ITR Filing For AY 2025-26: 5 Types Of Income Tax Notices And How To Avoid Them

Many taxpayers make mistakes while filing their income tax returns (ITRs), leading to tax notices and sometimes penalties from the Income Tax Department. Income tax notices are written communications sent to individuals by the Income Tax Department to inform them that their return has been picked for scrutiny.

According to tax experts, one can receive an income tax notice because of various reasons.

Says Vishwas Panjiar, partner, Nangia Andersen LLP: “A large number of taxpayers do not grasp the technical aspects of tax regulations, including capital gains and foreign income requirements, and eligible deductions. In addition, many salaried individuals base their entire tax reporting on their employer-provided Form 16 because they believe it shows their complete income. During the return filing process, taxpayers commonly fail to check Form 26A, although it contains important transactions. The tendency to delay filing returns until the last moments creates a high risk of errors during submission.” 

After receiving the tax notice, therefore, taxpayers must act on it and resolve it within the given timeline.

The most common reasons for receive an income tax notice include:

• ITR Mismatch

• Mismatch in the amount of TDS reported.

• An error in your income tax return.

• Lack of submission of all the documents.

• Non-filing or delayed income tax return filing.

• When you invest in the name of your spouse and do not mention the same in your income tax returns

• If high-value transactions done but not properly reported.

• Inaccurate Information on Assets or Income

• If the assessing officer does random scrutiny of your income tax return.

• When long-term capital gains earned from equity investments are not reported correctly.

• If the taxpayer does not disclose any income or there is a discrepancy in the disclosed income.

• If a wrong income tax return form is used for filing the income tax return.

• If your refunds can be set off against the previous year's tax liability.

• If you have evaded tax in previous financial years.

• If the Self-assessment tax still needs to be paid.

• If you have claimed fake deductions, you might receive a notice under section 143(2).

Types of Income Tax Notices

Here are a few types of income tax notices.

Intimation Under Section 143(1) of The Income-tax Act,1961: An intimation under Section 143(1) functions as the Income Tax Department's official response which summarises the assessment results of your ITR submission.

“The Income Tax Department receives your ITR for processing after its initial submission. During the processing stage, if the tax department detects calculation mistakes and incorrect tax computations as well as unreported income or unclaimed tax refunds, it will issue an intimation u/s 143(1). You must respond to this notice accurately within the given time-frame, if there is a discrepancy or demand. If it shows a refund or no mismatch, no action is required,” says Abhishek Soni, co-founder, Tax2Win.

Tax Notice Under Section 142(1): The issuance of notice under Section 142(1) applies to both situations where taxpayers file their returns under section 139(1) and to situations where taxpayers fail to file their returns under Section 139(1) after the prescribed filing deadline has passed. The assessing officer has the authority to deliver a notice that demands the assessee to submit their ITR within the time mentioned in the notice when the assessee fails to submit their return within the set deadline.

Says Soni: “The notice can be issued after the assessment year has ended. A person who receives a Section 142(1)(i) notice even though they lack any requirement to file returns under the Income-tax Act, 1961 must file their return as demanded by the notice. The Income Tax Department has the option to issue this notice when they require further information concerning filed tax returns or unfiled returns.”

Notice for Defective Return U/S 139(9): When filing income tax returns with incomplete or inconsistent information, the assessee receives a notice u/s 139(9) of the Act. The assessee gets 15 days to respond to this notice, and should request an extension of timeline through a written letter to the Income Tax Department if they do not respond to the notice.

The return becomes invalid when the assessee fails to respond within 15 days or when no extension is granted. The defective return notice u/s 139(9) is issued to your registered email ID through email. Users can retrieve the income tax defective return notice through the e-filing portal.

Section 156 Demand Notice: A Section 156 notice functions as an income tax demand notice that is frequently used by tax authorities. The assessing officer delivers Section 156 notices to taxpayers who must pay any tax amount, including interest along with penalties or fines resulting from orders issued under the Income-tax Act, 1961. You have 30 days from the notification date to clear the outstanding payment.

Notice Under Section 245 of Act: Intimation under Section 245 is issued by the Income Tax Department to inform you that they are adjusting your previous year’s pending tax payable with the current year’s refund.

“The I-T Department has authority u/s 245 of the Act to merge previous year tax demands with current year tax refunds. The Department must issue Section 245 intimation under the I-T Act to taxpayers before exercising their power to adjust previous year tax demands with current year refunds,” says Soni.

Ways to Avoid Tax Notices

File your ITRs accurately and on time, declaring all sources of income, verifying deduction of tax at source (TDS), Form 26AS, and all statements before filing. After filing, respond to any tax notice within the stipulated deadline (usually 15–30 days), and consult a tax expert, if you are unsure about the notice or your response.

Ignoring or mishandling income tax notices can have serious financial and legal consequences. Therefore, always review, understand, and respond within the deadline to protect yourself from unnecessary trouble.