HANDLING TAXNOTICES GUIDE

What it means:

• • Your return has defects or errors
• • Missing mandatory information
• • Incorrect or incomplete details
• • Non-compliance with return format
• • Missing supporting documents
• • Calculation errors in tax computation

How to respond:

• • File revised return within 15 days
• • Correct all identified defects
• • Provide missing information
• • Submit supporting documents
• • Pay additional tax if applicable
• • Respond through e-filing portal

Purpose:

• • Verify information in your return
• • Seek clarification on income sources
• • Request supporting documents
• • Investigate discrepancies
• • Cross-verify third-party information
• • Ensure compliance with tax laws

Response strategy:

• • Provide requested information promptly
• • Submit all supporting documents
• • Prepare detailed explanations
• • Maintain professional communication
• • Seek extension if needed
• • Consider professional assistance

Scrutiny process:

• • Detailed examination of return
• • Face-to-face or virtual hearing
• • Comprehensive document review
• • Income and deduction verification
• • Cross-matching with databases
• • Assessment order issuance

Preparation tips:

• • Organize all financial records
• • Prepare income source evidence
• • Document all claimed deductions
• • Review return thoroughly
• • Engage experienced CA/lawyer
• • Attend hearings punctually

Reasons for reassessment:

• • Income escaped assessment
• • New information discovered
• • Underreporting of income
• • Incorrect claim of deductions
• • Third-party information mismatch
• • Investigation findings

Response approach:

• • File return within specified time
• • Provide detailed explanations
• • Submit comprehensive evidence
• • Challenge if notice is invalid
• • Negotiate with assessing officer
• • Consider settlement options

Common mismatches:

• • GSTR-1 vs GSTR-3B differences
• • Input tax credit discrepancies
• • Output tax liability variations
• • Return filing inconsistencies
• • Payment and liability mismatches
• • Reverse charge mechanism errors

Resolution steps:

• • Analyze mismatch details carefully
• • Reconcile books with returns
• • File corrected returns if needed
• • Provide detailed explanations
• • Submit supporting documents
• • Pay additional tax if applicable

ITC issues:

• • Excess ITC claimed
• • Invalid or fake invoices
• • Supplier non-compliance
• • Time limit violations
• • Ineligible ITC claims
• • Documentation deficiencies

Response strategy:

• • Verify supplier compliance status
• • Check invoice authenticity
• • Provide purchase documentation
• • Reverse ineligible ITC
• • Pay interest and penalty
• • Strengthen compliance systems

Notice Analysis:

1. Read notice thoroughly and multiple times
2. Identify the specific section/provision
3. Understand the allegations or queries
4. Note all deadlines and time limits
5. Check notice validity and jurisdiction
6. Assess the seriousness of the matter

Immediate Actions:

1. Acknowledge receipt if required
2. Create a response timeline
3. Gather relevant team members
4. Secure all related documents
5. Consult with tax advisor/lawyer
6. Plan response strategy

Written Response:

• • Clear and concise language
• • Point-by-point response
• • Legal and factual arguments
• • Supporting document references
• • Professional tone throughout
• • Proper formatting and structure

Submission Process:

• • Submit before deadline
• • Use prescribed format/portal
• • Obtain acknowledgment receipt
• • Keep copies of all submissions
• • Follow up if required
• • Maintain communication records

Procedural Defenses:

• • Notice validity challenges
• • Jurisdiction issues
• • Time limitation defenses
• • Procedural non-compliance
• • Natural justice violations
• • Authority limitations

Substantive Defenses:

• • Factual disputes
• • Legal interpretation issues
• • Compliance demonstration
• • Good faith arguments
• • Precedent citations
• • Expert evidence

Basic Documents:

• • Filed income tax returns
• • Form 16/16A certificates
• • Bank statements (all accounts)
• • Investment proofs and statements
• • Property documents
• • Business books of accounts

Supporting Evidence:

• • Loan agreements and statements
• • Sale/purchase agreements
• • Professional fee receipts
• • Medical expense bills
• • Education fee receipts
• • Charitable donation receipts

GST Records:

• • All GST returns filed
• • Input and output invoices
• • Purchase and sales registers
• • Payment challans and receipts
• • ITC reconciliation statements
• • E-way bills and transport documents

Business Records:

• • Stock registers and records
• • Manufacturing/trading accounts
• • Supplier and customer agreements
• • Import/export documents
• • Job work records
• • Audit reports and certificates

Appeal Levels:

1. Commissioner of Income Tax (Appeals) - CIT(A)
2. Income Tax Appellate Tribunal - ITAT
3. High Court (substantial question of law)
4. Supreme Court (significant legal issues)

Time Limits:

• • CIT(A): 30 days from assessment order
• • ITAT: 60 days from CIT(A) order
• • High Court: 120 days from ITAT order
• • Supreme Court: 90 days from HC order
• • Condonation of delay possible
• • Valid reasons required

GST Appeal Structure:

1. Appellate Authority (First Appeal)
2. Appellate Tribunal (Second Appeal)
3. High Court (substantial question of law)
4. Supreme Court (constitutional issues)

Appeal Requirements:

• • Pre-deposit requirement (10-25%)
• • 3 months time limit
• • Proper grounds of appeal
• • Supporting documents
• • Legal representation
• • Stay application if needed

Income Tax Compliance:

• • File returns on time
• • Accurate income reporting
• • Proper deduction claims
• • TDS compliance
• • Advance tax payments
• • Regular reconciliation

GST Compliance:

• • Timely return filing
• • Accurate ITC claims
• • Proper invoice management
• • Regular reconciliation
• • Compliance rating maintenance
• • Audit trail maintenance