Have you received Non-filing notice from Income-tax department?

CA Kinjal Mehta

Have you received Non-filing notice from Income-tax department? Here is what it means and what you should do?

The Income Tax Department has identified several potential non-filers who have carried-out high value transactions in Financial Year 2017-18 but have still not filed Income Tax Return for Assessment Year 2018-19 (relating to FY 2017-18). There might be several reasons for sending such notices. These are common notices, but you need to know what they mean and what you must do upon receiving them.

The Non-filers Monitoring System (NMS) is an initiative by the Tax Department to prioritize action on non-filers with potential tax liabilities. The IT department carries out ‘data analysis’ to identify non-filers about whom specific information is available through various sources such as Annual Information Return (AIR), Centralized Information Branch (CIB), TDS/TCS Statements etc.

The identified non-filers are informed by SMS, e-mails and physical letters.

How to reply to non-filing of Income Tax Return Notice? You can respond to the notice through your income tax e-Filing Account. There is no need of personal presence in this matter. Below are the step by step guidelines on how to respond to the notice;

1. Login to your e-Filing account at incometaxindiaefiling.gov.in with your user name and password. If you do not have a login id password, you may have to first register your PAN.

2. Click on ‘Compliance Menu Tab’ and you will be re-directed to the Compliance portal. Here you can view information about your non-filing status

3. Click on ‘View’ to submit your response to the non-filing compliance notice.

4. Click on ‘Filing of Income Tax Return’ to update your ‘response’ & ‘reason’ for not filing your income tax return for a specific Assessment Year.

5. Response can be either ‘you have filed ITR’ after receiving the notice (or) ‘ITR has not been filed’.

6. Reason can be, i) Return under preparation, ii) Not liable to file return of income

7. Also, remark is a mandatory field wherein you can mention the reason for non-filing.

8. The second tab of Verification issue list will have details about the third-party information received by the tax department. Click on View and you will see the details.

9. If the information pertains to you is correct, you need to click on I am aware of this information and submit.

IT department wishes to know the source of investment for purchasing the asset which you need to provide them here particularly if it is in cash. For example: You might have booked Fixed Deposits with your banker and they would have deducted TDS on them. So, you need to mention whether this information relates to ‘self’ and the source of such income. Another example can be, you would have received ‘Gift’ in cash mode and invested in Mutual The detailed information reasons can be as below; Out of Earlier Income or Savings, Out of Receipts Exempt from Tax, Received from Identifiable Persons (with PAN), Received from Identifiable Persons (without PAN), Received from Un-identifiable Persons, Others

After providing all the required details, you can click on ‘submit’ button and you will receive an acknowledgement.

You can view the status of your response by clicking on ‘Compliance tab’ and then on ‘View my submission’. The response submitted online by you will be verified by the ITD (Income Tax Department) and if found satisfactory, the case will be closed.

The chances of getting a notice for non-Filing of Income Tax Return from the compliance Management cell are high when if you have made a high-value Financial transaction in India. You may be a NAI (assuming that you have no taxable income in India) invested huge money in a property located in India and you may end up in getting a notice for non-filing of return if return is not filed. The IT department will only wish to know the source of funds through which the property was bought. You are only requested to furnish your response in the compliance module on the e-filing income tax portal. If you do not submit your response within the prescribed time-limit, your case might be transferred to the jurisdictional Assessing Officer. The office may consider to take up your case for scrutiny.

Even if there is no Income tax liability, ensure you respond to any income-tax Notice on timely manner. Take the notices seriously and if you think you will be unable to reply appropriately, take help of professional Chartered Accountants.

The author is Manager at GPK Tax Consultants and can be reached at +971553744876.