Income Tax Notice — Sections, Replies and Timelines
Most income tax notices are not accusations. The great majority are computer-generated communications telling you that a return has been processed, that a figure does not match what a third party reported, or that a document is needed before an assessment can be completed. Read in that light, a notice is a request with a deadline — and the deadline is usually the only part that is genuinely unforgiving.
What decides the outcome is almost never the tax at stake. It is whether the reply arrived inside the stated window, whether it answered the specific question asked, and whether it was backed by documents. A well-documented reply filed on time closes most matters without escalation. Silence converts an inquiry into a best-judgment assessment, where the officer estimates the income and the burden of dislodging that estimate falls entirely on you.
Section numbers have also changed. The Income-tax Act, 2025 renumbered the entire assessment and reassessment machinery, but the older year is still governed by the older Act — so a notice arriving today may legitimately cite either set. This guide maps both, explains what each notice actually wants, sets out the response process and its timelines, and covers the appeal routes when a reply is not enough.
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What is an income tax notice?
An income tax notice is a formal communication issued under a specific provision of the income tax law, requiring you to do something — verify a figure, produce a document, attend a proceeding, pay a demand, or explain a transaction. Every notice states the provision it is issued under, the year it relates to, what is required, and the date by which you must respond. Those four facts determine everything about how you should handle it.
Notices are delivered to the e-filing portal and mirrored to the registered email and mobile number, and almost all of them are answered on the portal without any visit to a tax office. That is also why a stale email address on the portal is one of the more expensive administrative oversights available — a notice served electronically is served whether or not you read it.
The reflex worth building is unglamorous: open it, identify the provision and the deadline, and diarise the deadline before you begin worrying about the substance.
Which income tax notices actually matter?
| What it is | Old Act section | New Act section | What it wants |
|---|---|---|---|
| Intimation after summary processing | 143(1) | 270(1) to (7) | Confirm the computation, or pay or dispute the difference |
| Defective return | 139(9) | Within the return provision, 263 | Rectify a specified defect, generally within 15 days |
| Inquiry before assessment | 142(1) | 268(1) | Produce accounts, documents, or information — or file a return |
| Scrutiny selection | 143(2) | 270(8) | Substantiate the income, deductions, and exemptions claimed |
| Assessment order | 143(3) | 270(10) | The officer's determination of income for the year |
| Best-judgment assessment | 144 | 271 | Income estimated because you did not comply |
| Show-cause before reopening | 148A | 281 | Reply before any reassessment notice is issued |
| Reassessment notice | 148 | 280 | File a return for a year being reopened |
| Refund set-off against demand | 245 | 435 | Agree or object before your refund is adjusted |
| Notice of demand | 156 | 289 | Pay the assessed amount within the stated period |
| Rectification of an apparent mistake | 154 | 287 | Correct an error in an order, on your request or the officer's |
| Penalty for under-reporting | 270A | 439 | Show cause before penalty is levied |
Two more are worth knowing even though they are not assessment notices. An information-gathering notice can require any person to furnish information relevant to a proceeding — typically after a high-value transaction in the Annual Information Statement does not reconcile with a return. And a summons can require attendance and sworn statements. Both are answered on the portal in the ordinary course, and neither implies wrongdoing.
Have the section numbers changed under the new Act?
Yes, comprehensively. The Income-tax Act, 2025 came into force on 1 April 2026 and consolidated assessment into a single provision with sub-sections doing the work the old separate sections did — processing, the intimation, scrutiny selection, and the assessment order now all sit under one section number, distinguished by sub-section. Reassessment has moved as a block, and appeal, rectification, demand, and penalty provisions have been renumbered too.
The transition rule is what matters practically. Proceedings relating to years beginning before 1 April 2026 continue under the old Act, so a notice received today for an older year will validly cite the old sections — and must be answered under the old framework, including its safeguards. A notice for the tax year 2026-27 onwards cites the new sections. Both are correct; which one you are looking at depends on the year, not on the date of the notice.
So do not treat an old section number on a recent notice as an error. Check the year first. Conversely, if a notice for an older year cites a new-Act section, that is worth querying, and it is the kind of point best raised in the reply rather than by ignoring the notice.
How do you check whether a notice is genuine?
- 1.Note the document identification number printed on the notice — a valid notice carries one
- 2.Log in to the e-filing portal and use the facility to authenticate a notice or order using that number
- 3.Cross-check the notice against the entry under Pending Actions and e-Proceedings
- 4.Confirm the PAN, name, year, and provision on the notice match your records
- 5.Treat any demand for payment to a personal account, a UPI handle, or a non-government channel as fraudulent
- 6.Ignore links in unsolicited messages; navigate to the portal yourself
- 7.Where the notice exists on the portal but the details look wrong, raise that in the reply rather than disregarding it
Phishing that imitates tax notices is common around filing season and typically arrives with an attachment or a payment link and an urgent tone. A genuine notice never asks for card details, an OTP, or payment outside the authorised challan and portal routes. If it is not visible on the portal under your PAN, it is not a notice.
What is an intimation after processing, and what do you do with it?
This is the most common communication of all, and it is generated for nearly every return. Processing checks the return arithmetically, matches tax credits, and applies obvious internal consistency tests. The intimation then shows the return as filed alongside the computation as processed, and the outcome is one of three things: no difference, a refund, or a demand. It must be issued within the prescribed outer period, currently nine months from the end of the financial year in which the return was furnished.
- 1.Compare the two columns line by line and identify exactly which line differs
- 2.Where the difference is a tax credit, check whether the deductor has filed the quarterly statement
- 3.Where the difference is arithmetical or a credit visible in Form 26AS was ignored, file a rectification request
- 4.Where the difference is because your return was wrong, file a revised return if the window is open
- 5.Where the demand is correct, pay it within the period stated to stop interest and further recovery
- 6.Where you disagree, submit a response to the outstanding demand on the portal with reasons and proof
- 7.Never leave a demand unanswered — an unresponded demand becomes recoverable and can be set off against future refunds
The distinction between rectification and revision is the one that trips people up. If the Department made the mistake, rectify the order. If you made the mistake, file a revised return. Revising will not disturb an intimation, and rectification will not introduce a claim that was never in the return.
What is a defective return notice?
A return is defective when it is incomplete in a way the statute specifies rather than merely wrong. The recurring grounds are the wrong ITR form for the income declared, financial statements or audit particulars missing where an audit applies, tax shown as payable in the return but not actually paid, and an updated return filed without proof of payment.
The window to rectify is short — generally 15 days from the intimation, extendable on request — and the consequence of missing it is severe out of proportion to the cause: the return is treated as invalid, which means treated as never furnished. Every consequence of non-filing then follows, including loss of carry-forward and the interest position of a non-filer. Respond to the defect notice itself; do not file a revised return in its place, because that does not answer the defect.
What does an inquiry notice before assessment ask for?
An inquiry notice requires you to produce accounts, documents, or specified information, or in some cases to file a return you have not filed. It is issued before an assessment is completed and it is not, in itself, an allegation — it is the officer gathering material. The requests are usually specific: bank statements for named accounts, the source of a particular credit, invoices supporting a claimed expense, a reconciliation between two reported figures.
Answer it point by point in the order the questions were asked, attach the specific proof for each item, and say so explicitly where a document does not exist. Non-compliance has two consequences: a penalty for the failure itself, and — more seriously — the officer's power to complete a best-judgment assessment by estimating income. An estimate is far harder to displace later than a document is to produce now. Where you genuinely need more time, request an adjournment through the portal before the date rather than letting it lapse.
What happens when a return is selected for scrutiny?
A scrutiny notice means the return has been selected for detailed examination and you are required to substantiate the income, deductions, and exemptions claimed. It does not imply evasion. Selection is risk-based, and the notice must be served within the prescribed period — currently three months from the end of the financial year in which the return was furnished — which is a real protection: a scrutiny notice served after that period is open to challenge on limitation.
Scrutiny is conducted faceless in the ordinary course, through written submissions on the portal rather than personal hearings, with video hearings available in specified circumstances. Expect several rounds of questions rather than one. The practical discipline is to build a single indexed file for the year — financials, bank reconciliations, party confirmations, contracts, and the computation — and to answer from it consistently. Contradicting an earlier submission is more damaging than the original gap.
Where the officer proposes an addition, respond on the merits before the order is passed. Points raised for the first time in appeal are harder to run, and where the addition results in under-reported income, a penalty proceeding follows separately with its own opportunity to show cause.
What is a reassessment notice, and what protection do you have?
A reassessment notice reopens a year that had been closed, on the basis that income escaped assessment. The current framework is information-led: the officer must hold specified information suggesting escaped income, must issue a show-cause communication first, must give you an opportunity to reply, must pass an order dealing with that reply, and must obtain the sanction of the specified authority before issuing the reassessment notice itself. Time limits are tied to how much income is alleged to have escaped, with a longer outer period for larger amounts.
The show-cause stage is the most valuable one and the most often wasted. A substantiated reply at that point can prevent the notice from being issued at all — because the officer has to consider it and record a decision — whereas the same material produced after the notice merely defends the reassessment. If you receive a show-cause communication, treat it as the main event.
For older years, reopening continues under the old Act by virtue of the savings provision, including the old show-cause safeguards, so a notice citing the earlier sections for an earlier year is valid. Preserve the procedural points — jurisdiction, limitation, sanction, and whether the reply was actually considered — because they are frequently decisive on appeal.
What is a refund set-off intimation?
Where the Department owes you a refund and you owe it tax for any year, it may adjust one against the other — but only after giving you prior intimation and an opportunity to object. You generally have 30 days from that intimation to respond on the portal, agreeing, partially agreeing, or disagreeing with the demand.
- Open the intimation and identify the year and source of the demand being relied on
- Check whether the demand was already paid, and locate the challan
- Check whether the demand arose from an intimation you had already disputed
- Check whether it rests on a TDS credit mismatch since resolved by the deductor
- Respond as fully correct, partially correct, or not correct, with reasons and proof
- Where the demand is stayed or under appeal, say so and attach the order
- Keep the acknowledgement, because the adjustment proceeds automatically if you do not respond
Silence here has a specific cost: if you do not respond within the window, the officer proceeds with the adjustment and you lose that opportunity to object. Old demands that were never disputed are the usual culprit, which is why an unexplained demand should be resolved when it appears rather than when it consumes a refund.
How do you respond to a notice on the portal?
- 1.Log in to the e-filing portal and open Pending Actions, then e-Proceedings
- 2.Locate the notice, view it, and download the PDF for your records
- 3.Authenticate the document identification number if you have any doubt about the source
- 4.Note the exact deadline and what is being asked, question by question
- 5.Draft the reply in the same order as the questions, answering each specifically
- 6.Assemble the supporting documents in the accepted formats and within the size limits
- 7.Choose a full response where you have everything, or a partial response where submissions will be staged
- 8.Add remarks summarising the reply and listing the attachments
- 9.Submit, and save the transaction identification and acknowledgement number
- 10.Where you cannot meet the date, request an adjournment in writing before it, not after
- 11.Track the proceeding until it is closed, and diarise any follow-up notice
Where a notice is not linked to your PAN or you cannot log in, a pre-login facility allows a response using the document identification number with verification, though its functionality is limited. Use the logged-in route wherever possible so the submission sits on the proceeding record.
What documents should a reply carry?
- A covering reply that answers each question in the order asked, with a document index
- The return, computation, and acknowledgement for the year in question
- Form 26AS, the Annual Information Statement, and the Taxpayer Information Summary for that year
- Bank statements for the full year for every account referred to in the notice
- Invoices, contracts, and agreements supporting the specific item questioned
- Confirmations from parties where a credit, loan, or gift is being explained
- Proof of source of funds for any high-value transaction identified
- Audited financials and audit report where the entity is under audit
- Challans for taxes paid, and any order granting stay or disposing of an appeal
- Prior correspondence on the same issue, so the record reads consistently
Two habits make replies much stronger. Reconcile rather than assert — a one-page statement bridging the reported figure to your figure is worth more than paragraphs of explanation. And never submit a document you have not read, because an attachment that contradicts your reply does more damage than a missing one.
What happens if you ignore an income tax notice?
| Notice ignored | Immediate consequence | Downstream effect |
|---|---|---|
| Defective return notice | Return treated as invalid | Treated as never filed; carry-forward and regime choice lost |
| Inquiry notice | Penalty for the failure to comply | Best-judgment assessment on estimated income |
| Scrutiny notice | Assessment completed without your material | Additions you must then challenge on appeal |
| Show-cause before reopening | Reassessment notice issued | A defensible year becomes a contested one |
| Refund set-off intimation | Refund adjusted automatically | Opportunity to object is lost |
| Notice of demand | Interest continues and recovery begins | Bank attachment and set-off against later refunds |
| Penalty show-cause | Penalty levied without your explanation | Higher exposure where treated as misreporting |
Penalty amounts and the daily rates for non-compliance are set by statute and change, so these are heads of exposure rather than a price list. The pattern, though, is stable: in almost every case, ignoring a notice moves the burden of proof onto you and removes the cheapest opportunity to resolve the matter.
What are the appeal routes if you disagree with an order?
The first appeal is to the Commissioner (Appeals), filed electronically within the prescribed period from service of the order, with the prescribed fee and a statement of facts and grounds. Where a substantial part of the demand is disputed, a stay application on the demand is filed alongside — an appeal by itself does not suspend recovery. A faceless appeal process operates in the ordinary course.
From there the route runs to the Appellate Tribunal, then to the High Court on a substantial question of law, and finally to the Supreme Court. Alternative routes exist for specific situations: a rectification application where the error is apparent from the record, a revision application to the Commissioner in defined circumstances, a dispute resolution mechanism for eligible small cases, and an application for immunity from penalty and prosecution where the tax and interest on an under-reporting addition are paid and no appeal is filed.
The immunity route is underused and often the most economically sensible. Where an addition is defensible but not worth litigating, paying the tax and interest and applying for immunity within the prescribed period can close the year without a penalty. That calculation is worth running before an appeal is filed rather than after — a short conversation through online CA consultation usually settles it.
Why do income tax notices arrive at all?
- A high-value transaction in the Annual Information Statement that the return does not explain
- A TDS or TCS credit claimed that does not match the deductor's quarterly statement
- Property bought or sold, reported by the registrar, with no matching capital gain in the return
- Cash deposits, foreign remittances, or credit-card spends out of line with declared income
- Turnover in the income tax return that does not reconcile with GST returns
- Deductions claimed in the return that were never declared to the employer
- A large refund claim built on deductions with thin documentation
- Foreign assets, foreign income, or overseas signing authority not disclosed
- A return filed in the wrong form for the income declared
- A previous year's demand left unresolved on the portal
- Non-filing where the Department holds information showing taxable income
- Late deposit of TDS by a business, which generates its own notices to the deductor
Nearly all of these are reconciliation gaps rather than disputes, and nearly all are preventable by reading the Annual Information Statement before filing rather than after — see income tax filing. Where books are involved, the same discipline applies to the entity return: see business ITR filing.
Why choose Arjun Filings for income tax notice?
Arjun Filings runs income tax notice as a checklist-first engagement: a qualified CA or CS scopes the work, tells you exactly which documents are needed, and reviews every form before it is signed and submitted. You get a named specialist, a status update at each stage, and a compliance calendar for whatever comes next.
- CA-reviewed income tax notice
- Checklist before computation
- E-verification guidance
- Notice awareness when relevant