Asset Publisher

What is Income Tax Notice & Its Different Types?

4/24/25 1:10 PM

Product Enquiry

Get Started

Back To BlogS

188 |

Asset Publisher

Table Of Contents

Receiving an income tax notice might be unappealing, but it does not necessarily indicate trouble. In most circumstances, it is just a request for additional details or clarification on your tax returns. One of the most common reasons for receiving notices is inaccurate income reporting, failure to register tax saving investments, or mistakes while claiming tax benefit.

You can stay in compliance and save unnecessary penalties by being aware of the different types of tax notices. Hence, this guide will break down everything you need to know about income tax notices, their types, and the right way to handle them.

What is an Income Tax Notice?

An income tax notice is a formal mode of communication between you, the taxpayer, and the Income Tax Department. It can be related to various aspects of income tax filing and compliance, such as requests for extra information, clarification of disparities in a tax return, audits, tax payment demands, or refund notifications.

The Income Tax Department also sends notices for not filing income tax returns or for filing incorrect information.

Key Reasons for Receiving an Income Tax Notice

There exists a variety of reasons for which one might receive an income tax notice. Some of the key reasons are mentioned below:

A common reason for receiving an income tax notice is filing your income tax return using the wrong ITR form.

An income tax notice is also issued if you miss the deadline for filing your tax returns.

A notice will be issued if you miss reporting high-value transactions in your ITR, such as cash deposits of lakhs and above, in your bank account during the fiscal year.

If your ITR is randomly selected for scrutiny by the IT authorities, you will receive an income tax notice.

You can also receive an income tax notice if you make investments in your spouse's name but don’t report them in the tax returns.

Types of Income Tax Notices

The Income Tax Act of 1961 includes various provisions for issuing different types of income tax notices. Some key notices are listed below:

Notice Under Section 143(1) – Intimation Notice

Aspect	Description
Purpose of Notice	This is a preliminary communication sent after the Income Tax Department processes your return. It confirms whether the tax you computed matches the department's calculations or highlights any adjustments they've made, potentially leading to additional tax, interest, or a refund.
What You Need to Do	Carefully review the notice to understand any adjustments made. If you agree with the assessment, no action is needed. If you disagree, you can respond with explanations or supporting documents through the e-filing portal.

Notice Under Section 142(1) – Inquiry Before Assessment

Aspect	Description
Purpose of Notice	This notice is issued either when you haven't filed your income tax return or when the Assessing Officer (AO) requires more details or clarifications about the information you've provided.
What You Need to Do	If you haven't filed your return, do so immediately. If the notice requests additional information, gather all relevant documents (receipts, invoices, bank statements, etc.) and respond through the e-filing portal within the given deadline.

Notice Under Section 143(2) – Scrutiny Notice

Aspect	Description
Purpose of Notice	This notice is issued after filing your return when the Assessing Officer (AO) wants to conduct a detailed scrutiny of your income tax return. It is issued if the AO has reasons to believe that your income has been understated, excessive loss has been claimed or there has been underpayment of taxes.
What You Need to Do	You are required to cooperate with the Assessing Officer during the scrutiny assessment. This involves providing all necessary documents, explanations, and clarifications as requested.

Notice Under Section 148 – Income Escaping Assessment

Aspect	Description
Purpose of Notice	This notice is issued when the Assessing Officer (AO) has reason to believe that some income chargeable to tax has escaped assessment. This means that the AO believes that you have not disclosed some income in your return, or you have not filed a return at all.
What You Need to Do	You are required to file a return of income for the year to address the issued notice. You also have the right to ask the AO for the reasons for issuing the notice and file an objection to the assessment if you disagree.

Notice Under Section 156 – Demand Notice

Aspect	Description
Purpose of Notice	This notice is issued when any tax, interest, penalty, or any other sum is payable by you. It functions as a demand for payment of the outstanding balance.
What You Need to Do	You must pay the amount demanded within the time specified in the notice. If you disagree with the demand, you may submit an appeal to the Commissioner of Income Tax (Appeals).

Notice Under Section 139(9) – Defective Return Notice

Aspect	Description
Purpose of Notice	This notice is issued when the Assessing Officer (AO) finds that your return of income is defective. A return can be defective for various reasons, such as inconsistencies in the information provided, non-filling of mandatory fields, or non-submission of necessary documents.
What You Need to Do	You are required to rectify the defect within the time specified in the notice, generally 15 days. If you fail to rectify the defect within the given time, your return will be treated as an invalid return.

Notice Under Section 245 – Adjustment of Refund Against Outstanding Tax

Aspect	Description
Purpose of Notice	This notice is issued when the Assessing Officer (AO) proposes to adjust your refund against any outstanding tax, interest, or penalty from previous years. Before adjusting the refund, the AO is required to give you an opportunity to be heard.
What You Need to Do	You should carefully examine the notice and verify the outstanding demand. If you agree with the adjustment, no further action is required. If you disagree with the adjustment, you can file an objection with the Assessing Officer (AO).

How to Respond to an Income Tax Notice?

You can easily respond back to an income tax notice by following the steps mentioned below:

Go to the income tax e-filing portal.

Now, go to the e-File menu and check for any available notices in your account.

You will be able to view detailed notices and submit a response once you click on "Provide."

Takeaway

Filing your tax returns regularly can provide you with numerous tax benefits, but sometimes, some irregularities in your tax returns might invite an income tax notice to your doorstep. However, if you receive an income tax notice, you should never panic in that situation. You should go through the notice and seek expert advice in case of any difficulty.