What happens if we do not respond to Income Tax Notice?

Income Tax Notice is a correspondence sent by the Income Tax (IT) Department when they want to raise an inquiry against the returns filed by the taxpayer. There are various reasons that the department may send a notice; they may ask the taxpayer for additional information or documents or indicate that the taxpayer owes additional taxes. If the taxpayer does not respond to the Income Tax Notice promptly and accurately, they may have to face penalties or other taxes.

Penalties under the Income Tax Act

The following consequences can be levied on a taxpayer if they do not respond to Income Tax Notice.

Section 139 (9)

Suppose a taxpayer does not respond to the defective notice within the required time frame, i.e. 15 days after the Assessing Officer's (AO) notification date. In that case, their return may be deemed invalid and be subject to penalties, interest, non-carry forward of losses and loss of specific exemptions.

Section 245

The AO may send a notice if a taxpayer requests a refund for a specific assessment year but still owes taxes. The outstanding demand as of the notification date will be considered for adjustment against your return if the communication is not responded to within 30 days of notification.

Section 143 (1)

A tax notice u/s 143 (1) is an intimation letter sent by the AO. Suppose a taxpayer fails to respond to a notice under section 143 (1) within the required time. In that case, the Income Tax Return (ITR) will be processed after making the necessary adjustments mentioned in the income tax notice.

Section 143 (1a)

A notice under section 143(1a) is a computer-assisted notice sent to the taxpayer per this provision if there is any discrepancy in the income stated in the ITR. If a taxpayer fails to respond to a notice under section 143 (1a) within the required time, the department will raise a penalty against the taxpayer.

Section 143 (2)

A notice u/s 143 (2) is a follow-up notice. The AO is dissatisfied with the taxpayer’s response or has not received the required documents. If a taxpayer fails to respond to a scrutiny notice, i.e. notice under section 143 (2), within the required time may lead to a penalty.

Section 148

A notice u/s 148 is issued by the AO if they suspect that some income has escaped assessment. If a taxpayer fails to respond to a notice under section 143 (1a) within the required time, the department raises a non-compliance penalty against the taxpayer.

Section 234 (F)

Under section 234 (F) of the Income Tax Act, if a person is obligated to file an ITR form per the terms of the Income Tax Law but fails to do so within the allotted time frame, they must pay late fees while completing their ITR form. The overall revenue and the time it takes to file the return will determine the number of fees. When filing one's Income Tax Return, it is necessary to conduct a thorough check of all the details and documents and have a CA recheck the said details and documents. By doing so, the taxpayer can avoid the possibility of receiving notice.