Errors in filing ITRs? A notice may be on its way

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Finance Minister Nirmala Sitharaman recently said that the government had sent more than 1 lakh notices. These notices have been sent to those taxpayers who have not filed their income tax return, or have shown lower income in their return.

Income tax department can send notices for several reasons.  The first big reason is that you have not disclosed some income. The second reason is that there is some kind of mistake committed while filing the ITR. Sometimes some mathematical errors also result in income tax notices.

You get notices if you have claimed wrong exemptions or deductions to save tax. For example, in claiming house rent allowance  you may have attached fake rent receipts. Attaching fake receipts of donations also invite income tax notices.

Notices are also sent when the income shown in the ITR does not match with Form 26AS and Annual Information Statement (AIS).

The income tax department has information about almost every transaction of the taxpayer. The department gets information about the person’s transactions from sources such as banks, mutual fund houses, stock exchanges, property registrar offices and other reporting agencies.

When the taxpayer files the return, the information is matched with the details received from various sources. If there is a mismatch, i.e. discrepancy, a notice is sent to the taxpayer asking for details.

Now let’s find out under which sections can IT department send the IT notices? 1) Section 139(9) notice comes for defective return. If the assessing officer thinks that there is some information missing in your ITR. He can send a notice under this section. 2) If a person has not filed ITR, he can be asked to file it by sending a notice under section 142 (1). For minor information or clarification, notices can also be sent under this section. 3) Section 143 (2) – This is a scrutiny notice. It means that the income tax department wants some more detailed information from you. It may ask for information such as book of accounts, bank statement, etc.

4) Section 144 notice is issued for best judgment assessment.  If you have not filed ITR or you have not responded to the notice issued under section 142 (1) or 143 (2). The income tax officer can send a notice under section-144. In this case, the officer can assess the income based on the information available to him. And impose tax and penalty on it! 5) If the tax officer feels that some income is not included in your previous assessment. Or, you have some income source earlier that has not been disclosed. Then, notices come under section 148. This is called Income escaping assessment notice. It can be used to reopen old cases.

If you have received a notice through an e-mail or SMS or a post, there is no need to panic. Most of the notices are sent for seeking additional information about you. So login to the income tax department’s website and respond to the notice…

Pay the tax if you agree with the notice. To contest the notice, collect all the necessary documents, such as bank statement, financial record, etc. Give a proper reply within the stipulated time. You can take the help of a chartered accountant to prepare your reply. If the decision is not in your favour even after you have given the clarification, you can present your case before the commissioner.