Sometimes, you may be required to file income tax returns (ITR) in response to a notice issued to you by the income tax authorities. These are some major instances when notice can be issued to the taxpayer:
If your tax return is defective
If the Assessing Officer thinks that your return of income is defective, he may notify you of the defect,1 and give you an opportunity to rectify the defect within fifteen days of the notice. The defect should be rectified within fifteen days or the extended period allowed by the Officer. Otherwise, your return shall be treated as an invalid return. It will be considered that you as the taxpayer have failed to submit the return, which will result in penalties for you.
Not filing tax return on time
In order to make an income tax assessment, the Assessing Officer may serve a notice on any person who has not submitted an income tax return on time, to make the person submit the return. The Officer can also ask you to produce any accounts or documents required by the Officer. The income tax authorities can ask you to submit or verify any information. Further, this may include a statement of all your assets and liabilities.2 then he may assess or reassess such income which has escaped assessment and which comes to his notice subsequently. Before making this assessment, the Assessing Officer shall serve you a notice.3 The notice will require you to submit a return of income for the previous year corresponding to the relevant assessment year. The notice will specify the time within which you have to submit the return.
Penalties for not responding to notices
You have to respond promptly to the notices mentioned above, and act accordingly. If you do not respond, you can be punished under the Income Tax Act. However, you will not be punished if:
- You submit the return before the end of the assessment year
- Tax payable does not exceed Rs. 10,000.
If you don’t respond to a notice asking you to submit your tax return, or a notice asking you to submit your return for reassessment, then you can be punished with imprisonment and an unlimited fine. If the tax amount involved is more than Rs. 25 lakh, you can face imprisonment from 6 months up to 7 years. In other cases, you can face imprisonment from 3 months up to 2 years.40
- Section 139(9), Income Tax Act, 1961
- Section 142(1), Income Tax Act, 1961).
Reassessment of your income chargeable to tax
- Section 148, Income Tax Act, 1961
- Section 276CC, Income Tax Act, 1961