Income Tax Notice: 10 Reasons to Know Why You Get

Filing income tax returns can be a complex affair. But do you know that you may be served notice for filing wrong returns or if your records show some discrepancy? Here are ten reasons why you may be served a tax notice.

1. Non-filing or Delay in Filing of Returns: You may be served a notice if you fail to file the IT returns within the deadline applicable to you.
2. High-Value Transactions: The Income Tax Department may serve you a notice if it finds out that there is a high-value transaction such as property purchase/sale done in a year but not reported in the returns.
3. TDS error: If the TDS recorded by various deductors such as your employers, bank or even tenants in form 26AS does not match the TDS claimed by you in form 16, you can receive a notice under section 139(9) or 143(1) declaring that your income has been incorrectly declared.
4. Incorrect filling of ITR: If you did not fill the form properly or disclose essential information, you could receive a defective return notice under section 139(9).
5. Non-Disclosure of Investments under the Spouse’s Name: If you have not declared investments made in spouse’s name, you can receive a notice under section 143(2).
6. Non-Disclosure of Income: If you do not report or under-report any income, you can receive a notice under 139(9) or 143(1)
7. Random Scrutiny: If you receive any notice specifically under 143(2), it means that your ITR has been chosen for scrutiny by the assessing officer. In this case, you will have to appear before your assessing officer and report all your income and assets.
8. Non-Disclosure of Long-Term Capital Gains: The taxpayer should report and LTCG from listed equities while filing ITR. To avoid getting a notice, make sure you disclose all returns accrued in the form of LTCG.
9. Refund Adjustment: If you have claimed a refund on the tax paid, but there are still some tax dues payable by you, you will be issued a notice under Section 245.
10. Tax evasion in previous years: If you have been suspected of purposefully under-reporting or not reporting your income in previous years, you may receive a notice under section 147 or 148.

As long as you declare all your income and assets in utmost good faith and in a timely and orderly fashion, you don’t have to worry about receiving such notices. If your finances are in order and you have correctly reported your income you are safe even if you receive such a notice.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.