Today, with the rising level of digitalisation, the Income Tax Department of India is using data matching and automated checks for income tax; getting an income tax notice is no longer restricted to large business taxpayers. People, salary earners, and small business owners are increasingly getting notice notices attached to their returns or filings. But a notice doesn’t have to be a harbinger of trouble; a failure to follow it could be.
In this blog, we discuss what a tax notice is, the types of tax notices you may receive, whether or not you have received a tax notice through FY 2024-25, how to determine if you have received a tax notice, and how you should respond to your tax notice.
What is an income tax notice?
In simple words, an income tax notice is an official communication issued by the Income Tax Department to the taxpayer for certain action: to provide information, clarifications, to pay an outstanding tax amount, or respond to a query. It is used as an initial investigation if the department needs more documents or wishes to notify you of an adjustment.
The important thing is it is not necessarily a sign of my guilt or the weight of my punishment, but it does mean that I must respond. Failure to do so may result in escalation, interest, penalties, and/or assessment/reassessment.
Here are the main notices that you can give at the major level. These each have their own function and schedule. If you do get one, it will help you to know what kind, so you can deal with it accordingly.
Income tax notice under Section 142(1): Inquiry before assessment
According to the provisions of Section 142(1) of the Income-tax Act, 1961, a notice can be sent to a taxpayer to submit a return (if it has not already been submitted), or books of account, documents, or information for the purpose of assessment.
Under Section 142(1), when will you receive an income tax notice?
Typically, you receive this if you haven’t filed your return although you were required to, or if the Assessing Officer (AO) feels additional information is required before making an assessment. For instance, if there are any transactions mentioned in your Form 26AS, but you have not filed your ITR, or the AO requires further information.
Notice under Section 139(9): Defective income tax return
The Income Tax Department may issue notice under Section 139(9) in cases where the income tax return (ITR) filed has “defects” (for example, missing information, mismatch in ITR with information in Form 26AS, mismatch in disclosures, etc.).
When will you receive a tax notice for Section 139(9)?
In case you have already filed your ITR and it got successfully processed, but the department feels the ITR is incomplete and/or incorrect in a material aspect. The notice will state that you have a period of time to correct (usually 15 days).
Income tax notice under section 143(1): Intimation after processing
Once the return is filed and processed (wherever there is any arithmetical error in the return or some claim has been adjusted, as per the TRP), the ITD notifies you about tax liability or refunds (under Section 143(1) of the Income Tax Act, 1961).
Under which provision of Section 143(1) do you receive a tax notice?
Typically within the year after the return is filed. It is based on changes the department makes based on the information that is present. If you don’t, you have to respond or file a rectification or a revised return, taking into account the time limit.
If the AO is not satisfied with the return or if there are significant differences, he/she may issue a notice under section 143(2), meaning that your case has been picked up for detailed scrutiny (assessment under section 143(3)).
Income tax notice under Section 148: Income escaping assessment
If the department is satisfied that there is any amount of money that is not being assessed for that year, then it will send you a notice under section 148 to reassess for that year.
Under Section 148, when does a tax notice come?
This can happen if, after filing your return, information (banking, SFT, AIS) reveals unreported income or your return is found to be substantially understated and there seems to be tax evasion either through wilful misrepresentation or through failure to fully disclose all material facts.
Responding Effectively to an Income Tax Demand Notice
The demand notice would be issued by the AO under section 156, indicating the amount and the date for the payment of the tax, interest, penalty or fee after an order has been issued pursuant to assessment/reassessment/rectification.
At what time do you receive an income tax notice u/s 156?
Once the department has finished assessing, assessing again and/or rectifying and decides that you need to pay. Not doing so carries the risk of interest and enforcement.
Other notices
There are other sections and notices you should be aware of:
- Examples of notices under section 133(6) are: asking for books/documents or explanations.
- Notice u/s 245 – where refund for a year is being offset against the outstanding demand for the previous year(s).
- Taking notice u/s 144 – Best Judgement Assessment where you do not respond.
They all come with their own attributes, but the above ones address most of the cases.
Is the Income Tax Department issuing notices for FY 2024-25?
Yes, the Income Tax Department is actively working on the assessment cycle for Assessment Year (AY) 2025-26, i.e., for FY 2024-25. While many notices will still be issued in the coming months, given strengthened data flows (e.g., from AIS, Form 26AS, SFT), the chances of notices being triggered are higher. The mismatches between ITR vs AIS/Form-26AS are one of the most common reasons highlighted in the recent industry comments for 2025. So, it’s best to review possible pending actions or notices before assuming that everything has been settled if you’ve already filed your ITR for FY 2024-25.
What will be the length of time for receiving income tax notices?
Time limits for the issue of income-tax notices are different as per the Section and the type of cases:
Section 142(1) or 139(9): Notices under these sections for non-filing of returns or for defective returns are generally issued shortly after the due date for filing or soon after submission of a return found to be incomplete or inconsistent.
Notice under section 143(2): The notice under section 143(2) should be issued within 3 months from the end of the financial year in which the return is furnished. This is the first time that a detailed assessment (under section 143(3)) is undertaken.
Section 148: Under the amended Section 149 for income escaping assessment, the time limit for issuing a notice to reassess escaped income is:
- In normal cases, up to 3 years from the end of the assessment year to which the previous assessment period applied,
- The limited period of 10 years would be applicable only if the Assessing Officer has evidence that the income chargeable to tax, which he has recorded in the form of an asset, expenditure or books of account, is more than ₹50 lakh.
This amendment has substantially cut down on the earlier 6-year time limit and made the extended time at 10 years only apply to high-value or serious cases.
- An order for rectification (and consequential notice, if any) can be issued within 4 years of the end of the financial year in which the order sought to be rectified is passed.
How to Access and Review Income Tax Notices in Your Account
The following is what to do:
1. Log in to the official e-filing portal of the Income Tax Department with your details. On the dashboard, check for any “Pending Action/ e-Proceedings/ Notices” items. A notice is always recommended to be checked on the portal.
2. Please refer to your registered email and SMS (Department alerts sent).
3. Go through your AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) for your PAN – these details will reflect 3rd party reported transactions. Any discrepancies from the filing are red flags.
4. Follow up on “Demand/Refund” notices in the “Pending Actions” section of the portal. If you have a notice for section 156, you will see the amount, due date, etc.
If there is a notice, don’t wait! Record the section from which it is issued, the due date, and collect/ensure timely communication to the Income Tax Department with relevant documents immediately.
What to do if you receive an income tax notice
Here are some best practice steps (and why you will want to engage a Chartered Accountant):
- Verify the authenticity of the tax notice: Check that this is a valid tax notice from the Income Tax Department. Please cross-check the ITR e-filing portal and check the PAN & notice reference before proceeding.
- Read carefully: Note the section quoted, the reason (e.g., “please furnish documents for AY 2025-26”), the deadline, and what is demanded.
- Documents to be collected: Depending on the type of notice, they may require ITR filed, Form 16/16A, Form 26AS, bank statements, investment proofs, asset schedules, foreign asset disclosures, etc.
- Formulate the reply: It could involve filing of additional documents (142(1)), reopening return (139(9)), agreeing/disagreeing with intimation (143(1)), or giving explanations (143(2)), or initiating a reassessment proceedings (148).
- E-Response through portal: Most notices are e-response enabled in the “e-Proceedings” module of the e-filing portal. If you do, preserve the acknowledgment ID. Experts point out that responding in time will save it from going to best judgment or penalty.
- Follow-up & track: Monitor the portal regularly to see if there are new points of information, new questions, or assessment orders.
- Why engage a Qualified Financial Advisor: Why hire a Chartered Accountant, a QFA, to help you understand the notice, assess your risk, value your tax/interest/penalty risk, talk to the AO if necessary, and document the process? In 2025, with data flows stronger, expert support can help minimize stress and the potential for costly mistakes.
Conclusion
Income tax notices have become a part of the tax reality these days, and not a concern that should be taken with a grain of salt. The secret is being aware and doing the right thing at the right time. When a notice is received, be aware of the reason for it, when it is due, and what documents back your case. Quick action can often save the day and avoid penalties and extensive correspondence.
With more and more systems being strengthened by the Income Tax Department, the process for proactive taxpayers who have records, reconcile AIS/Form 26AS data, and seek professional advice if necessary should be smooth and stress-free in the future.
