We become surprised when we receive any intimation or notice from Income tax department even when we have successfully filed our Income tax return.
First thing we have to understand the difference between an intimation and a notice. Intimation is just the outcome of the processing of return and we may not be required to act upon it although there are few exceptions to it. However, when notice is received from the department then you have to mandatory act on it.
when the return is processed by the department then the intimation under sec. 143(1) is issued by CPC reflecting any of the three situations:
Income is computed by the AO after making the following adjustments to the total income –
No intimation under this sub section shall be sent after the expiry of one year from the end of the financial year in which the return made.
Return can be considered as defective by the Assessing officer. The defect can be are as follows: –
If the AO consider the return as defective return, then he will intimate the same and gave the opportunity to rectify the defect within 15 days from the date of such intimation.
If the defect is not rectified within the given period, then the return will be considered as invalid return and it will be deemed that no return has been filed.
A notice under this section can be issued under these situations: –
The basic purpose is to ask the details of the assessee before making the assessment. It is served to ask for the documents and details from the assessee and to take that case under assessment.
AO may or may not start the assessment after compliance with this notice, depends upon the documents served by the assessee. If the AO is satisfied with the documents or return, he may not start the assessment process.
To comply with this notice is mandatory even if the assessee thinks that the accounts or the documents required are irrelevant.
If the assessee does not comply with this notice: –
If the Assessing Officer is not satisfied with the produced documents or with the responses of the assessee against income tax notice u/s 142(1) then you will get the Notice u/s 143(2) which means that your return has been selected for the detailed scrutiny by AO.
AO may ask the assessee to either attend his office himself or produce the relevant supporting, and evidences in support of his claim.
Through the detailed scrutiny, the Assessing Officer wants to ensure that the assessee has not done any of the following: –
In this notice, the assessee is required to reply to the questionnaire issued along with all the documents required by the Income tax department.
Notice under this section can be served only before the expiry of six months from the end of the FY in which the return is furnished.
If the AO has reason to believe that the assessee has not disclosed the income correctly or have paid the lower taxes or have not filed the return then in all cases it is termed as Income escaping assessment. Under these situations, AO assess or reassess the Income, as the case may be.
To initiate the proceedings u/s 147, AO should serve a notice u/s 148.
Timelines for issuance of notice u/s 148 are as follows: –
Where any tax, interest, penalty, fine or any other sum is payable in respect of any order passed, then the AO serve the notice u/s 156 to the assesse specifying the sum so payable.
Assessee can deposit the amount payable within 30 days from the date of Income tax notice.
There is no time limit to serve this notice.
In case of delay in payment of tax, the assessee shall be deemed to be in default and liable to pay simple interest u/s 220(2) @1% for every month or part thereof and further penalty u/s 221(1) may be imposed.
Notice u/s 245 is issued when the tax refund for an AY is adjusted against the tax demand dur from the assessee. There is no time limit to serve this notice.