Income Tax Tips: How to respond when an Income Tax Notice comes, taxpayers must know this important thing...

If you have also claimed more tax deductions than the figures appearing in your Form-16 or AIS statement, then you may receive a tax notice. Go. Many times people claim too much tax deduction, but later the Income Tax Department feels that some tax deductions are not correct.

Then a notice is sent to the people demanding additional tax. In such cases, two things can happen. Either the demand of the Income Tax Department will be correct or the ITR filed by you will be correct. Let us know how you should respond to the notice of the Income Tax Department in both of these circumstances.

How does the Income Tax Department send notice?

Once the ITR is verified, then its processing starts by the Income Tax Department. Under this, the Central Processing Unit validates the ITR from its records in its primary investigation using Form 16, Form 26AS, AIS, TIS, etc. After the ITR is processed, notices are issued to people by the Income Tax Department under Section 143(1). In case of any mismatch, either tax is refunded or additional tax is demanded.

How to respond to the notice of the Income Tax Department?

You may receive a notice from the Income Tax Department for many reasons. You may have made a mistake while filling ITR. Because of this, there may have been a mistake in tax calculation on your part. In such a situation, the Income Tax Department issues a notice and demands additional tax. It is possible that there may have been a mistake in the calculation by the Income Tax Department and you may have received a notice. In such a situation, first of all, you should review the notice and check all the information and calculations. Let us know how you should respond to the Income Tax Department in both of these situations.

If the demand of the Income Tax Department is correct then...

If the notice received from the Income Tax Department seems correct to you, that is, you feel that a mistake has been made on your part and the tax demand of the Income Tax Department is correct, then you will have to pay the tax. In such a situation, you will have to pay additional tax along with a penalty.

If the demand of the Income Tax Department is wrong then...

It is possible that the Income Tax Department may have made a mistake in the calculations or may not have understood something correctly. In such a situation, you will have to disagree with the demand of the Income Tax Department and respond to the notice. Merely expressing your importance through the notice of tax demand is not enough. You will also have to submit all the documents while answering. You can apply for reprocessing of ITR or application rectification under section 154(1).

You can choose the option of 'full' or 'in part' while replying to the tax notice. Full means that you completely disagree with the assessment of the Income Tax Department, whereas choosing the option in part means that you disagree with some part of the assessment of the Income Tax Department. Through tax notices, the Income Tax Department provides an opportunity under which users can explain any kind of mismatch.

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