INCOME TAX

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Types of Income Tax Notice

1. Section 139(9): Defective Income Tax Return

In this case, Assessing Officer is of the opinion that ITR filed by the assessee is defective. The best
part is that a proper error description is shared and the AO also suggest a probable solution to
rectify the same. The assessee is given an opportunity to respond within 15 days from the date of
intimation or before it is assessed. If you don’t respond within 15 days then your return will be
rejected by the AO. The defect u/s 139(9) can be the wrong ITR filed, missing information,
incomplete return etc.
You may agree or disagree with the observation of the Assessing Officer. In the majority of the
cases, without going into the merits, the assessee accept/agree on the defect. This is one of the
common mistakes by the assessee. If you do not agree with the error description then you can reply
to the income tax notice and share the reasons for the same. The only catch is you should know all
the rules.

2. Section 131(1A): Income is concealed or likely to be concealed

If your AO is of the opinion that you are concealing the income or likely to conceal income then
you will receive income tax notice u/s 131(1A). This notice is basically intimation that AO is
initiating an enquiry or investigate into the matter. The assessing officer can impound the books of
account or other documents by providing reasons for the same. There is NO specific time limit to
serve this notice.

3. Section 142(1): Preliminary Enquiry before an assessment

You will get a notice of preliminary enquiry in case the return is not filed on time. Alternatively, if
the AO would like to go through the documentary proof to verify your claim in Income Tax Return
then he may ask you to furnish the documents for assessment purpose. The time limit to serve the
notice u/s 142(1) is before the end of the relevant assessment year. For example, the income tax
return filed for AY 2017-18, you can receive notice u/s 142(1) on or before 31st March 2018. This
timeline is not valid in case the return is not filed by the Assessee.

4. Section 143(2): Follow up to the notice u/s 142(1)

If the AO is not satisfied with the response of the assessee or assessee fail to provide the documents
against income tax notice u/s 142(1) as explained in the previous point then you will receive notice
u/s 143(2). In this scenario, the case is called for detailed scrutiny. The AO may ask the assessee to
either attend his office in person or produce supporting, particulars and evidence in support of his
claim. The timeline to serve notice u/s 143(2) is before the expiry of six months from the end of FY
in which the return is furnished. For example, return for FY 2015-16 was filed in FY 2016-17 on or

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 INCOME TAX
before 5th Aug 2016. End of FY 2016-17 is 31st Mar 2017. Six months from the end of FY 2016-
17 is 30th Sep 2017. Therefore, notice can be served till 30th Sep 2017.

5. Section 148: Income escaped assessment

To err is human and same holds true for Assessing Officer or if your new AO does not agree with
the assessment of previous AO then you can expect notice u/s 148. In short, even after assessment,
if the AO is of the opinion that some income of the assesses escaped assessment then income tax
notice u/s 148 can be issued. As assesses may be asked to file the income tax return for the relevant
assessment, reassessment or re-computation.
The notice can be served within 4 years from the end of the relevant assessment year if the income
escaped assessment is Rs 1L or less than that. Otherwise, the notice can be served within 6 years
from the end of the relevant assessment year. For example, for a return filed in AY 2016-17, an
income tax notice can be served on or before 31st March 2021 (for 1L or less than 1L cases). In the
case of more than 1L cases, the income tax notice can be served till 31st March 2023.

6. Section 156: Notice of Demand

If any penalty, tax, fine or any other amount is due from the taxpayer to the income tax department
then income tax notice u/s 156 is served. Normally this notice is served after the assessment of ITR.
The taxpayer can deposit the amount payable within 30 days from the date of the income tax notice.
There is no time limit to serve this notice. Income tax notice under section 143(1) and 200A are
also referred as Notice of Demand.

7. Section 245: Refund adjusted against the tax demand

It is basically intimation from Income Tax department. This notice is issued when the tax refund
(full/partial) for an assessment year is adjusted against the tax demand due from the taxpayer. The
assessment year of refund and tax demand can be different. There is no time limit to serve or send
income tax notice/intimation u/s 245.

In this, i tried to explain the types of income tax notice in layman terms and simplified language.
Some of these notices are complete subject in it. The objective of these notes is to share the reason
behind each type of income tax notice in concise and summarize format so that taxpayer should not
panic. As i shared, a taxpayer can reply to most of the notices on his/her own. Lastly, in the case of
doubt, a taxpayer can obtain an advance ruling to avoid tax issues.
Normally the taxpayer gets confused between Income Tax Notice and Assessment Intimation. If
you receive intimation u/s 143(1), 143(3), 144 or 147 then these are not income tax notice.
Basically, these four are 4 major assessments that we had already discussed in my previous lecture.

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