Income Tax Notice is not a summon or something to worry much about in the first instance if you know you have not done anything wrong.

Do not panic when you get one; oblige the notice. First, file a proper response to the notice, and furnish the documents and information the department has sought either yourself if you are aware or hire a Financial Doctor. Then, file a rectified return and pay the additional tax due, if any, within the stipulated period & deadline. In some cases, tax officials may ask you to be present in person or through an authorised representative for checking returns filed by you.

Ten reasons why you may get a notice from the income tax department

1. For delay in filing your Income Tax Return

If you haven't filed your return by the deadline or extended deadline, you may receive a reminder notice from the income tax department. You may get this notice before the end of the A.Y for which the return is due.

2. Mis-Reporting of Long Term Capital Gains from equity

You need to report & disclose any realised long-term capital gains (LTCG) on listed equity and equity-related mutual funds when filing Income Tax Return. LTCG above INR 1 lakh in a year on listed equity and equity-related mutual funds on which Securities Transaction Tax (S.T.T) has been paid will be taxed at 10 per cent. Reporting LTCG on equity can be complex for taxpayers from the financial year 2018-19 onwards.

3. For TDS claimed, which is not matching with Form 26AS

While filing ITR, the TDS should be the same in Form 26AS and Form 16 or 16A. However, there can be several reasons for certain discrepancies. Notices for mismatches in TDS are issued under section 143(1). The notice is a mismatch in the TDS reported by the deductor to the revenue authorities and TDS claimed in the income tax return by the assessee.

4. For non-disclosure of any income

Income tax Departments obtain information about the income of assesses from different sources such as banks, employers, tenants, mutual exchange of information in between countries etc. Therefore, if you have not disclosed certain income in your ITR, you may get an intimation from the income tax department if they find the non-reportage or non-disclosure. Therefore, notice is issued u/s 139(9) or 143(1) for non-disclosure of income in your tax return filed.

5. For not declaring or disclosing investments made in the name of your spouse

At times, it may happen that you made investments in your spouse's name but have not declared the income from those investments in your tax return. In such a case, any income from such investments will be taxable in your hands, and you need to declare it at the time of filing your tax returns.

6. For filing the defective return due to an error in it while filing

If you fail to file the income tax return in the correct given form, you will get a defective return notice from the income tax department. For example, you get a notice for defective return u/s 139(9) of the Income Tax Act. Once received, you need to respond to the notice within 15 days of receiving it. In such a scenario like this, if you have incorrectly filed your ITR, you may need to file a revised ITR. Therefore, you must try filing the revised ITR.

7. If you have done any high-value transactions

You may receive an intimation if you have done any such high-value transactions. The income tax department identifies those taxpayers who have made certain high-value transactions in any financial year but have not yet filed their income tax return. The department may ask you to mention the source of funds for initiating such high-value transactions. For example, if you made large transactions through your credit card, made substantial financial investments, or bought a proper.

8. If your return is auto-picked for scrutiny (CASS)

You may anytime come under the tax department's lens. For example, the department can randomly scrutinise tax returns to enforce tax compliance. Therefore, if you receive any notice specifically u/s 143(2), it means your return filed is under scrutiny by your Assessing Officer (Computer Assisted Selected Scrutiny). The scrutiny can be related to inaccurate reporting, mismatches or return filed, and all other related documentation or based on certain predefined criteria issued every year.

9. For setting off or adjusting refunds against remaining tax payable for any year

If you have claimed a refund for the current year, but there are still some previous tax dues payable by you for any previous years, the Assessing Officer (A.O) may send you a notice. The Assessing Officer will give an intimation in writing to such taxpayer of the action proposed to be taken regarding the refund claimed. In addition, the A.O can ask for the pending demands from the previous years to be adjusted with the refund amount.

10. For tax evasion in any of the earlier years

The Income Tax Act gives the Income Tax department power to reassess any of the previously filed I-T returns u/s 147 of the Income Tax Act. An A.O can pick tax returns for reassessment based on specific predefined criteria. Notice for reassessment is sent only when the tax officer has reasons to believe that income that was actually chargeable to tax has escaped assessment.

To avoid getting tax notice: You must file your Income Tax Return in utmost good faith and avoid tax evasion.