Income tax department sends you a notice, if you make some mistakes while filing income tax returns or for any other reasons. These are five common tax notices sent by the income tax department to tax payers, irrespective of whether he has filed his returns or not.
When income tax returns are filed by a taxpayer, he will receive a notice-cum-intimation under Section 143(1) of the Income Tax Act, 1961. As this is just an intimation saying that the return has been successfully processed, the taxpayer doesn't have to respond to this notice.
Sometimes, the department can also send routine notices to provide the information regarding arithmetical errors, mismatch of income declared in returns vis-a-vis Form 26AS. You have to respond to this notice.
Usually, these notices will be sent for verification, regular assessment or reassessment or for limited scrutiny. If the Income Tax Department wants any clarification or information with respect to income tax returns filed by the taxpayer, notices will be sent seeking information or details with respect to the tax return.
You will have to undergo a thorough scrutiny if the notice is regarding assessment or reassessment. Such notices will be sent along with a questionnaire seeking information regarding a particular transaction, asset or income. If the notice is regarding the limited scrutiny, you will have to give the details of the asset mentioned in the notice.
If the Income Tax Department feels that the tax paid by the taxpayer is not matching with his/her income, a show cause notice for the penalty will be sent.
If you fail to file your returns even after receiving a notice under Section 142(1), you will receive a notice under Section 143(2) by the Income Tax Department.
Income tax department may send you a notice seeking the details of the assets held by you in foreign countries. This is done to curb the flow of black money and catch Benami properties.