All you need to know about income tax e-notices

Under the lens

Since the advent of technology, most of the Income Tax (IT) department’s communication addressed to an assessee is delivered to his/her registered e-mail. The Delhi High Court in Venad Properties Pvt. Ltd. vs. Commissioner of Income Tax (2013) 212 Taxman 20, held that the object and purpose of service of notice is to inform and intimate the addressee about the proceedings and the date of hearing. If the notice is served or received by the party concerned and the same is established, then the manner or mode of service is not relevant.

Ignoring a Notice (departmental e-mails and registered posts) can prove to be very expensive, attracting a penalty of Rs 10,000 for each default. Non-compliance, depending on the facts or seriousness of the case, can lead to prosecution.

The most common reasons for a taxpayer to receive Notices include delaying/not filing IT returns, intentionally misreporting long term capital gains received on listed equity shares and other mutual funds, non-disclosure of income, and investments made in the name of spouse, high-value transactions and tax evasions in earlier years.

Also Read | Tax collections soar to record Rs 27.07 lakh crore in FY22

The IT department in recent years, under ‘Project Insight’, is becoming tech-savvy, using data analytics and artificial intelligence extensively. It tracks most of the monetary and non-monetary transactions and uses it to cross-verify while processing the IT returns.

Types of notices

Notice issued for defective IT return: Assessing Office may issue a Notice under Section 139(9) if, in his opinion, the return filed by the assessee has incorrect details. It is an opportunity extended to the assessee to correct the errors, provide missing information, and complete the return in all aspects within 15 days from the date of intimation or extended time.

Notice for preliminary enquiry: Assessing officer may issue a Notice under Section 142(1) (i) to a person who has not filed a return of income before the end of the relevant assessment year, requiring him to furnish the return of income. This Notice can be issued only after the expiry of specified due dates.

Notice cum intimation: Assessing officer may issue a Notice cum Intimation under Section 143(1) stating that filed Return is considered as a final assessment of that particular Return or refund of excess taxes after adjusting the tax dues or further tax demand, in case of short payment or omission of an income from the ambit of tax. However, Tax Department can still send a Notice under a different section seeking further information. This intimation can be expected within 9 months of the financial year in which the return is furnished.

Also Read | New tax rules to make life costlier for rural residents

Notice for commencement of scrutiny: This is a follow-up Notice to the Notification issued under Section 142 (1). If the assessing officer is not satisfied with the response provided thereunder, he can issue another notice under Section 143(2) calling for detailed scrutiny. In this case, he may insist the concerned assessee to attend his office in person or produce documentary evidence in support of his claims. This Notice shall be issued on or before the expiry of the 3 months from the end of the financial year in which the return is furnished.

Income escaped assessment: Assessing officer may issue a notice under Section 148 if he disagrees with the previous assessment of the income tax return where certain income escaped due assessment. It implies a re-opening of the closed Assessment. However, the assessing officer should have a valid reason(s) to reopen the case and must record the reasons for issuing the said Notice.

Additional income tax/fine/penalty: An assessing officer can issue a Notice under Section 156 to collect due tax or fine or penalty after completion of the assessment. The assessee is required to deposit the amount payable within 30 days from the date of receipt of the notice. Unlike in other cases, no such time limit has been prescribed here. If you have received an e-mail from the IT department, don’t panic or ignore it, patiently take a set of printouts, and check its authenticity at the e-portal of the IT department (https://bit.ly/38szmN6), read it thoroughly and take corrective measures on priority.

If the situation warrants it, don’t hesitate to take a tax professional’s advice.

(The writer is the Founder and CEO of Shree Tax Chambers)

Watch the latest DH Videos here: