Income Tax Notice Received? Know Types, Reasons, And How To Respond | Tax News

Last Updated:July 17, 2025, 13:39 IST

Tax experts expect more taxpayers to receive notices this time amid tighter scrutiny. Here’re common types of income tax notices, their possible reasons, and how to deal with them.

Receiving an income tax notice can be stressful, but it doesn’t always mean you’ve done something wrong.

ITR Filing FY 2024-25: The income tax department earlier this week conducted raids across the country and busted a network of individuals and entities involved in fake deduction claims. The operation indicates the seriousness of the offence of claiming fake income tax refunds. Tax professionals expect more taxpayers to receive notices this time amid tighter scrutiny. Receiving an income tax notice can be stressful, but it doesn’t always mean you’ve done something wrong.

The income tax department issues notices for various reasons — ranging from simple discrepancies in your tax return to more serious issues like unreported income. Ignoring these notices can lead to penalties, so it’s crucial to understand why you received one and how to respond properly.

Here are the most common types of income tax notices, their possible reasons, and step-by-step guidance on how to deal with them effectively.

Common Types of Income Tax Notices

1. Intimation Notice – Section 143(1)

What it is: A preliminary notice sent after your ITR is processed, indicating any adjustments (like tax calculation errors or mismatches in TDS).

Possible Reasons: Discrepancy between ITR and Form 26AS/16/AIS, math errors in tax calculations, or excess or short tax payment.

How to Respond: Verify the adjustments; if correct, no action is needed. If incorrect, file a revised return or submit a response online.

2. Defective Return Notice – Section 139(9)

What it is: Sent when your ITR has errors or incomplete information.

Possible Reasons: Missing fields (like bank details or income sources), incorrect ITR form selection, or mismatch in personal details (PAN, name).

How to Respond: Correct the defects and file a revised return within the given time (usually 15 days).

3. Income Escapement Notice – Section 148 (Reassessment)

What it is: Issued if the tax department believes you have underreported or escaped income.

Possible Reasons: High-value transactions not reflected in ITR (property, investments, deposits), or suspected tax evasion.

How to Respond: File a response within 30 days, providing necessary documents. If income was correctly reported, submit proof.

4. Notice for Non-Filing of ITR – Section 142(1)

What it is: This is sent if you have not filed a return despite having taxable income.

Possible Reasons: High TDS deductions but no return filed, or suspected income based on financial transactions.

How to Respond: File the ITR immediately if applicable. If not liable to file, submit a reply explaining why.

5. Penalty Notice – Section 234F (Late Filing Fee)

What it is: A penalty for filing ITR after the due date.

Possible Reasons: ITR filed after September 15 (for individuals).

How to Respond: Pay the penalty (Rs 1,000-Rs 5,000) and file the return.

6. Tax Demand Notice – Section 156 (Notice of Demand)

What it is: Sent when you owe additional tax after assessment.

Possible Reasons: Underpayment of tax, or disallowance of deductions/claims.

How to Respond: Pay the demand within 30 days. If disputed, file an appeal or request a waiver.

Reasons for Receiving Income Tax Notices

The most common reasons for receiving income tax notices are — mismatch in TDS/TCS (Form 26AS vs. ITR); high-value transactions (property, investments, cash deposits); non-filing of ITR despite taxable income; discrepancies in deductions/exemptions claimed; and random scrutiny selection by the tax department.

How to Respond to an Income Tax Notice

1. Verify the Notice Details – Check PAN, assessment year, and issue type.

2. Understand the Reason – Read the notice carefully to identify the issue.

3. Gather Supporting Documents – Bank statements, Form 16, investment proofs.

4. Submit a Timely Response – Reply via the Income Tax Portal or consult a CA if needed.

Common Mistakes to Avoid

Delaying or ignoring the notice, which might lead to higher penalties.

Submitting incomplete/inaccurate replies, which might lead to further scrutiny.

Not keeping records, which makes it difficult in proving claims.

Preventive Measures to Avoid Tax Notices

According to tax experts, taxpayers might prevent tax notices by following some steps. They said taxpayers need to file ITR on time and verify it; reconcile Form 26AS/AIS before filing; report all income sources, including freelance/gig income; keep financial documents (bank statements, invoices, proofs) for over 6 years; consult a tax expert for complex cases.

ITR FY 2024-25 Deadline

The ITR filing season for FY 2024-25 (or AY 2025-26) is going on. As of July 17, a total of 1,36,94,411 income tax returns have been filed. Out of these, 1,32,97,817 ITRs have been verified and 1,12,77,922 returns have already been processed, according to the latest data available on the income tax portal.

Currently, there are 13,12,40,338 individual registered users, as per the income tax portal.

Mohammad Haris

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More

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