In the current scenario, there are many tax compliances which all are very important and need to fulfill all these compliances. In this modern time, the Income Tax Department can access all the financial information of any of the assessee with the use of a computer and can know about the financial transactions of such person. When the income tax department finds any fraud, tax evasion, tax shifting, or any discrepancy in the income tax data, the department issues the notices under the various provisions of the Income Tax Act.
We can get the notice from the income tax department for many reasons. In this article, we will discuss reasons to a get notice from the income tax department and what will be the solution.
Certain reasons for a notice from the income tax department
There are certain reasons which result into a notice which will receive from the income tax department-
- Late filing of Income Tax Return– As per the provision of the income tax act, if there is any person who is required to file an income tax return, the person will file it within the time limits which are specified under the income tax act but if the assessee fails to file the return within the specified time then the department will serve a reminder notice and such reminder notice will be issued by the department before the end of the relevant assessment year for which the return is required to file.
- Escaped Income– If there is any person who escapes the income or such person is not pay the amount of tax on such income whether knowingly or unknowingly then such an assessee can get a notice from the income tax department.
- Non – filing of Income Tax Return– As per the provision of Income Tax Act 1961, if there is any person whose amount of income is more than the basic exemption limit then such person is mandatory required to file an income tax return for the relevant year. But if the assessee fails to file the return, can get the notice from the income tax department.
- TDS claimed not match with form 26AS– The income tax return is filed by the assessee but the TDS which is claimed by the assessee is not to matched with Form 26AS. There may be several reasons for the mismatch. Due to this, the assessee can get a notice from the income tax department.
- Misreporting of Long- Term Capital Gain– if there is any long term capital gain that arises on the transfer of listed equity and equity- related mutual funds, such amount of long – term capital gain should be disclosed in its return. If such amount of long – term capital gain is more than 1lakh in the financial year and on which STT paid then It will be taxable @ 10%.
- Non- disclose income– The assessee is required to pay tax on all his income if any of the income is not disclosed by the assessee, he will get the notice from the income tax department.
- Clubbed income– If there are any investments are transferred by the person to his spouse then the income from such investment will be taxable in the hands of the person who will transfer such investment. If such income is not considered by such person, can get a notice from IT department.
- The assessee can receive the notice from the IT department if he has done high – volume transactions.
- The assessee may receive the notice under section 143(2) which means your return is under scrutiny and it may be related to mismatched or inaccurate reporting of the income.
- Due to the evasion of tax, the assessee can get notice.
What to do if you get a notice from Income Tax Department
If the assessee receives the notice from the IT department under any provision of the income tax act, the assessee must provide all the relevant and required documents and details whether these are irrelevant according to him within the specified time period. The assessee will comply with the notice and serve all the required information.
Alternatively, it is always better to consult a tax expert who may suggest the appropriate action for handling such Income tax notice. We, at Aristotle Consulting, help such assessees for analysing the reason for such Income tax notice and accordingly file the reply with authorities.