Income Tax Department - Tax Notices to Salaried employees; Here is How to Deal With it

The Income Tax Department has sent tax notices to thousands of people whose actual income has not matched with the income declared on their income tax return (ITR) form. There has been a spike in the number of income tax notices as over the years the Department has developed an extensive risk analysis system to identify persons who are non-compliant. 

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Highlights 
  • Income Tax Department has sent tax notices on mismatch of income 
  • Most of the tax notices are issued under Section 143 (1A) and Section 148 
  • There are strict penalties in case of a income tax fraud 
Chetan Chandak, head – tax research at H&R Block India, says, “Lot of people have recently received income tax notice under section 143 (1A) of the Income Tax Act. The Department has found a variance between information stated in 26AS and the income declared in ITR forms of taxpayers.” 

The statement 26AS is issued under Section 203AA of the Income-tax Act, 1961. It shows details of taxes deducted from your income by an employer, a bank, including a tenant. It. While filing the income tax return form it is always advisable to download your 26AS statement from the website of the department of income tax, as any mismatch can result in a tax notice. 

Having said that people many people whose 26AS statement has not matched with income declared in ITR have got the tax notice. Deepak Jain, CEO of TaxManager.in, said, “The income tax department has sent tax notices to people where there is any variance in income. For example: if the income stated in ITR does not match with 26AS Statement then a person has got a tax notice.” 

The reason for improved monitoring is the fact that now more data is available with the income tax department ranging from Form 26AS, ITR and bank details. The Department has sent notices after examining and verifying details as part of its return processing exercise. 

Not just for the last assessment year, many people have received income tax notice for previous assessment years as well under section 148 of the Income Tax Act. 

How to deal with a tax notice? 

There is no need to get confused as many people get notices without any reason. The first thing you need to do is find out the reason for an income tax notice. If you agree with the notice, then you need to file revised ITR and pay the additional income tax liability. If you disagree you can reply online stating reasons why there would be no additional tax liability. There are, however, serious penalties under the Income Tax Act in case of a fraud. A few days ago the income tax department has issued a warning that “if the Department notices any fraudulent claims on the returns, such taxpayers may be punishable under various provisions of the Income Tax Act. This may also delay issuance of refunds in such cases.” 

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