You May Receive Income Tax Notice For These Reasons; Check Details
You should promptly respond to the income tax notice and provide all the necessary documents. Filing income tax returns (ITR) within the due date is mandatory to avoid any penal action by the income tax department. If your total earnings in a financial year fall under taxable income, then it is necessary to file ITR.
The income tax department issues notices to taxpayers who fail to file their returns within the due date. In many cases, despite filing the ITR well within the deadline, a few taxpayers may receive income tax notices.
If you receive an income tax notice, it does not always mean that you have done something wrong. It is worth noting that you should promptly respond to the notice and provide all the necessary documents and information to the department as required.
The income tax department may issue a notice in order to ascertain certain aspects mentioned in your ITR. A taxpayer usually receives an income tax notice due to discrepancies in declared income and actual income, failure to report high-value transactions, incomplete documentation and late filing or non-filing of returns. If you have claimed excessive deductions you may also get a notice.
Let’s take a look at the possible reasons of receiving a notice from the income tax department.
Discrepancies in your declared income and actual income: The income tax department is constantly on the lookout for people who try to evade taxes. If the authorities suspect that there is some discrepancy between your reported income and your actual income, then you could be served notice.
Failure to report high-value transactions: Failure to disclose high-value transactions in the ITR will attract the scrutiny of the tax officials. These transactions include large cash deposits, purchase of property or luxury items. The income tax department requires taxpayers to report all their high-value transactions in order to curb black money and trace all under-reported income.
Incomplete documentation: If you fail to attach all the required documents while filing ITR, then you may receive a notice from the tax sleuths. It is advisable to submit all the requisite documents in support of the deductions you claim and the total income in a financial year from all sources.
Late filing or non-filing of ITR: The income tax department will certainly issue a notice if you fail to file your tax returns on time or do not file them at all.
Random scrutiny: The income tax department randomly selects the files for which the tax returns need to be scrutinised. If you have paid your tax returns accurately and on time, you have nothing to worry about.
Excessive deductions: If you claim excessive deductions, the income tax officials may send you a notice for further scrutiny.
Date: 07/04/2023/ Source: News18 Business