Income Tax Notice Received? Types & How to Respond

Receiving a notice from the Income Tax Department can be alarming, but most notices are routine and require a simple response. Understanding the type of notice, the reason behind it, and the deadline to respond is crucial to avoid penalties.

This guide covers the most common income tax notices, what they mean, and how to respond online.

Types of Income Tax Notices

1. Section 143(1) — Intimation After Processing

What It Is: This is the most common communication from the IT Department. It is an automated intimation sent after your ITR is processed by CPC Bengaluru.

Why You Received It:

• Your return has been processed and the tax computation matches — no action needed
• There is a mismatch between your declared income/TDS and the department's records
• A refund has been determined, or an additional tax demand is raised

What to Do:

1. Log in to incometax.gov.in → e-File → View Filed Returns
2. Download the 143(1) Intimation for the relevant Assessment Year
3. Compare the department's computation with your filed return
4. If there is no mismatch — no action needed
5. If there is a mismatch — file a rectification under Section 154:
   • Go to Services → Rectification → select Assessment Year → submit corrected details
6. If a refund is due, it will be processed automatically

2. Section 139(9) — Defective Return Notice

What It Is: The IT Department found your return to be defective — meaning it has errors or missing information.

Common Reasons:

• Income shown in return does not match Form 26AS
• Deductions claimed without proper schedule details
• Missing audit report (for taxpayers requiring audit)
• Tax computation errors

Deadline: 15 days from the date of receiving the notice (extendable on request)

How to Respond:

1. Log in to the portal → Pending Actions → Worklist
2. Open the 139(9) notice and read the specific defect mentioned
3. Click Response to Defective Return
4. You have two options:
   • Agree — file a corrected/revised return addressing the defect
   • Disagree — provide an explanation if you believe the return is correct
5. Submit within the deadline

Warning: If you don't respond within 15 days, your return will be treated as invalid (as if never filed).

3. Section 148 — Notice for Income Escaping Assessment

What It Is: The IT Department believes you have undisclosed income that was not reported in your return, or you did not file a return when required.

Why You Received It:

• High-value transactions detected (property purchase, large cash deposits)
• Information from third parties (banks, mutual funds, property registrar)
• Income not reported in any return
• TDS deducted but no return filed

Deadline: You must file a return within the time specified in the notice (usually 30 days)

How to Respond:

1. Read the notice carefully to understand which income is in question
2. File or revise your return for the relevant Assessment Year as requested
3. Log in to the portal → Pending Actions → Response to Notice
4. If you have already disclosed all income, submit an explanation with supporting documents
5. Consult a Chartered Accountant (CA) — this is a serious notice that may lead to a detailed assessment

Important: Do NOT ignore a Section 148 notice. Non-compliance can lead to a best judgment assessment where the department estimates your income and taxes.

4. Section 245 — Adjustment of Refund Against Outstanding Demand

What It Is: The IT Department proposes to adjust your current year's refund against a tax demand from a previous year.

Why You Received It:

• You have an outstanding tax demand from a previous assessment year
• The department wants to use your current refund to settle that demand

Deadline: 30 days from the date of notice

How to Respond:

1. Log in to the portal → Pending Actions → Response to Outstanding Demand
2. Review the outstanding demand — check if it is valid
3. If the demand is correct:
   • Select Agree — the refund will be adjusted
   • Or pay the demand separately and claim your full refund
4. If the demand is incorrect:
   • Select Disagree (Fully or Partially) and provide reasons
   • Upload supporting documents (challan receipts, previous orders)
5. If you already paid the demand, submit proof of payment

5. Section 156 — Notice of Demand

What It Is: A formal demand for payment of tax, interest, penalty, or fine.

Why You Received It:

• After assessment or processing, tax payable was found to be more than what you paid
• Interest under Section 234A/234B/234C is due
• Penalty imposed for late filing or under-reporting of income

Deadline: 30 days from the date of notice (payment must be made within this period)

How to Respond:

1. Log in to the portal → Pending Actions → Response to Outstanding Demand
2. Review the demand amount and computation
3. If the demand is correct:
   • Pay the amount online via e-Pay Tax on the portal
   • Select the correct challan (Challan 280 for income tax)
   • After payment, submit the response with the challan receipt
4. If the demand is incorrect:
   • Select Disagree and provide reasons with supporting documents
   • You can also file an appeal if the demand is from an assessment order

Warning: Non-payment within 30 days can lead to penalty and interest charges, and the department may initiate recovery proceedings.

How to Respond to Notices Online

General Steps for All Notices:

1. Log in to incometax.gov.in
2. Go to Pending Actions → Worklist or Response to Outstanding Demand
3. Open the relevant notice
4. Read the notice carefully — note the Assessment Year, section, and specific query
5. Prepare your response and supporting documents
6. Submit online within the deadline
7. Download and save the acknowledgment of your response

Documents to Keep Ready:

• Copy of the original ITR filed
• Form 26AS / AIS for the relevant year
• Bank statements showing income and tax payments
• Challan receipts for any taxes paid
• Investment proofs for deductions claimed

Penalties for Ignoring Income Tax Notices

Important Tips

1. Never ignore an income tax notice — even routine 143(1) intimations should be reviewed
2. Check the portal regularly — notices are sent to your registered email AND posted on the portal
3. Respond within the deadline — request an extension if you need more time
4. Keep all tax documents for at least 7 years from the end of the relevant Assessment Year
5. Consult a CA for notices under Section 148 or large demand notices — professional help is worth the cost

Frequently Asked Questions

Q1: How do I know if an income tax notice is genuine?

Genuine notices come from @incometax.gov.in email addresses and are always available on the e-Filing portal under Pending Actions. The IT Department never sends notices via WhatsApp or asks for payment through UPI or gift cards.

Q2: I received a 143(1) intimation with "No Demand No Refund." Do I need to do anything?

No action is needed. This means your return was processed and the department's computation matches yours.

Q3: Can I respond to a notice after the deadline has passed?

You can still respond, but it may be treated as late compliance. For 139(9) notices, a late response means your return could be invalidated. For demand notices, late payment attracts additional interest.

Q4: What is a "best judgment assessment"?

If you don't respond to a Section 148 notice, the Assessing Officer can estimate your income based on available information and raise a tax demand. This assessment is usually unfavorable to the taxpayer.

Q5: I disagree with the demand raised. Can I appeal?

Yes. You can file an appeal with the Commissioner of Income Tax (Appeals) within 30 days of receiving the assessment order. This can be done online through the e-Filing portal under e-File → Appeals.

Q6: How do I check all outstanding demands against my PAN?

Log in to the portal → Pending Actions → Response to Outstanding Demand. This shows all pending demands across assessment years.

Disclaimer: CitizenNest is an independent platform and is not affiliated with the Income Tax Department or Government of India. Information is for guidance only. For serious notices, consult a qualified Chartered Accountant. Always verify details on the official Income Tax e-Filing portal.