Importance of ITR: What Happens If You Don't Respond To Income Tax Notice?

What is an Income Tax Notice?

Income Tax Notice is a communication sent by the Income Tax Department to a taxpayer. The notice may be sent for any reason, such as errors found in the income tax return filing or failure to file the ITR on time. After the notice is issued, the taxpayer should carefully read the notice, authenticate it, and respond to it as quickly as possible. If the taxpayer fails to respond on time, it can result in a hefty fine or penalty.

While navigating the complex tax regime might feel difficult, we are here to guide you through the tax laws as the best income tax consultant Gurgaon. We also provide step-by-step guidance on complicated processes like GST registration in Gurgaon and cross border transactions. Continue reading to find out what happens if a taxpayer does not respond to the income tax notice promptly.  

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Penalties And Consequences Under The Income Tax Act

If you fail to respond to a notice sent by the income tax department on time, you might have to face the following:

Section 139(9)

If you are a taxpayer, and you have to respond to the notice mentioning the failure of not completing returns on time, or filing the wrong return then you are required to respond to the notice within 15 days. If you fail to do so, the Assessing Officer (AO) will charge a penalty against you, which you will be required to pay along with the taxes. 

Section 141(1)

The Assessing Officer or Income Tax Officer is authorised to examine your income tax return and might issue a notice under section 141(1) to request more information or clarification from your side. If you fail to respond to this notice, then you will be charged a penalty. 

Section 143 (1a)

The Assessing Officer is authorised by the Income Tax Act to issue a notice for a detailed scrutiny assessment of the income tax return. If the AO believes that you have under-reported or over-claimed deductions during filing returns, then they will issue this notice. If you fail to respond to this notice on time, the AO might increase your tax which is due and charge an additional penalty.

Section 143 (2)

If the Assessing Officer finds the documents unsatisfactory or feels like they have not received the required documents, then they will send this follow-up notice to you. If you fail to respond to this notice on time, then you will be charged a penalty in accordance with the Income Tax Act.

Section 148

This notice can be issued when the Assessing Officer suspects that you have not disclosed your income correctly within the income tax return filing. If you fail to respond to this notice under section 148 of the Income Tax Act, then the AO will increase the tax due and charge a penalty against you. 

Section 243 (F)

If the taxpayer fails to file an ITR form within a given time frame, then they are required to pay late fees when completing the ITR form. The time taken and overall revenue will determine the final amount charged in the late fees. The more you delay, the higher the amount of penalty you will be required to pay.

Section 245

If you still owe tax payments from one of the previous assessment years, then you may be sent this notice from the income tax department. The outstanding tax payment demand will be adjusted and communicated if you do not respond within 30 days of the notice. 

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Conclusion

It is best to respond to the income tax notice as soon as possible to avoid future penalties from the income tax department. If you fail to respond back within the given time limit, depending on the notice you receive, you will be left with a hefty penalty or fine to pay to the assessing officer.