Income Tax Notices: Can You Receive One, And What Are The Different Types

Recently, a labourer from Uttar Pradesh allegedly received a tax notice of over Rs. 7 crore from the Income Tax (IT) department. The notice said that the daily-wage labourer owes the amount as unpaid taxes, PTI reported.

The alleged notice sparked distress among family members of the labourer about how such a notice can be received when the income of the daily-wage labourer is below the tax bracket. While according to the report, I-T inspector Shubham Sharma denied having any such notice, it raises a question about when a tax notice can be served and who can receive it.

When is an Income Tax Notice Served?

The IT department serves income tax notices as a form of formal communication to taxpayers for a number of reasons. The primary reason is that there is some error on the taxpayers’ part, which the IT department wishes to clarify further.

If a taxpayer receives an income tax notice, it is not necessarily a fault on their part; it could also be that there was something wrong with the tax filing, which needs an update. Similarly, if the taxpayer missed reporting some income or had filed taxes under different heads, they can also receive a tax notice. Another common reason could be some inconsistency in documentation or some clarification requests that the IT department asks for. In case you receive a tax notice, it is pertinent that a prompt reply is sent to avoid any penalties.

Different Types of Tax Notices

Here are some examples of different types of tax notices under IT laws that taxpayers commonly receive, and how to go about them.

Tax notice under Section 139(9): Under this section, a tax notice is issued when an income tax return (ITR) filed by a taxpayer is considered defective because there are missing details, or incorrect details of tax paid, or if there is any mismatch in income. These notices come with a window for the taxpayer to correct the filings within a specified period.

Tax notice under Section 142(1): Such a notice is served when the department wants a taxpayer to submit additional information or documents regarding particular income heads.

Tax notice under Section 143(1): If there is a mismatch or a calculation error in the tax filings, then the IT department sends notices under this section. There could also be a mathematical error in exemptions or refunds. In such a case, a taxpayer could either rectify the error and make adjustments or file a request for rectification.

Tax notice under Section 143(2): The IT department sends a notice under this section to inform you of further scrutiny of your income statements and filings. Taxpayers are required to substantiate their tax claims with proper documentation to support them.

Tax notice under Section 148: Under this section, a tax notice is served for reassessment of the income if the IT department believes that your income has not been assessed properly. Taxpayers are required to file the ITR again and explain why the earlier filed report was correct or updated, or whether the reassessment was not necessary.

Tax notice under Section 156: Under this section, the tax notice is served where the taxpayer needs to pay any tax, interest or penalty determined by tax officers. The notice specified the deadline by which the sum must be paid.