Income Tax, Income Tax Notices

What should a Tax Payer do Once He Receives a Notice from the Income Tax Department?

Receiving a notice from the Income Tax department can cause undue stress to tax payers who are not used to replying to such notices. Also, the notices carry the weight of Income Tax act behind it and need to be responded to within time.

So what do you do when you receive a notice?

Firstly you should be happy that you are aware that a notice has been sent. The Income Tax department sends notices over e-mail and online to the login-id of the tax payer with the department. Hence, many times tax payers are not even aware that they have been issued notices as most assesse’s log on to their tax account only once during the return filing.

Now that a notice has been issued, you need to determine the reason for issue of notices. There are several different notices that can be issued under the Income Tax Act (sections 139 (1), Section 142 (2), Section 143 (2). You can read more about the different sections in our separate blog. Each of these notices has separate meaning and seriousness attached to it.

The process for responding to a notice is as follows:

You should  Login to website  using User ID (Which is your PAN Number) and Password.

Under the tab “E-filing” click response to Outstanding Tax Demands

Outstanding tax demands will appear on the screen along with details of date on which the demand has been served, Assessment year it relates to, the section number under which the same has been served, the Demand identification number, the demand amount payable.

After understanding the reasons for the notice, you have to select one out of the following options (Selecting the right option after understanding the reason for the notice is important – you may need professional advise at this stage to determine if the notice is for simple mis-matches or a more serious tax demand):

(a) Demand is correct

If the assesse agrees with the demand he should proceed with Option (a). However, once option (a) is selected he cannot disagree with the demand. The tax amount due will have to be paid immediately. Once the payment is done,

  • Demand is partially correct

Where the assesse exercises this option, the amount he is in agreement shall be entered which. The amount in dispute shall be               auto filled. Reasons why the same is partially correct will have to be justified.

The reasons mentioned on the portal are as follows 

(a) Demand paid 
i) Demand paid and challan has CIN 
ii) Demand paid and challan has no CIN 
(b) Demand already reduced by rectification/revision 
(c)Demand already reduced by the Appellate order but appeal effect to be given 
(d) Appeal has been filed 
(i) Stay petition filed with 
(ii) Stay granted by 
(iii) Instalment granted by 
(e) Rectification/Revised return filed at CPC 
(f) Rectification filed with AO 
(g) Others 

  • Disagree with demand

Incase the assesse opts for option (c ) , then he must classify the reasons for disagreement under the head mentioned under point(b).

  • Demand is not correct but agree for adjustment

Incase option (d) is opted then he shall mention the reasons for disagreement and classify the same under the reasons mentioned under point(b).

After sending the same, once the transaction is sent to the department , Transaction ID is generated.

The same should be checked for further update.

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