Income tax notice: 8 common notices, why you get them and how to respond

The Income Tax (I-T) Department issues different notices at different stages of return processing, assessment and tax demand. The reason for the notice and the response required can vary depending on the section under which it has been issued. Here are some common income tax notices, why they are issued and what you should do after receiving them.

The income tax department issues it when it has identified a possible mismatch or apparent error while processing your income tax return. This could relate to deductions claimed, tax credits, or information reported by employers, banks or other institutions.

How to respond to this tax notice: Read the proposed adjustment carefully and compare it with your tax records. If the adjustment is correct, accept it. If not, submit an online response with supporting evidence before the deadline.

This notice is issued when the Income Tax Return (ITR) is found to be defective due to missing information, incomplete disclosures or other prescribed defects.

How to respond to this tax notice: Rectify the defects and file the corrected return within the specified time. Failure to do so may result in the income tax return being treated as invalid.

The Section 142(1) income tax notice is issued to seek additional information, documents or explanations required for making an assessment or to require the filing of an income tax return where one has not filed it.

How to respond to this tax notice: Furnish the information or documents sought through the e-proceedings portal within the prescribed timeline. Ensure the response is complete and supported by relevant records.

This tax notice is issued when the ITR is selected for scrutiny to verify the correctness of income reported, deductions claimed, exemptions or other tax positions.

How to respond to this tax notice: Respond to all queries with supporting evidence and cooperate during the assessment proceedings. Timely compliance is essential.

A Section 148 income tax notice is issued where an Assessing Officer proposes to reassess income believed to have escaped assessment, subject to the conditions and safeguards prescribed under the Income-tax Act.
How to respond to this tax notice: Carefully examine the basis of the notice, file the return as required, and submit a detailed response. Professional advice is advisable in such cases.

A Section 245 income tax notice is issued when the Income Tax Department proposes to adjust a tax refund against an outstanding demand relating to another assessment year.

How to respond to this tax notice: By verifying whether the outstanding tax demand is correct. Accept the adjustment if valid, or file an online objection with supporting evidence if the demand is disputed or has already been paid.

A Section 154 income tax notice is issued to rectify a mistake apparent from the record, such as clerical, arithmetical, or other obvious errors in an order.
How to respond to this tax notice: One should review the proposed rectification and respond if required. Where the mistake is genuine, the rectification should be accepted; otherwise, objections should be submitted with supporting reasons.

A Section 263 income tax notice is issued when the Commissioner considers that an assessment order passed by an Assessing Officer is erroneous and prejudicial to the interests of the revenue, and proposes to revise the order.

How to respond to this tax notice: One should file a detailed written submission explaining why the assessment order is neither erroneous nor prejudicial to the revenue, along with supporting legal and factual evidence. Professional representation is generally recommended.