ITR Filing 2025: Your Simple Guide to Responding to Income Tax Notices

Filing your income tax return (ITR) can feel like the final step in your tax duties, but sometimes, the Income Tax Department might send you a notice even after you've submitted and verified your return. While getting a tax notice can be a bit unnerving, most are routine and can be easily managed. Understanding what these notices mean and knowing how to respond correctly can save you from penalties, unnecessary hassle, and stress. 

Golden Rules to Follow When You Get a Notice 

If you receive an income tax notice, remember these crucial tips to stay calm and handle it effectively: 

• DON'T IGNORE IT: Every notice has a deadline. Missing it can lead to penalties and further complications. 

• VERIFY YOUR DATA: Use Form 26AS and the Annual Information Statement (AIS) to check and match your income and tax deducted at source (TDS) information with the department's records. 

• BE ACCURATE: Make sure your responses are precise. Mismatches can trigger more detailed checks or additional tax demands. 

• ACT PROMPTLY: Even if a notice seems minor, address it quickly to prevent it from snowballing into bigger problems. 

• SEEK EXPERT HELP: For complex notices, don't hesitate to consult a chartered accountant or a tax professional immediately. Their expertise can be invaluable. 

ITR Filing 2025: How to Handle Common Income Tax Notices  

Here’s a simple guide to some of the most common income tax notices: 

1. Section 143(1): Intimation after Return Processing 

This is the most common notice. It's an automated intimation comparing your filed return with the department's data. You might receive it for TDS mismatches, calculation errors, incorrect deductions, or if you filed your return late. 

• What to do: Log into the income tax portal, review the notice. If everything matches, no action is needed. If you owe more tax, pay it within 30 days. If you find an error, file a rectification with supporting documents. 

2. Section 245: Adjustment Against Previous Dues 

If you are due a refund, but have unpaid tax from earlier years, the department might adjust your refund against those dues. 

• What to do: Check the notice in your portal under 'e-Proceedings'. You have 15 days to agree or disagree with the reasons. If you don't respond, your refund will be automatically adjusted. 

3. Section 142(1): Inquiry Before Assessment 

This is a preliminary inquiry, sent if your return hasn't been filed or if the department needs more details before assessing it. 

• What to do: If your return is pending, file it. Submit all requested documents by the deadline. Ignoring this can lead to penalties or a full scrutiny. 

4. Section 139(9): Defective Return 

Your return is considered defective if it has errors or missing information (e.g., missing income details, incorrect deduction entries). 

• What to do: You get 15 days to correct and re-file. Access the notice under 'e-Proceedings' on the portal and respond. Failing to act will make your return invalid. 

5. Section 133(6): Request for Financial Information 

This notice seeks clarification on specific transactions, such as large cash deposits or property purchases. 

• What to do: Provide relevant documents like bank statements or agreements within the deadline to avoid further scrutiny. 

6. HRA and TDS Mismatch Notices 

These are sent if your House Rent Allowance (HRA) claim or TDS details don't match the department's records. 

• What to do: Ensure your tenant follows TDS rules if rent is over ₹50,000 a month. Keep rent receipts and your landlord’s PAN. If there's a genuine mismatch, file an updated return and keep all documents. 

7. Section 143(2): Scrutiny Notice 

This means your return has been chosen for a detailed examination. 

• What to do: Cooperate fully by submitting all required proofs (income, deductions, expense claims). Attend hearings if called, or respond through the portal. Not responding can lead to tax assessments based on department estimates. 

8. Section 148: Income Escaping Assessment 

Issued when the department believes some income was not disclosed in your previous returns. 

• What to do: File a revised return or provide an explanation as per the notice. Justify the source of income with relevant proof. Ignoring this can result in past assessments being reopened and penalties. 

9. Section 271AAC(1): Penalty for Unexplained Income 

If unexplained income, like sudden large deposits, is found during a scrutiny, this notice might be issued. 

• What to do: Provide documentation explaining the source of income. Be aware that penalties of up to 60% can apply if the income remains unexplained. 

Read more: ITR Filing 2025: A Guide for First-Time Taxpayers   

Conclusion 

Receiving an income tax notice doesn't necessarily mean trouble. By understanding the common types of notices, knowing what actions to take, and acting promptly and accurately, you can effectively manage the situation. Remember, the key is to not panic but seek professional help for complex issues. Staying informed and compliant will help maintain your peace of mind regarding your tax journey. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.