend inaccuracies in their tax filings. The goal is to ensure that all records are accurate and reflect the correct tax liabilities or entitlements. Responding promptly to rectification notices helps prevent further complications and ensures compliance with tax regulations.
Pricing
Appeal Cases
Starting From
- Exclusive of 18% GST *
- For 1st& 2nd Appeal
- Appeals that can be conducted through online tax portals, without requiring a physical visit
- ITAT Appeals will be charged separately, depending upon location & availability of tax consultant
- For cases where you cannot proceed with simple rectification, revise return, feedback
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Rectification/Revised/Defective
- Exclusive of 18% GST *
- Applicable to rectifying defects, revisions, adjustments, HVT Notice, adjustments, Form 67 defects, 26AS-AIS/TIS mismatch etc.
- Major overhauls or replacements beyond basic rectification
- If the ITR plan fee is higher of the notice fee, the higher of the two fees will be applicable
- Full payment upfront
- We aim to complete the service within 4 business days from the date of receiving the notice with all related documents
- This pricing plan covers a two- time rectification/ revise/ defective service for each eligible customer.
Routine Notice
- Exclusive of 18% GST *
- For providing a simple response and cross checking your filed ITR
- Applicable for Risk Management Notices, Refund Re-issue, Simple Response to outstanding demands, E-campaign Response etc.
- For revise filing due to omission of income or taken incorrect deductions, plan will change accordingly
- For Agree/Disagree Responses
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Scrutiny Cases
Starting From
- Exclusive of 18% GST *
- Comprehensive service for scrutiny cases, including document review, preparation of responses.
- Note: Scrutiny by the tax department is conducted randomly. The process is independent of the timing of your income tax return (ITR) filing, the nature of your income sources, or the specific ITR form you use.
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Calling for Information/Seeking Clarification
- Exclusive of 18% GST *
- Suited For Assistance in seeking clarification or providing additional details in response to:
- Financial Transactions
- Deductions
- F&O Trades
- Full payment upfront
- Unreported Income
- Misreported/Underreported Income Get Started Now
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Scrutiny Cases (ITR Filed By Covering Taxes)
- Exclusive of 18% GST *
- Special rate for scrutiny cases where Covering Taxes has already filed the Income Tax Return (ITR) on behalf of the client for that particular A.Y only.
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Steps to Handle an Income Tax Notice
Upon receiving a notice from the Income Tax Department, it is crucial to handle the situation with care and precision. Follow these steps to effectively manage and respond to the notice:
Read the Notice Carefully:
Thoroughly review the notice to understand the reason behind it and what the Income Tax Department is requesting or highlighting.
Confirm Your Details:
Ensure that the notice is intended for you by verifying personal details such as your name, PAN, address, and the relevant assessment year.
Identify the Issue:
Determine the specific problem with your tax return that prompted the notice, such as discrepancies in declared income, significant transactions, or missing information.
Respond Promptly:
Reply to the notice within the stipulated deadline to avoid penalties or further legal complications.
Submit Required Documentation:
Provide all necessary documents and explanations to address the queries or issues raised by the Income Tax Department.
Check Your E-Filing Account:
Log into your account on the Income Tax e-filing portal to verify the notice’s authenticity and for tracking purposes.
Seek Professional Advice:
If you are unsure about the notice or how to respond, consult with a tax professional for expert guidance.
Essential Documents for Responding to an Income Tax Notice
The specific documents required to respond to an income tax notice can vary based on the nature of the notice received. However, some fundamental documents are commonly necessary for most responses. Below is a detailed list of these essential documents:
1.Copy of the Notice:
Ensure you have a clear and complete copy of the notice received from the Income Tax Department, as it contains vital information about the issue and required response.
2.TDS Certificate (Form 16 – Part A):
This certificate provides details of the tax deducted at source (TDS) by your employer, and it is crucial for verifying the accuracy of your tax payments.
3.Proof of Income Source:
Include comprehensive evidence of your income, such as salary receipts and Form 16 – Part B. These documents help substantiate your declared income and ensure transparency.
4.Investment Proof:
Provide proof of your investments, such as receipts or statements for any deductions claimed under various sections of the Income Tax Act. This can include documentation for investments in PPF, mutual funds, insurance, etc.
By ensuring you have these documents ready, you can effectively respond to the income tax notice, addressing any discrepancies and providing the necessary information to the authorities.
Frequently Asked Questions
An Income Tax Notice is a formal communication issued by the Income Tax Department to taxpayers. While receiving such a notice can be worrisome, it is generally part of the department’s routine procedures to ensure proper compliance and accurate tax filings. These notices serve various purposes, including:
Clarifications and Information Requests:
- The notice may ask for additional documentation or clarifications regarding specific details in your tax return.
Discrepancy Alerts:
- Notices may highlight discrepancies found in the tax return submitted versus the information available to the tax department, such as differences between declared income and income records from other sources.
Compliance Checks:
- They can also be used for routine compliance checks to ensure that all taxpayers adhere to the legal requirements and norms set forth by the tax authorities.
Assessment Proceedings:
- In some cases, notices are part of assessment proceedings where the department needs further information to complete the evaluation of the taxpayer’s liabilities.
Demand Notices:
- These can include demands for payment of additional taxes, interest, or penalties due to underreporting or late payment of taxes.
It is crucial to thoroughly read and comprehend the contents of the notice to understand what is being requested or addressed. The notice will specify the necessary actions or documentation required and often includes a deadline for your response.
To effectively manage and respond to an income tax notice, consider the following steps:
Careful Review:
- Carefully review the notice to understand the nature of the request and identify any discrepancies or issues highlighted by the tax department.
Verification of Details:
- Ensure that the notice is correctly addressed to you and pertains to your tax filings by verifying personal details such as name, PAN, address, and assessment year.
Documentation and Response:
- Gather and prepare all necessary documents to support your response. Provide accurate and complete information to address the department’s queries.
Professional Assistance:
- If the notice involves complex issues or if you are unsure about how to proceed, seek the guidance of a qualified tax professional. This can help ensure that your response is accurate and comprehensive, potentially mitigating further issues or penalties.
Promptly addressing the notice and adhering to the instructions can help resolve the matter efficiently and maintain compliance with tax regulations.
An Income Tax Notice can be delivered to the taxpayer through several methods. To ensure you properly receive and verify these notices, follow these steps:
Email Notification:
- Income tax notices are often sent to the taxpayer’s registered email address. Regularly check your email, including the spam or junk folder, for any communication from the Income Tax Department.
Income Tax Portal:
- You can also access the Income Tax Notification Portal to check for notices. Log in to your account on the portal, and navigate to the “My Account” section where notices and communication from the tax department are posted.
In-Person Visit:
- For certain notices that may not be available online, it may be necessary to visit your local Income Tax Department office.
Authenticity Verification:
- It is essential to verify the authenticity of any notice you receive. Use the “Authenticate Notice/Order issued by ITD” quick link on the Income Tax Department’s official website to confirm the legitimacy of the notice.
DIN (Document Identification Number):
- Be aware of the Document Identification Number (DIN) provided in the notice. This unique number facilitates communication with the Income Tax Department and ensures the notice is genuine.
By following these steps, you can efficiently manage and verify your Income Tax Notices, ensuring compliance and preventing any potential issues.
Yes, salaried individuals can receive income tax notices. Such notices are often issued due to discrepancies in the information reported, such as mismatches in Form 26AS, AIS, TIS, or omissions of income.
Receiving an income tax notice can be concerning, but it is important to remain calm and understand the reason behind it. If the notice is due to missing information, provide the required details promptly. If it is due to errors in your tax return, correct them accordingly. Ensure you respond within the specified timeframe to avoid any penalties.
If you fail to respond to an income tax notice, the repercussions can vary depending on the type of notice. Potential consequences include penalties of up to INR 10,000 and, in severe cases, imprisonment for up to one year.
If you fail to respond to an income tax notice within 30 days, the IT department may proceed to adjust the outstanding demand without providing you an opportunity to explain or contest the issue. This can lead to automatic adjustments and potential penalties.
Responding to an income tax notice can be efficiently handled online. Visit the official Income Tax Department website, log into your account, navigate to the compliance section, and submit your response to the notice.
An intimation letter, issued under Section 143(1), is sent by the Income Tax Department after processing your tax return. It compares the information you submitted with the department’s records. This notice is typically sent within a year after the end of the financial year.
EXC 001 denotes transactions that exceed the limits permitted by the Income Tax Act. Specifically, it refers to monthly cash transactions exceeding INR 10 lakh.
Certainly. You may receive Income Tax Return (ITR) notices pertaining to current account transactions. For instance, any transaction exceeding Rs 50 lakhs in a financial year requires disclosure. Failure to comply may result in receiving a notice regarding the same.
This communication entails any information provided by the Income Tax (IT) department regarding adjustments made against the refund claimed in your income tax return. These adjustments may include correcting incorrect claims, rectifying arithmetical errors, or disallowing claimed losses. Such adjustments could pertain to outstanding demands from previous assessment years.
To address any demands raised due to discrepancies noted in the notice under u/s 143(1), you have two options. If the demand is accurate, you should proceed with paying it. Conversely, if there is an apparent mistake in the record, you can file for rectification under u/s 154(1) or submit a revised return. To file a revision, navigate to the ‘e-file’ section and select ‘file income tax return’. For rectification, access the ‘services’ tab and choose the ‘rectification’ option from the menu.
Settling your tax demand online is a convenient method. Begin by accessing the e-filing portal of the Income Tax department and logging into your account. Review the outstanding tax demand and proceed to make the payment directly through the “Response to Outstanding Tab” on the web portal.
To rectify outstanding tax demand, log in to the official e-filing website and navigate to the “Pending Actions” section. From there, select “Response to Outstanding Tax Demand” to initiate the correction process.
Typically, taxpayers may receive a scrutiny assessment notice under section 143(2) within six months from the conclusion of the financial year.
Upon filing your Income Tax Return (ITR), you receive an acknowledgment (ITRV) on your registered email address. Additionally, you can access and download it from your account on the official income tax department website.
Terms & Conditions *
Confidentiality Assurance: At Covering Taxes, we prioritize the confidentiality of all information provided by our clients regarding their income tax appeals. We uphold stringent measures to safeguard sensitive financial and personal data, ensuring utmost security and privacy.
Expert Guidance: Our team at Covering Taxes is dedicated to providing expert assistance and representation in income tax appeal cases. With our profound knowledge and extensive experience in tax law, we offer comprehensive support to navigate through complex legal processes effectively.
Timely Filing Commitment: Covering Taxes is committed to ensuring that all appeals are filed within the prescribed time limits. We recognize the importance of adhering to deadlines to mitigate the risk of dismissal and uphold the integrity of our clients’ appeals.
Transparent Pricing Policy: Transparency is paramount at Covering Taxes. We provide our clients with a clear breakdown of fees and charges for our services, fostering trust and transparency in every aspect of our engagement.
Regular Progress Updates: Throughout the appeal process, Covering Taxes ensures that our clients are kept informed with regular progress updates. We believe in maintaining open communication channels to address any queries or concerns promptly.
Client-Centric Approach: At Covering Taxes, we tailor our services to meet the specific needs and goals of each client. Our client-centric approach ensures personalized attention and customized solutions for the best possible outcome.
Negotiation and Legal Representation: In advocating for our clients’ interests, Covering Taxes may engage in negotiations with tax authorities and provide legal representation during appeal proceedings. Our aim is to seek favorable settlements and resolutions, potentially averting prolonged litigation.
Responsive Support: Our team at Covering Taxes is dedicated to providing responsive support to our clients. We are readily available to address any queries or concerns, offering dedicated assistance and guidance throughout the appeal process.
Professional Conduct: Covering Taxes conducts all interactions with clients and tax authorities with the utmost professionalism and integrity. We uphold high ethical standards to ensure the best possible outcome for our clients’ appeals.
Payment Terms and Termination Clause: We outline clear payment terms, including the schedule and method of payment, in our engagement agreements. Both parties reserve the right to terminate the engagement under specified conditions, ensuring mutual understanding and accountability.
Retainer Fee and Engagement Duration: Covering Taxes may require an upfront retainer fee to secure our services, with clear terms outlined in the engagement agreement. Additionally, we may specify a minimum engagement duration to ensure commitment from both parties.
Discretionary Appeals and Third-Party Costs: We exercise discretion in determining whether to file an appeal on behalf of the client, based on the merits of the case. If third-party experts or services are required during the appeal process, the client may be responsible for these additional costs.
Conflict of Interest and Limited Liability: In representing multiple clients, Covering Taxes acknowledges the possibility of conflicts of interest and prioritizes client confidentiality. We may limit our liability in case of errors or unfavorable outcomes in the appeal, subject to applicable laws and regulations.
Termination for Non-Payment and Scope of Engagement: Covering Taxes reserves the right to terminate services if the client fails to make timely payments as per the agreed-upon terms. We specify the exact scope of our engagement, with any services outside this scope incurring additional charges.
No Guaranteed Outcomes and Changes to Terms: We explicitly state that there are no guaranteed outcomes in the appeal process, and final decisions rest with the tax authorities or legal entities. Covering Taxes may make changes to the terms and conditions of engagement with prior notice to the client.
Record Retention and Withdrawal of Services: We retain records related to the client’s case for a specified duration, even after the engagement concludes. Covering Taxes may withdraw services if we believe the client’s case lacks merit or if the client fails to cooperate during the appeal process.
Limited Liability for Errors and Indemnification: Our liability for errors, omissions, or inaccuracies in handling the notice is limited as permitted by applicable laws. The client agrees to indemnify and hold Covering Taxes harmless from any claims arising due to inaccurate information or non-cooperation.
Limitation of Claims and Exclusion of Consequential Damages: Any claims against Covering Taxes must be made within the specified timeframe, as outlined in the engagement agreement. We exclude liability for consequential damages arising from the handling of the notice, such as lost profits or business interruption.
Force Majeure and Professional Standards: Covering Taxes is not liable for delays or failures in performance due to circumstances beyond our control. We conduct our services in accordance with applicable professional standards and ethics, adapting to changes in the tax landscape to provide informed advice and actions.
