Income Tax notices explained: Types of notices, time limits and other key details

Notice under Section 142(1): Inquiry before official assessment

If there is any mismatch between the information you provided in your ITR and the information available to the assessment officer (AO), you will receive a notice under this section asking you to furnish more information before the AO makes the final assessment.

It is sent before your tax return is officially assessed. This notice can be issued at any time before the assessment of your ITR is complete.

Compliance with this notice is necessary even if a taxpayer thinks that the information/documents asked by the AO are irrelevant. If they fail to comply, penalties and prosecution may be applicable. One must reply to this notice within the time mentioned (usually 15-30 days) to avoid penalties or further notices.

Notice under Section 143(2): Scrutiny Assessment

Notice under Section 148: Income escaping

If the AO finds any discrepancy in your income details, in case you have not disclosed the entire income or have paid lower taxes, the AO will serve this notice for income escaping assessment.

Note that the AO needs to conduct an inquiry under Section 148A with the prior approval of the specified authority, in which the taxpayer will be allowed to explain before issuing this notice. The taxpayer gets seven to 30 days to provide their explanation. In case the AO is not satisfied with the response, he/she can reopen the case and issue a notice under this section.

This notice can be issued within three years and three months from the end of the relevant assessment year. However, if the evidence points to an evaded tax of over ₹50 lakh, a notice can be issued within five years and three months from the end of the relevant assessment year.

Notice under Section 156: Demand

After the assessment is complete by the AO, an assessment order is passed, which highlights if there is any tax, interest or penalty due to be paid by the taxpayer. The assessment order is sent with a demand notice.

The taxpayer should pay the demand notice within 30 days of receiving the notice. After 30 days, a 1% interest is charged per month (or part thereof), and additional penalties can be imposed.

Notice under Section 139(9): Defective Notice

What to do after receiving a notice

If you have received any notice from the IT department, you must not take it lightly and respond within the specified time period, or else you’ll be subject to penalties and further prosecution.

In case you have received a tax demand, you can also dispute it, but remember that you will have to pay at least 20% of the tax due before appealing to higher authorities.