No one wants to receive a tax notice, but if you do get a notice, don’t panic. Try to respond to the notice with caution.
The Income Tax Department has extended the date of filing Income Tax Return (ITR) for the financial year 2020-21 to 30 September 2021. You should file your ITR very carefully as the income tax department may send you a notice due to errors and discrepancies between earned income and tax paid. Although no one wants to receive a tax notice, don’t panic if you do get a notice. Try to respond to the notice with caution. There are different types of tax notices that you may receive. In this article, we will discuss the reasons for the tax notice and the steps you can take in such a situation.
Notice for delay in filing ITR u/s 143(1)(i)
If you have taxable income and you do not file ITR by the last date, you may get a notice from the Income Tax Department to file your return. If you have already filed a return, you may get a notice for insufficient information or if the Assessing Officer wants more information or documents. You must, as provided under this section, respond by the date specified in the notice to avoid fines and lawsuits or both.
Misreporting of Long Term Capital Gains (LTCG) from Equity
Long term capital gains (LTCG) exceeding Rs 1 lakh during any one financial year in equity and equity mutual fund investments are taxed at the rate of 10%. During assessment, if the Assessing Officer notices any errors or tax shortfalls, the tax department may send a notice to you asking for payment of tax on the shortfall or penalty under section 270A. To avoid LTCG related notices, it is best for you to obtain a statement from your broker that clearly states your short-term and long-term capital gains. Similarly, get the statement for LTCG on Mutual Funds from the respective mutual fund company. You should tally every detail and calculation before mentioning it in your ITR.
Non-matching of TDS and 26AS
While filing your ITR, ensure that the amount reported as TDS matches with the amount mentioned in Form 26AS, Form 16/Form 16A. At times, it may happen that the amount may not match, but you must be prepared for the explanation. In case of mismatch, the tax department sends you a notice under section 143(1). You can easily avoid this notice by taking adequate precautions like matching 26 AS, Form 16 and the TDS amount you are going to file in ITR. If the correct TDS is not disclosed by the deductor, the taxpayer should approach the deductor and get the same rectified.
Notice u/s 139(9) of Income Tax Act for filing defective return
On filing of defective return, the Income Tax Department sends a notice u/s 139(9) and gives 15 days (from the date of receipt of this notice) to reply. You can file a revised return and inform the same within 15 days in response to the notice to avoid any further action by the tax department in this regard. Defective return occurs when you file the return in the wrong form. Make sure that you choose the correct form while filing the revised return.
Notice under section 148 for non-disclosure of correct income
When the Assessing Officer suspects that you have not disclosed the correct income, due to which the tax has been short paid, the tax department issues a notice to you under section 148. This notice can also be sent when your income is taxable, but you have not filed a return to avoid assessment. In such cases, the Assessing Officer sends you a notice and returns the income tax as per the provisions of section 148.
Asks to file. With effect from the 1st day of April, 2021, the Assessing Officer has the power to reopen the case for a period of three years from the assessment year in which the tax case arose, or if 50 lakhs during the relevant financial year. The Assessing Officer has the power to reopen the case after three years but before 10 years from the financial year concerned, if the income exceeding Rs. To avoid the hassle of notice u/s 148, you should take every precaution that shows that you have filed an income tax return without the intention of saving tax.
You should not panic when you get a notice from the tax department. It is important to respond to the notice within the stipulated time. Always reply with the necessary documents to prove your point and attach the documents asked by the tax department. If you do not know how to respond to the notice, you must consult a tax expert.
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