Receiving an income tax notice is unsettling — but most notices are routine and can be resolved without visiting an IT office. The key is to understand what the notice is about, respond correctly, and meet the deadline.
Not all notices are bad news. Intimation u/s 143(1) — the most common notice — is simply the IT department confirming they've processed your return. It may actually contain good news (a refund!).
Step 1: Identify Your Notice Type#
The section number on the notice tells you everything. Here are the most common:
Section 143(1) — Intimation (Most Common)#
This is an automated notice, not a manual review. It's sent after the Centralized Processing Center (CPC) processes your ITR.
What it means:
- Your return has been processed
- The CPC has computed tax based on your filing
Possible outcomes:
- Refund due — your refund will be credited shortly
- Demand raised — a discrepancy was found (e.g., you claimed 80C without proper data); pay the demand or file a response
- No demand, no refund — return matches CPC computation
Response required? Only if there's a demand. Otherwise, no action needed.
Section 142(1) — Preliminary Enquiry#
The AO (Assessing Officer) asks you to submit:
- Your return (if not filed)
- Specific documents or information
- Accounts or documents for verification
Deadline: Typically 15–30 days. Must respond promptly.
Section 143(2) — Scrutiny Notice#
This is a serious notice indicating your return has been selected for detailed scrutiny.
What it means: The AO wants to examine specific items — high deductions, mismatch with AIS, large refunds, first-time business income, etc.
Deadline: Respond within the specified time (usually 30 days). This requires thorough document preparation. Engage a CA.
Section 148 — Reassessment Notice#
The department believes income escaped assessment in a prior year. They're reopening your return.
What it means: A serious notice that alleges tax evasion or unreported income.
Deadline: Respond within the specified time. File a return if asked. Always seek CA help.
Section 156 — Tax Demand Notice#
After scrutiny or rectification, the department raises a specific tax demand.
What it means: Pay the amount within 30 days or dispute it.
Section 245 — Refund Adjustment#
The department is adjusting your refund against an outstanding demand from a prior year.
What to do: If the adjustment is incorrect, file a response through the portal.
Step 2: Log In to the e-Filing Portal and Find the Notice#
All notices are now delivered electronically through your e-filing account.
- Log in at incometax.gov.in
- Go to e-File → Response to Outstanding Demand (for 143(1) demands)
- OR go to e-Proceedings for scrutiny/reassessment notices
- Download the notice PDF and read it carefully
What to look for in the notice:
- Section number (tells you what kind of notice it is)
- Demand amount (if any)
- Response deadline (never miss this)
- Documents requested
- Verification required
Critical: Never ignore an income tax notice. Even if you think it's incorrect, you must respond within the deadline. Ignoring a notice leads to ex-parte assessment (judgment without your input) and potential penalties.
Step 3: Understand What's Being Asked#
Read the notice carefully. The common reasons for notices are:
For 143(1) Demands:#
| Reason | What Happened | What to Do |
|---|---|---|
| TDS mismatch | Your claimed TDS doesn't match 26AS | Verify 26AS; if correct, file rectification |
| Income not matched | AIS shows income you didn't report | If correct, pay tax + interest; if wrong, dispute |
| 80C/deduction mismatch | Deduction claimed exceeds CPC's limit | Check your data; if correct, file rectification |
| Rebate computation error | 87A rebate incorrectly computed | File rectification with correct computation |
For Scrutiny Notices (143(2)):#
Common scrutiny triggers:
- Refund above ₹10 lakh
- First-year business return showing losses
- Capital gains vs AIS mismatch
- High-value transaction (property sale, large FD)
- Mismatch between Form 16 and ITR salary
- Frequent revision of returns
- Non-disclosure of foreign assets
Step 4: Prepare Your Response#
For 143(1) Demand — Two Options#
Option A: Agree with the demand
- Log in to portal → e-File → Response to Outstanding Demand
- Click Submit → Choose "Agree with demand"
- Pay the tax online using Challan 280
- Enter challan details
Option B: Disagree with the demand
- Click Disagree
- Select the reason for disagreement
- Upload supporting documents
- Submit
Common grounds for disagreement:
- TDS credit not properly given despite being in 26AS
- Deduction claim is legitimate
- Income doesn't belong to you
For 143(2) Scrutiny — Document Preparation#
Compile these documents (as requested in the notice):
| Document | Purpose |
|---|---|
| Form 16 | Salary verification |
| Bank statements (all accounts) | Income and expenses |
| Capital gains statements | Equity/MF/property gains |
| Investment proofs | 80C, 80D deductions |
| Rent agreement + receipts | HRA exemption |
| Home loan certificate | Section 24 deduction |
| Sale deed / purchase deed | Property transactions |
| Business books of accounts | Business income |
For Section 148 — Reassessment#
- File a fresh return for the year in question (as directed in notice)
- Include all income (including the allegedly escaped income)
- Prepare to demonstrate that income was duly disclosed
Step 5: Submit Response on the Portal#
For most notices, response is submitted online:
- e-File → e-Proceedings → View Notices
- Click on the specific notice
- Upload response letter and documents
- Submit and download the acknowledgement
Response letter should include:
- Your name, PAN, Assessment Year
- Notice reference number and date
- Your grounds of response (factual and legal)
- List of documents attached
- Declaration that the information is correct
Keep proof: Always download the submitted response acknowledgement and keep screenshots. This is critical if there are future disputes about whether you responded in time.
When to Engage a CA#
Always get CA help for:
- Section 143(2) scrutiny notices
- Section 148 reassessment notices
- Any notice involving more than ₹1 lakh demand
- Cases involving capital gains, foreign income, or business profits
- Notices received on behalf of a deceased taxpayer
- When you genuinely don't understand what's being asked
You can handle yourself:
- Section 143(1) where the demand seems incorrect due to a simple data entry error
- 143(1) where the refund amount is different from what you expected (might just need verification)
Consequences of Not Responding#
| Action | Consequence |
|---|---|
| Ignore 143(1) demand | Demand remains; recovery proceedings begin |
| Ignore 143(2) | Ex-parte assessment; AO decides your income based on own data |
| Ignore 148 | Best assessment without your input; heavy penalty |
| Ignore 156 | Penalty + prosecution possible for non-payment |
Frequently Asked Questions#
I received a notice but my filing was completely correct — do I still need to respond? Yes. If there's a demand, you must formally dispute it within the deadline. The department won't assume you're correct just because you didn't respond.
What is a "Prima Facie" notice? Some notices are sent by AOs for prima facie (preliminary) adjustments. These usually relate to mathematical errors or clear inconsistencies in your return. Respond with the correct data.
My notice says I need to appear in person. Do I have to? Often, notices can be complied with through the online portal or by authorized representatives (CAs). Check whether the notice specifically requires personal appearance. In most cases, a CA can appear on your behalf.
How long should I keep all supporting documents? For at least 6 years from the end of the relevant assessment year. For larger transactions (property, business), 8–10 years is recommended.
I accidentally responded incorrectly to a 143(1) demand and agreed with a demand I should have disputed — what now? You can file a Rectification Application under Section 154 within 4 years of the intimation. Or consult a CA for the right remedy.