Notice Requirements and Procedures under Income Tax Act

RETURN FILING WITH REFERENCE TO NOTICE U/S 148, 142(1),139(9), PURSUANT TO 119(2(B). PROVISIONS RELATED TO CONDONATION OF DELAY, HOW TO SUBMIT APPLICATION TO CBDT, TAX AUDIT REPORT U/S 44AB & 92E, AS-26 / AIS, RELIEF U/S 89(1), ADVANCE TAX, FOREIGN TAX CREDIT, ETC

PROCEDURE U/S 148A TO BE FOLLOWED BEFORE ISSUANCE OF NOTICE U/S 148 6) PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 148, AO IS REQUIRED TO FOLLOW THE PROCEDURE PRESCRIBED UNDER CLAUSES (A) TO (D) OF THE SECTION 148A AND PASS AN ORDER UNDER SECTION 148A(D). THE AO, UNDER SECTION 148A, IS OBLIGED TO: a) CONDUCT ENQUIRY, WITH THE PRIOR APPROVAL OF THE SPECIFIED AUTHORITY, WITH RESPECT TO INFORMATION WHICH SUGGESTS THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT [SECTION 148A(A)]; b) ISSUE A NOTICE UPON THE ASSESSEE TO SHOW-CAUSE WHY NOTICE UNDER SECTION 148 SHOULD NOT BE ISSUED AND PROVIDE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE [SECTION 148A(B)]. TIME PERIOD OF AT LEAST 7 DAYS BUT NOT EXCEEDING 30 DAYS TO BE PROVIDED TO RESPOND TO SHOW CAUSE NOTICE. EXTENDED TIME MAY BE ALLOWED ON APPLICATION IN THIS BEHALF. c) CONSIDER THE REPLY OF THE ASSESSEE [SECTION 148A(C)]; d) DECIDE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND THE REPLY FURNISHED BY THE ASSESSEE, BY PASSING AN ORDER WITHIN ONE MONTH OF RECEIPT OF ASSESSEE'S REPLY WHETHER OR NOT IT IS A FIT CASE FOR ISSUANCE OF NOTICE UNDER SECTION 148, WITH PRIOR APPROVAL OF SPECIFIED AUTHORITY [SECTION 148A(D)]. PROCEDURE PROVIDED IN SECTION 148A IS NOT APPLICABLE IN CASES OF SEARCH, SURVEY OR REQUISITION INITIATED OR MADE ON OR AFTER 01.04.2021 [FIRST PROVISO TO SECTION 148A] 2

WHAT IS SECTION 142(1) OF THE INCOME-TAX ACT? SECTION 142(1) OF THE INCOME-TAX ACT 1961 EMPOWERS INCOME-TAX AUTHORITIES TO ISSUE A NOTICE FOR MORE CLARIFICATION OR FOR FURTHER DETAILS ABOUT WHERE A RETURN HAS BEEN FILED OR IF THE RETURN HAS NOT BEEN FILED, THEN TO FURNISH THE REQUIRED INFORMATION IN A PRESCRIBED MANNER.

WHEN IS THE NOTICE UNDER SECTION 142(1) ISSUED? NOTICE U/S 142(1) CAN BE ISSUED IN BOTH CASES, WHERE YOU FILE YOUR INCOME TAX RETURN U/S 139 (1) AND ALSO IN THE CASE YOU DO NOT FILE YOUR INCOME TAX RETURN U/S 139 (1) AND TIME SPECIFIED TO FILE A SUCH RETURN HAS BEEN EXPIRED. HOWEVER, ASSESSING OFFICER SHALL ONLY REQUIRE THE PRODUCTION OF ACCOUNTS OR INFORMATION RELATING TO A PERIOD OF THREE YEARS BEFORE THE PREVIOUS YEAR.

PURPOSE OF NOTICE NOTICE U/S 142(1) IS ISSUED BY THE INCOME TAX DEPARTMENT FOR: 1. FILING OF INCOME TAX RETURN: IF YOU VE NOT FILED YOUR RETURN WITHIN THE SPECIFIED PERIOD OR BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR, YOU MIGHT RECEIVE NOTICE U/S 142(1) ASKING YOU TO FILE YOUR RETURN. 2. PRODUCING SPECIFIC ACCOUNTS AND DOCUMENTS: AFTER YOU VE FILED YOUR INCOME TAX RETURN, YOUR ASSESSING OFFICER (AO) MAY ASK YOU TO PRODUCE SUCH SPECIFIC ACCOUNTS AND DOCUMENTS AS REQUIRED BY HIM BY WAY OF NOTICE U/S 142(1). FOR EXAMPLE, YOU MIGHT BE REQUIRED TO PRODUCE YOUR PURCHASE BOOKS, SALES BOOKS, OR PROOFS OF ANY DEDUCTIONS AVAILED BY YOU, ETC. 3. ANY OTHER INFORMATION, NOTES, OR WORKINGS AS DESIRED BY THE AO: THE ASSESSING OFFICER MAY REQUIRE YOU TO FURNISH IN WRITING AND IN THE PRESCRIBED MANNER THE INFORMATION, NOTES, OR WORKINGS ON SPECIFIC POINTS AS REQUIRED BY HIM, WHICH MAY OR MAY NOT FORM PART OF BOOKS OF ACCOUNTS. FOR EXAMPLE, A STATEMENT OF YOUR ASSETS AND LIABILITIES.

PENALTY FOR NON-COMPLIANCE OF SECTION 142(1) TAX NOTICE: IF YOU DON T COMPLY WITH NOTICE U/S 142(1), THEN: A PENALTY OF RS 10,000 CAN BE IMPOSED ON YOU U/S 271(1) (B). YOUR CASE CAN FALL UNDER BEST JUDGEMENT ASSESSMENT U/S 144, WHERE THE ASSESSMENT WILL BE CARRIED OUT AS PER THE BEST JUDGMENT OF THE ASSESSING OFFICER ON THE BASIS OF ALL THE RELEVANT MATERIAL HE GATHERED. YOU CAN BE PROSECUTED U/S 276D FOR UP TO 1 YEAR WITH OR WITHOUT A FINE. A WARRANT MAY ALSO BE ISSUED U/S 132 FOR CONDUCTING A SEARCH.

WHAT IS A DEFECTIVE RETURN? WHEN ANY IMPORTANT INFORMATION IS MISSING OR REPORTED WRONGLY ON THE RETURN, IT IS KNOWN AS A DEFECTIVE RETURN. IN ANY OF THE ABOVE CASES, THE INCOME TAX DEPARTMENT ISSUES A DEFECTIVE NOTICE U/S 139(9) TO THE TAXPAYERS, INTIMATING THEM ABOUT THE SAME AND ASKING THEM TO CORRECT THE INACCURACIES PRESENT IN THE RETURN. YOU ARE REQUIRED TO MAKE THE NECESSARY CORRECTIONS IN THE RETURN WITHIN 15 DAYS OF RECEIVING THE NOTICE. IF YOU FAIL TO CORRECT THE ITR ON TIME, IT MIGHT HAVE CERTAIN CONSEQUENCES IN THE FUTURE.

WHAT IS THE REASON FOR DEFECTIVE NOTICE 139 9? INCOMPLETE ITR - NEED TO FILL THE ANNEXURE, STATEMENTS, AND COLUMNS IN THE INCOME TAX RETURN. IT MUST BE DULY FILLED WHEREVER REQUIRED. FOR EXAMPLE, WHILE CLAIMING DEDUCTION U/S 80G, THE DETAILS IN ITS SCHEDULE NEED TO BE FILLED OR CORRECTLY FILLED. MISSING TAX INFORMATION - TAX, TOGETHER WITH INTEREST, IF ANY, IS PAID BEFORE FILING THE RETURN, AND ALL THE DETAILS RELATING TO IT ARE NOT FILLED IN. FOR EXAMPLE, THE BSR CODE, DATE OF CHALLAN, AND CHALLAN SERIAL NUMBER SHOULD BE CORRECTLY FILLED IN. MISMATCH IN INFORMATION - THE TAX ACTUALLY PAID DOES NOT MATCH WITH THE TAX PAYABLE IN THE INCOME TAX RETURN, OR TAXES ARE NOT PAID IN FULL. PRESUMPTIVE TAXATION SCHEME - WHILE FILING ITR 4, IF TOTAL PRESUMPTIVE INCOME IS SHOWN AS LESS THAN 8% OR 6% OF GROSS TURNOVER OR RECEIPTS, AS THE CASE MAY BE, THEN IN THAT CASE, ITR 3 SHOULD HAVE BEEN FILED. THE GROSS RECEIPTS ARE NOT MENTIONED IN THE PROFIT & LOSS A/C, OR THE GROSS RECEIPT OR INCOME U/S 44AD IS SHOWN AS MORE THAN RS. 2 CRORE IN ITR 4. IF YOU HAVE FILED YOUR RETURN U/S 44ADA WITH A GROSS RECEIPT OF MORE THAN 50 LAKHS WITHOUT A BALANCE SHEET AND PROFIT & LOSS, THEN A NOTICE WILL BE RECEIVED FOR FILING ITR-3 WITH AUDITED B/S AND P&L STATEMENT. IN BUDGET 2023, THIS LIMIT FOR PRESUMPTIVE TAXATION HAS BEEN INCREASED. FOR 44AD IT IS INCREASED TO 3 CRORES AND FOR 44ADA IT IS INCREASED TO 75 LAKHS. THIS INCREASE IN LIMIT IS SUBJECT TO THE CONDITION THAT 95% OF RECEIPTS MUST BE THROUGH ONLINE SALES. MAINTAINING BOOKS OF ACCOUNTS -YOU RE REQUIRED TO MAINTAIN REGULAR BOOKS OF ACCOUNT SUCH AS BALANCE SHEETS AND PROFIT AND LOSS STATEMENTS, BUT THEY HAVE NOT BEEN FILLED IN THE RETURN WHILE FILING IT. TDS CLAIMED BUT INCOME NOT MENTIONED -THE TAX DEDUCTED HAS BEEN CLAIMED AS A REFUND, BUT NO INCOME DETAILS ARE PROVIDED IN RETURN. RELATED TO INCOME TAX AUDIT - WHEN THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED, BUT A COPY OF THE AUDIT REPORT AND AUDITED FINANCIAL STATEMENTS HAVE YET TO BE FILLED IN THE RETURN WHILE FILING IT. COST AUDIT REQUIREMENTS - IF THE ENTITY IS REQUIRED TO CONDUCT A COST AUDIT BUT FAILS TO PROVIDE DETAILED INFORMATION OF THE SAME. MISMATCH IN NAME -NAME MISMATCH BETWEEN PAN AND INCOME TAX RETURN.

WHAT SHALL I DO AFTER RECEIVING NOTICE U/S 139(9)? ONCE YOU VE RECEIVED INCOME TAX NOTICE U/S 139(9), YOU MUST CORRECT YOUR RETURN BY REVISING IT WITHIN 15 DAYS FROM RECEIPT BY THE INCOME TAX DEPARTMENT. YOU CAN ALSO APPLY FOR AN EXTENSION BY WRITING AN APPLICATION TO THE ASSESSING OFFICER (A.O.) REQUESTING AN EXTENSION OF THE DEADLINE FOR FILING A REVISED RETURN. PRACTICALLY, IT IS SEEN THAT EVEN A TAXPAYER RECTIFIES THE DEFECT AFTER THE EXPIRY OF FIFTEEN DAYS. STILL, BEFORE THE ASSESSMENT IS MADE, THE ASSESSING OFFICER MAY CONDONE THE DELAY AND TREAT THE RETURN AS VALID. HOWEVER, IF THE RESPONSE IS NOT FILED WITHIN 15 DAYS OR THE EXTRA DAYS ARE GRANTED, THE ORIGINAL RETURN FILED IS TREATED AS AN INVALID RETURN.

REMEDY UNDER SECTION 119(2)(B) SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961, PROVIDES VITAL REMEDIES FOR TAXPAYERS FACING GENUINE HARDSHIPS THAT HINDER THEM FROM MEETING TAX-RELATED DEADLINES. THESE REMEDIES, REGULATED BY THIS PROVISION, PLAY A CRUCIAL ROLE IN THE INDIAN TAX SYSTEM.

KEY ASPECTS OF REMEDIES UNDER SECTION 119(2)(B) THE KEY ASPECTS OF REMEDIES UNDER SECTION 119(2)(B) ARE: EMPOWERMENT OF INCOME TAX AUTHORITIES: SECTION 119(2)(B) ALLOWS INCOME TAX AUTHORITIES TO CONSIDER APPLICATIONS FOR EXEMPTIONS, DEDUCTIONS, REFUNDS, OR OTHER RELIEF, EVEN AFTER THE PRESCRIBED DEADLINE HAS PASSED. CONDONATION OF DELAY: THIS PROVISION CONDONES DELAYS IN FILING APPLICATIONS OR CLAIMS WHEN VALID REASONS EXIST. SIX-YEAR LIMIT: CLAIMS FOR REFUNDS OR LOSS CARRYFORWARDS BEYOND SIX YEARS FROM THE END OF THE ASSESSMENT YEAR ARE NOT ENTERTAINED. COURT ORDER EXCLUSION: THE TIME PENDING BEFORE A COURT ORDER CAN BE EXCLUDED, SUBJECT TO CERTAIN CONDITIONS.

KEY ASPECTS OF CIRCULAR NO. 09/2015: HERE ARE THE KEY ASPECTS OF CIRCULAR NO. 09/2015: MONETARY LIMITS: CIRCULAR NO. 09/2015 ESTABLISHES MONETARY THRESHOLDS TO DETERMINE WHICH INCOME TAX AUTHORITIES ARE EMPOWERED TO HANDLE CONDONATION OF DELAY APPLICATIONS. THE LIMITS ARE AS FOLLOWS: FOR CLAIMS NOT EXCEEDING RS. 10 LAKHS, THE AUTHORITY RESPONSIBLE IS THE PRINCIPAL COMMISSIONER OF INCOME TAX OR THE COMMISSIONER OF INCOME TAX. CLAIMS EXCEEDING RS. 10 LAKHS BUT LESS THAN RS. 50 LAKHS ARE DEALT WITH BY THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX OR THE CHIEF COMMISSIONER OF INCOME TAX. CLAIMS EXCEEDING RS. 50 LAKHS FALL UNDER THE PURVIEW OF THE CBDT.

WHO CAN ACCEPT APPLICATIONS? THE CBDT S CIRCULAR ALSO ESTABLISHES MONETARY LIMITS THAT DICTATE WHICH INCOME TAX AUTHORITIES ARE EMPOWERED TO HANDLE CONDONATION APPLICATIONS. THESE LIMITS ARE AS FOLLOWS: IF THE MONETARY LIMIT OF THE CLAIM MADE IS NOT MORE THAN RS. 10 LAKHS, THE INCOME TAX AUTHORITY THAT HANDLES IT IS THE PRINCIPAL COMMISSIONER OF INCOME TAX OR THE COMMISSIONER OF INCOME TAX. IF THE MONETARY LIMIT OF THE CLAIM IS MORE THAN RS. 10 LAKHS BUT LESS THAN RS. 50 LAKHS, THE INCOME TAX AUTHORITY RESPONSIBLE IS THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX OR THE CHIEF COMMISSIONER OF INCOME TAX. IF THE MONETARY LIMIT OF THE CLAIM EXCEEDS RS. 50 LAKHS, THE AUTHORITY IN CHARGE IS THE CBDT.

ANNUAL INFORMATION STATEMENT AIS SHOWS BOTH REPORTED VALUE (VALUE REPORTED BY THE REPORTING ENTITIES) AND MODIFIED VALUE (I.E. THE VALUE AFTER CONSIDERING TAXPAYER S FEEDBACK) FOR EACH TYPE OF INFORMATION, I.E. TDS, STATEMENT OF FINANCIAL TRANSACTION (SFT) AND VARIOUS OTHER INFORMATION. AIS IS INTRODUCED WITH THE OBJECTIVE OF DISPLAYING COMPLETE INFORMATION TO THE TAXPAYER AND CAPTURE THEIR ONLINE FEEDBACK THE SAID MOVE WILL FACILITATE VOLUNTARY COMPLIANCE AND ELIMINATE UNDERREPORTING OF INCOME BY THE TAXPAYERS ENABLE SEAMLESS PRE-FILLING OF RETURN DETER NON-COMPLIANCE

SALIENT FEATURES OF AIS IT INCLUDES NEW INFORMATION INTEREST, DIVIDEND, SECURITIES TRANSACTIONS, MUTUAL FUND TRANSACTIONS, FOREIGN REMITTANCE INFORMATION, ETC. SUMMARY OF AIS INFORMATION IN THE FORM OF TAXPAYER INFORMATION SUMMARY (TIS) FOR EASE OF FILING RETURN (ALL THE INFORMATION WILL BE PRE-FILLED IN YOUR RETURN) TAXPAYERS WILL BE ABLE TO SUBMIT ONLINE FEEDBACK ON AIS S INFORMATION AND DOWNLOAD INFORMATION IN PDF, JSON, AND CSV FILE FORMATS AIS UTILITY WILL ENABLE TAXPAYERS TO VIEW AIS AND UPLOAD FEEDBACK IN AN OFFLINE MANNER

WHAT ARE THE DIFFERENT TYPES OF INFORMATION SHOWN IN AIS? THE INFORMATION IS DISPLAYED IN TWO PARTS. PART A AND PART B. PART A- GENERAL INFORMATION IT DISPLAYS GENERAL INFORMATION SUCH AS PAN, MASKED AADHAAR NUMBER, NAME, DATE OF BIRTH/INCORPORATION/FORMATION, CONTACT DETAILS OF THE TAXPAYER. PART- B TDS/TCS INFORMATION INFORMATION RELATED TO TDS/TCS IS DISPLAYED HERE. THE INFORMATION CODE OF THE TDS/TCS, INFORMATION DESCRIPTION AND INFORMATION VALUE IS SHOWN. SFT INFORMATION INFORMATION RECEIVED FROM REPORTING ENTITIES UNDER STATEMENT OF FINANCIAL TRANSACTION (SFT) IS DISPLAYED. THE SFT CODE, INFORMATION DESCRIPTION AND INFORMATION VALUE IS MADE AVAILABLE. PAYMENT OF TAXES INFORMATION RELATING TO TAXES SUCH AS ADVANCE TAX AND SELF-ASSESSMENT TAX IS SHOWN. DEMAND AND REFUND -DETAILS OF THE DEMAND RAISED AND REFUND INITIATED (AY AND AMOUNT) DURING A FINANCIAL YEAR. OTHER INFORMATION: DETAILS OF THE INFORMATION RECEIVED FROM THE OTHER SOURCES, SUCH AS DATA PERTAINING TO ANNEXURE II SALARY, INTEREST ON REFUND, OUTWARD FOREIGN REMITTANCE/PURCHASE OF FOREIGN CURRENCY ETC., IS DISPLAYED HERE.

FORM 26AS AX CREDIT STATEMENT OR FORM 26AS IS AN IMPORTANT DOCUMENT FOR TAX FILING. GONE ARE THE DAYS WHEN ONE HAS TO DOWNLOAD FORM 26AS TO FILE IT RETURNS MANUALLY. THE SCOPE OF THE STATEMENT HAS NOW BEEN EXPANDED TO INCLUDE DETAILS OF FOREIGN REMITTANCES, MUTUAL FUNDS PURCHASES, DIVIDENDS, REFUND DETAILS, ETC. FORM 26AS GIVES A CONSOLIDATED RECORD OF EVERY TAX-RELATED INFORMATION ASSOCIATED WITH YOUR PAN (PERMANENT ACCOUNT NUMBER). IT CAN BE VIEWED AND DOWNLOADED EASILY FROM THE TRACES WEBSITE. IT IS USEFUL TO VERIFY THE CONTENTS OF THE TDS CERTIFICATE AND ENSURE THAT THE TDS DEDUCTED FROM YOUR INCOME IS ACTUALLY DEPOSITED WITH THE INCOME TAX DEPARTMENT.

FORM 26AS IS A STATEMENT THAT SHOWS THE BELOW INFORMATION: TAX DEDUCTED ON YOUR INCOME BY ALL THE TAX DEDUCTORS DETAILS OF TAX COLLECTED SOURCE BY ALL THE TAX COLLECTORS ADVANCE TAX PAID BY THE TAXPAYER SELF-ASSESSMENT TAX PAYMENTS REGULAR ASSESSMENT TAX DEPOSITED BY THE TAXPAYERS (PAN HOLDERS) DETAILS OF INCOME TAX REFUND RECEIVED BY YOU DURING THE FINANCIAL YEAR DETAILS OF THE HIGH-VALUE TRANSACTIONS REGARDING SHARES, MUTUAL FUNDS, ETC. DETAILS OF TAX DEDUCTED ON SALE OF IMMOVABLE PROPERTY DETAILS OF TDS DEFAULTS (AFTER PROCESSING TDS RETURN) MADE DURING THE YEAR TURNOVER DETAILS REPORTED IN GSTR-3B

FORMS TAX AUDIT REPORT U/S 44AB FORM 3CA-CD , FORM 3CB-CD 92E FORM 3CEB RELIEF U/S 89(1)- FORM 10E FOREIGN TAX CREDIT FORM 67