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Income Tax Notice to File Returns Compliance Form

The tax season is ongoing and the Income tax department is set out to be vigilant for the tax-invaders. Income Tax Return is a helpful tool for income tax department for keeping a close eye on the tax-invaders. Income Tax Return Filing is an important income tax obligation that every Resident Indian falling under the tax-net has to follow. Filing an income tax return also helps the tax-payer to have a good finance management. Every individual who has a gross total income above the basic exemption limits (as set by the income tax department) has to mandatorily file income tax returns of the relevant financial year or Assessment year with the income tax department. Non-filing of Income Tax returns is an unlawful act and can attract serious consequences to the tax-payer.

Even if you have genuine reasons for not filing the income tax returns, like your income for the financial year being under the basic exemption limits due to loss of job or less profits booked in business, it is still recommended to file income tax returns. If you have been filing income tax returns and irrespective of genuine reasons fail to file the income tax department can issue notice to you u/s 143(2) of Income Tax Act, stating non-compliance as the reason of notice. This article will guide you to respond to income tax notice issued for non-compliance in filing income tax returns.

How IT Dept Tracks Non-compliance and Non-filing of Returns?

Income tax department identifies potential individuals who have carried out high value transactions in the financial year, but have failed to file the income tax returns in the applicable assessment year. So, the officials of income tax department send out notices to such non-filers. To keep a tab on such activities, the Income tax department has introduced NMS i.e. Non-Filers Monitoring System. This system is introduced to pick and prioritize action against non-tax-return-filers having potential income tax liability. The non-tax-return-filers are identified through data analysis. This data analysis is done on the information received through various channels namely: Banks via its TDS or TCS statements, Centralized Information Branch, Annual Information Return etc. Once the non-tax-return-fillers are identified, the income tax department sends out notice to such individuals via mobile SMS, electronic mails or letters.

If you have received any such notice, you can either physically or electronically file response. For submitting a physical response, you have to visit the nearest income tax department office. While in case of sending an electronic response, you only need to login to the income tax department’s e-filing portal. Assessee can view the notice and submit a response related to the same through the income tax department’s e-filing portal.

Responding to the Notice for Non-Filing of Return

In most of the cases, the income tax department sends out income tax notice via mobile SMS or electronic mails. You can respond to the notice of non-filing of returns via online channel by logging in to the income tax department’s e-filing portal. Following is a step-by-step guide on how to respond to the notice for non-filing of returns.

  • Step 1: Visit the income tax department’s online portal by typing www.incometaxindiaefiling.gov.in in the address bar of your internet explorer
  • Step 2: Login to the income tax website with your valid credentials i.e. with correct Login ID and Password. Kindly note, if you are not a registered user, then you may have to first register yourself with the website in order to carry out further actions. You can register yourself to income tax department portal by registering your PAN details. Also, if you want to submit the response of the income tax notice electronically, then it can be submitted only after successfully registering and logging in to the income tax department’s e-filing portal.
  • Step 3: Once you are logged in to your account, you shall see dashboard consisting of various tabs. Click on the ‘Compliance’ tab. The compliance tab will contain all the information related to non-filing of income tax returns.
  • Step 4: The compliance tab consists of two options:
    • View and Submit Compliance: This option is used to view the income tax notice and gives options to submit the relevant reasons and responses.
    • View My Submission: This option is used to view the status of the compliance notice after being submitted by the assessee.
  • Step 5: All the details related to non-filing of income tax returns are present under the ‘View and Submit Compliance’ tab. Now the assessee has to click and choose one of the appropriate options amongst the following:

    • Income Tax Return has been filed

    • Income Tax Return has not been filed

If you have already filed your updated income tax return, then you need first update the details like Mode of Filing whether E-Filing or Paper Filing, acknowledgement number, date of Filing of Income Tax Return, Acknowledgement Number, Circle / Ward and City Name.

  • Step 6: Click on ‘Submit’ Button and in this manner, you shall respond to the income tax notice.

However, if you choose ‘Income Tax Return has not been filed’ option, then you have to respond to a notice for related information. In this case, the website will prompt you to give additional information. If you have selected ‘Income Tax Return has not been filed’, then the income tax e-filing website will prompt you to further select and choose any one of the following options from the drop-down menu:

  • Return Under Preparation
  • Business has been closed
  • No Taxable Income
  • Others

Kindly note, in case you choose the option ‘Others’, then it is mandatory on your part to provide with appropriate remarks in the ‘Related Information Summary’ section.

Responding to a Notice for Related Information

This response is to be given by the tax-payer in case of default of filing the income tax return for any assessment year. Follow the below given guidelines in order to file the response to a notice received in case of not filing the income tax return for particular assessment year. Thus, the following step by step guideline will help you understand the manner of responding to a notice received from income tax department.

  • Step 1: Visit the official website of income tax department i.e. www.incometaxefilingindia.gov.in

  • Step 2: Login to your account by entering valid Login ID and correct Password. Kindly note, if you have not registered your account with the income tax website, then filing the compliance is not possible. Thus, it is mandatory to register your account on the official website of income tax department using your PAN Card details.

  • Step 3: Upon successfully log in to the account, click on the ‘Compliance’ Tab.

  • Step 4: Under the compliance tab, click on ‘View and Submit my Compliance’ option. Under this section details of non-filing of Income tax returns will be furnished.

  • Step 5: Furnish the appropriate reasons for not filling the Income Tax Returns. If you choose ‘other’, then switch to ‘Related Information Summary’ to furnish correct reasons by choosing any one of the following correct options.

    • Self-Investment/ expenditure is out of exempt income: the assessee must select this option if the information by third party is related to investment and/or expenditure is out of exempted income as defined under the Income Tax Act.
    • Self-Investment/ expenditure is out of accumulated Savings: the assessee must select this option if the third-party information is related to investment and/or expenditure is done out of accumulated savings.
    • Self-Investment/ expenditure is out of gifts/ loans from others: the assessee must select this option if the third-party information received is regarding investment and/or expenditure is out of gifts or loans received from others.
    • Self-Investment/ expenditure is out of foreign income: the assessee must select this option if the third-party information regarding investment and/or expenses is done out of foreign income.
    • Self-Income from transaction is exempted: this option must be selected by the assessee if the third-party information related to income and receipts of the assessee is exempted under the Income Tax Act.
    • Self-income from transaction is below taxable limit: This option is to be selected by the taxpayer if the third-party information about the income and receipts of the taxpayer is below the permissible taxable limit as per the slabs defined by the Income Tax Department.
    • Self-Income from transaction related to different assessment year: this option is to be selected if the information provided by the third-party agency regarding the income and/or receipts of the assessee is pertaining to some different assessment year and is taxable in different year.
    • Self Not Known: Taxpayer can select this option if the he / she has to furnish any other explanation related to the information obtained from the third-party agency related to income and/or receipts.
    • Other PAN: This option is to selected if you know that the information provided by the third-party agencies is related to another assessee and not you. Under this scenario, the assessee has to mandatorily provide the PAN details of such another assessee.
    • Not Known: this option can be selected if you have no details regarding the information provided to income tax department by the third-party agencies.
    • I need more information: You can select this option if you are aware of the information provided by the third-party agencies, but you want income tax department to provide you with more information pertaining to the same in order to submit the response.

Thus, in this manner every assessee must provide correct answer to the query put out by the income tax department. This is because in case of misappropriation, there are chances that the income tax department may further indulge in asking for more information.

In order to fill correct option, it is always recommended to take help from experts like practicing tax professionals or Chartered Accountants. As stated above, in case of incorrect submission, you may attract further scrutiny by the income tax department.

  • Step 6: Upon selecting the best suitable option, click on ‘Submit’ button and your response to the income tax notice shall be sent to the income tax department.

Processing the Response

Once all the necessary information is provided by the assessee, the income tax department shall verify the response. If the department finds the response to be honest and true, the case shall stand closed. If the income tax department is unsatisfactory towards the response given by the assessee, then the case shall be pushed for further investigation.

Every assessee can check the status of the income tax notice under the ‘View My Submission’ option under the ‘Compliance’ Tab. For this, the assessee first has to login to the income tax e-filing portal.

Frequently Asked Questions

What if I do not respond to income tax notice in prescribe timeframe?

In case you don’t respond to the compliance management cell of income tax department in time, then the Income tax department shall push your case to field assessing officer for further in-depth scrutiny.

I am a farmer and do not have taxable income still I received income tax notice, why?

Do not worry, receiving an income tax notice does not always necessarily mean that you are a tax evader. In case you have done some high-value transactions amounting to Rs. 10 Lakhs or more in your savings account, you will receive a notice for non-filing of income tax returns from the income tax department.

Do I have to register myself on the income tax department website?

Yes, it is mandatory for the assessee to register themselves with the income tax department’s official website in order to submit the response to the income tax notice.

How do I register myself to the income tax e-filing portal?

Registering to the income tax e-filing portal is very quick and simple. You need to register to the portal using your PAN CARD details.

I have filed my income tax returns still I have received notice related to non-filing?

In case you have already filed tax returns, update the relevant details of the same on the income tax e-filing portal and upon verification, if the department finds its authentic, the case shall stand closed.

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