• Notification Date: 18-08-2023
• Notification No: N/A

Salaried Class Assessees May Receive Income Tax Notice for Filing Errors

The Income Tax (IT) department will most likely issue a notice if an error is found in filing an Income Tax Return (ITR). 

Generally, there are six types of income tax notices under various Sections of the Income Tax Act (ITA), 1961, that a salaried class individual is likely to receive from the IT department. 

1. Section 143 (1) notice: Intimation notice 

Such a notice is despatched after the IT department processes the ITR. It aims to inform that the ITR calculations match that of the IT department. In the case of a mismatch, then this intimation notice will state whether there is a refund due or is a need to pay additional taxes. Either way, this notice is sent even if no mismatch or error is found in the ITR. 

The intimation notice under Section 143 (1) will be issued in nine months from the end of the financial year in which the ITR is submitted under Section 139 or as a response to the notice issued under Section 142 (1). 

There is no need to respond if the intimation notice is issued due to a refund or if there is no mismatch between a taxpayer’s and the IT department’s calculation. However, in a scenario where there is a tax payable demand, the taxpayer is expected to respond within 30 days from the date of issue of intimation notice, either agreeing or disagreeing with the adjustment proposed. 

2. Section 139(9) notice: Defective ITR 

A notice under Section 139(9) is given a few errors are found in the filed ITR. The IT department expects the taxpayer to rectify the errors by filing a revised ITR in this regard. 

Such notice may be issued within nine months from the end of the financial year the return is filed. 

A due date by which an assessee is supposed to respond will be mentioned in the notice. Generally, the IT department gives a time of 15 days to respond. 

3. Section 142 notice: Inquiry before scrutiny assessment 

When the IT department looks to seek clarification why ITR was not filed, despite the taxpayer earning an income over the basic exemption and evidence of various sources of income being present in AIS, etc., then a notice under Section 142 is despatched. 

However, no such maximum time limit is prescribed when it comes to issuing a notice under Section 142 (1). While the time limit to respond is generally mentioned in the notice itself, the IT department allows to respond within 15 days. 

4. Section 143 (2) notice: Scrutiny assessment 

This notice wants a taxpayer to undertake a scrutiny assessment of the ITR and confirm the correctness and genuineness of incomes and deductions as per the claims made in the ITR. The response to this notice is to be made in online mode. 

Such notice may be issued within three months from the end of the financial year in which the ITR is filed. Generally, the time to respond to such a notice is 15 days. 

5. Section 148 notice: Income escaping assessment 

When the Assessing Officer (AO) has any information suggesting that an assessee’s income has escaped assessment in the previous year, then a notice under Section 148 of the ITA, 1961 is issued. As per this notice, an individual has failed to report certain income in the ITR filed in the previous year. 

The timeframe for issuing a notice under Section 148 is as per the amount of income that has escaped from assessment. 

The tax notice will be issued within three years from the end of the relevant assessment year in case the income is less than Rs 50 lakh. If the income is over Rs 50 lakh, the ITR filed can be reassessed for up to 10 years from the relevant assessment year after seeking approval from the specified tax authority. 

Generally, 30 days is given to respond to notice under Section 148. 

6. Section 245 notice: Adjustment of tax payable with refund amount 

A notice under Section 245 is likely to be issued to a taxpayer in case the IT department looks to adjust the current year’s income tax refund against any of the pending tax demands of the taxpayer from the previous years. 

No time limit exists when it comes to issuing a notice under Section 245, and an individual has at least 30 days to respond to the same.