Received an Income Tax Notice? How to Read It and Respond on Time
An income tax notice is not necessarily a sign of wrongdoing. Many are automated outputs of data-matching. Still, every notice has a deadline, and the consequences of ignoring one can be serious. Here is how to approach it.
Common types of notices
References below are to the 1961 Act, which governs years up to FY 2025-26. The corresponding provisions continue in the Income-tax Act, 2025.
| Notice | What it means |
|---|---|
| Defective return (s. 139(9)) | The return has an error or omission, such as a missing audit report or a mismatch in TDS claimed. It must be corrected within 15 days, or the return is treated as invalid. |
| Intimation (s. 143(1)) | The return has been processed. Check for adjustments, such as disallowed deductions or TDS mismatches, and for any demand raised. |
| Proposed adjustment (s. 143(1)(a)) | The CPC proposes an adjustment and asks for your response within 30 days before it makes the adjustment. |
| Scrutiny (s. 143(2)) | The return has been selected for detailed assessment. |
| Enquiry before assessment (s. 142(1)) | A request for documents or information, during or before an assessment. |
| Reassessment (ss. 148A and 148) | The department believes income has escaped assessment. |
| Penalty | Proposed penalty for under-reporting, misreporting or non-compliance. |
Checks before you reply
- Is it genuine? Verify the notice on the e-filing portal under Authenticate notice/order issued by ITD. Every communication must carry a Document Identification Number (DIN). A communication without a valid DIN is treated as invalid under CBDT's instructions.
- Which year, and which Act? Note the assessment year or tax year and the section.
- Is it within time? Scrutiny notices under s. 143(2) must be served within three months from the end of the financial year in which the return was filed.
- Who issued it? Under the faceless scheme, most notices come from the National Faceless Assessment Centre. Jurisdictional issues are a recurring subject of litigation.
- What is the deadline? Note it immediately. Adjournment requests are possible but not guaranteed.
Reassessment time limits
Following the Finance (No. 2) Act, 2024, for notices issued on or after 1 September 2024:
- Three years and three months from the end of the relevant assessment year as the general limit
- Up to five years and three months where the escaped income, represented in the form of an asset or expenditure, is ₹50 lakh or more
Before issuing a reassessment notice, the officer must issue a show cause notice under s. 148A and give the taxpayer an opportunity to respond. Use this stage well: it is often the best chance to stop the proceedings.
How faceless proceedings work
- Notices and replies are exchanged on the e-filing portal under e-Proceedings.
- A personal hearing by video conference can be requested where the proposed order is adverse.
- Before the final order, you receive a show cause notice with a draft assessment order. Respond to it in detail. It is not a formality.
If the order goes against you
- Rectification (s. 154) for mistakes apparent from the record.
- Appeal to the Commissioner (Appeals) within 30 days of receiving the order, followed by the Income Tax Appellate Tribunal.
- Stay of demand – generally available on paying a percentage of the disputed demand while the appeal is pending, as per CBDT guidelines.
Respond on time, answer exactly what is asked, and support every statement with evidence. These three habits resolve most notices without escalation.
The information in this article reflects the law as on the date of publication and is for general guidance only.