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Got a Notice from Income Tax Department? Do Not Panic, Here's What it Means

A notice under Section 245 is an intimation to set off Demand and Refunds between the assessee and the Income Tax department.

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Updated:May 14, 2018, 10:45 AM IST
Got a Notice from Income Tax Department? Do Not Panic, Here's What it Means
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Nobody likes to pay Income Tax on their hard earned income; however, as law-abiding and socially responsible citizens we ought to pay Income Tax every year. There are various ways you can save Income Tax, like by investing money in several government saving schemes, buying Health Insurance coverage for your family and parents, taking a Home Loan, etc. Staying transparent with the Income Tax department is crucial to enjoy a complete peace of mind, especially when your income is decently high and puts you in the department’s radar.

However, there are times when you are either genuinely unable to file your Income Tax Returns (ITRs) on time, make an unintended mistake while filing your return or intentionally forge your ITRs to save taxes. All these scenarios can land you in trouble, beginning with a notice from the Income Tax department which can give jitters to anyone. So what should be your remedial course of action if you’ve received a notice from the Income Tax Department recently?

First of all identify the ‘Section’ under which the IT department of India has sent you a notice and secondly know the time period within which you have to respond either online or offline.

Here are the Top 5 Sections for different errors for which a notice can be issued to an Individual:

  1. Section 139 (9)
    Section 139(9) pertains to Defective Return, which means that the Income Tax Assessing Officer (AO) has identified an error in the ITR like missing proof of tax, computation of payable Income Tax, etc. The assessee gets 15 days to correct the defect, failing which the return is treated as void-ab-initio and won’t be considered as a duly filed Income Tax Return.

  2. Section 142(1)
    Notice under Section 142(1) is issued by the AO to get more details of the assesse before taking a particular case under assessment. He may ask the assessee to declare Assets and Liabilities on a particular date, produce accounts or documents for assessment, or to simply furnish his ITR. Failing to respond to notice under Section 142(1) can attract a fine of Rs.10,000/- and/or prosecution upto 1 year.

  3. Section 143(1)(a)
    Notice under Section 143(1)(a) is sent by the Central Processing Centre (CPC) if there’s a discrepancy between Income and Deduction filed by the assessee as compared to Form 16, Form 16A or Form 26AS with the IT department. It could also be sent as a refund notice in case of excess tax paid by the assessee or on the other hand, when there’s a deficit in tax payment.

  4. Section 154
    A notice under Section 154 is sent by the AO when the amount of refund is to be reduced or tax liability is to be increased for the assessee on the basis of mistake in gender or mismatch found in advance tax, tax credit or tax refund in the ITR.

  5. Section 245

A notice under Section 245 is an intimation to set off Demand and Refunds between the assessee and the Income Tax department. It is usually issued when the AO wants to adjust an outstanding tax demand from an earlier Assessment Year against a refund due to the assessee in another year.

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