Income Tax Department: ITR Mismatch Emails Are Advisory, Not Punitive

The Income Tax Department has issued a clarification regarding recent alerts sent to taxpayers related to mismatches in disclosed income and reported transactions.  

The communication, according to the department, is advisory and part of a broader compliance initiative based on third-party data collected from multiple sources. 

Taxpayer Alerts Are Advisory, Not Penal 

Recently, many taxpayers received notifications concerning inconsistencies between their filed income tax return (ITR) and third-party reported transactions such as large bank deposits, mutual fund investments, or other high-value transactions.  

The Central Board of Direct Taxes (CBDT) clarified that these messages are advisory in nature and not linked to scrutiny or penalty actions. 

The department stated, “Such communication is to facilitate taxpayers and make them aware of information available with the Income Tax Department (ITD) regarding transactions reported by Reporting Entities during the financial year.” 

Data Sources and Reason for Discrepancies 

The alerts have been generated based on data from banks, mutual funds, registrars, and other reporting entities submitted through the Annual Information Statement (AIS) and Statement of Financial Transactions (SFT).  

Discrepancies generally appear when a transaction's value significantly exceeds the income shown in the ITR, or when such transactions are entirely unreported by the taxpayer. 

Read More: Income Tax Slab Changes in 2025: How Much Can You Save Under the New Tax Regime! 

Voluntary Correction and Compliance Portal Use 

The department has urged taxpayers to check their AIS and use the Compliance Portal to review the flagged issues. If found to be accurate, taxpayers can ignore the alert.  

If there is any genuine mistake, they may choose to revise their ITR or file a belated return. December 31, 2025, is the final date for revising or filing a belated return for Assessment Year 2025–26. 

The objective is to help taxpayers take timely action and ensure that there is voluntary compliance without enforcement measures. 

Conclusion 

The Income Tax Department has emphasised that the intent behind these communications is to assist taxpayers in staying informed and compliant. No penal proceedings are initiated solely based on these alerts, providing an opportunity for self-correction where required. 

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