If you are the who has received notice from Income tax department then first you must understand few basics of notice. This article will surely help you on how to deal with Income Tax notices. Usually communication from the Income Tax department causes increase in heart beat for most of us. But you shall note that majority of letter or notices are of routine type and need fever attention.
What to do when you receive an Income Tax notice?
1. Don’t Ignore: Handle the situation carefully and sincerely. Inform your consultant by email about the notice. if possible send a scan copy. Don't use WhatsApp to inform your Chartered Accountant so that you can always refer when did you inform Chartered Accountant about the notice.
2. Back to basics: Check the whether the notice is really meant for you by checking basic things like PAN, Name, Assessment year it related to issuing officer, signature, address with details of ward and circle number. Verify these details to avoid being cheated. To see details go to E filling website see know your AO
3. Preserve the envelope: If the notice comes by postal mail, preserve the envelope and staple it on the back of the notice. It serves as proof of the dates on which it was posted and received. I also suggest my clients to write the date time and receivers name on the back of the notice.
4. DIN: If the notice is delivered online, then check the Document Identification Number. In case of online notices also carefully check the authority to whom you should respond
5. Identify the reason behind the notice: By normal reading one can easily indentifies the reason behind notice. Reasons could be a simple mismatch in TDS or inconsistency in your returns, or some serious concerns like income concealment. It can also be a survey or scrutiny of accounts.
6. Validity: Check the validity of the notice and the timely issuance. Also check the section under which the notice has been issued. For example: A notice under Section 143(3) for scrutiny assessment has to be served within six months of the end of the financial year in which the return was filed. If served later than this period, it will be considered invalid.
7. Gather the documents: Start collecting the documents that the department has requested via the notice. Documents needed can vary depending on the gravity of the notice, usually scrutiny notice may ask for several documents, including bank statements, pay-slips, rent receipts and brokerage statements. While it may not be possible to put all this together in the short time.
8. Letter: Prepare a covering letter along with the set of documents. Also mention list of all the documents enclosed. Many time it is observed that Documents and information produced for verification purpose in original are not mentioned in submission letter.
9. Acknowledgement: Prepare two set of all the documents required, along with a copy of the covering letter. Get your copy stamped to maintain personal records, and as a proof of submission of the documents thereby complying with the notice. In case the officer is absent on the date of submission make sure that your visit is recorded and acknowledged.
10. Reply in time: Always respond to the notice on time even if you are unable to collect the required documents. You can even ask for some time to gather all the documents. Timely response will help establish that you are honest, and cooperating with the law.
11. CA help:- If the notice is simply about a factual matter, such as an arithmetical error, TDS mismatch or deduction amount, a taxpayer may respond on his own, Only when it is a serious issue, such as a notice for scrutiny or reassessment under Section 148, should one get a professional to respond. But A chartered accountant will be better equipped to deal with the situation and provide responses.