Notices are generally issued under section 142(1), 142(1), 143(2), 148, 139(9) and 156 of the Income Tax Act,1961.
Section 142(1) - Inquiry Before Assessment
Notice under Section 142 is
issued, to gather information from the taxpayer such as Books of accounts or
documents, Other information in written form as required by the assessing
officer.
This information might include
statements of assets and liabilities, which are already part of accounts.
If the asseessee has not filed
Income Tax Returns, this notice can be issued, requiring the assessee to file
the returns within the specified time limit.
Therefore, it can be issued
irrespective of whether the assessee has filed the income tax returns or not.
If the Assessing Officer is
satisfied that the information submitted by the assessee is valid and complete,
he may choose to discontinue the assessment proceedings at that stage.
The assessee should provide the
information as requested by the assessing officer even if he opines that the
information is irrelevant for the assessment procedures.
Time Limit of Issue of Notice u/s
142(1)
·
Time limit for notice under the following two
situations are explained below
·
Notices issued for the production of books of
accounts or information
·
Notices issued in case the return on income not
filed
·
For Notices Issued for the Production of Books
of Accounts or Information
The time limit is 3 years before the financial year.
E.g. If the notice is issued on
24-05-2025, it was issued in the previous year, 2024-25. The notice pertaining
to the production of accounts should be pertaining to the year 2021-22 and not
any earlier previous year.
For Notices Issued in Case the Return on Income not Filed
There is no explicitly mentioned
time limit for the issue of notice u/s 142(1) in case the return on income is
not filed.
Note:
The time limit for completing the
assessment for section 143 is 12 months from the completion of the relevant
assessment year.
So, it can be inferred that the
notices should also be issued within the time limits for completion of the
assessment.
Time Limit for Response to Notice
The assessee is required to file
the return or necessary information within the time limit prescribed in the
notice.
Section 143(1) - Intimation on Summary Assessment
What is Summary Assessment?
Simply speaking, summary
assessment is the processing of the return.
Intimation on Summary Assessment
Under the act, it is not
mentioned as ‘notice’ but as ‘intimation’. This notice is issued when the
assessee has already filed the return on income. If the assessing officer finds
certain inconsistencies, as mentioned below, he sends an intimation to the
assessee.
·
Any arithmetical error in the return;
·
Any claim which is incorrect on the face of it,
·
Losses of previous financial years for which the
return is filed beyond the due date as per section 139(1)
·
Any expense disallowed in the Tax Audit Report
and not disallowed in the income tax computation.
·
If any deduction is claimed under Chapter VI-A
or section 10AA for the financial year in which the return is filed beyond the
due date mentioned in section 139(1).
·
Usually, these inconsistencies are not found out
of deep scrutiny; they are obvious inconsistencies that appear apparently.
·
The intimation can be issued if the return is
filed under section 139(1) or 142(1).
Time Limit for Notice u/s 143(1)
Notice under section 143(1)
cannot be sent by the assessing officer after 9 months from the end of the
financial year in which the return is filed.
For example, the return of income
is filed for FY 2024-25. End of the financial year is 31-03-2025. 9 months from
the end of financial year is 31-12-2015. It is the last date for issuing
intimation u/s 143(1) in this case.
Time Limit for Response to Notice
The assessee is supposed to file
a response to the intimation received within 30 days of the date the intimation
is issued.
If the Assessee files the
Response Within 30 Days
His responses will be considered
for the computation of income by the assessing officer. The assessing office
would verify the correctness and validity of responses received before giving
effect to the inconsistencies noted.
If the Assessee files no Response
Within 30 Days
The assessing officer will
proceed, giving effect to the inconsistencies noted. It might also result in
penal consequences under section 271 or prosecution proceedings under section
276D, which might also result in imprisonment.
Section 143(2) - Notice on Scrutiny Assessment
What is Scrutiny Assessment?
This notice is issued when the
assessee has not provided any information or when the assessing officer is not
satisfied with the information provided by the assessee.
This notice might ask you the
profit of tax deductions, and exemptions claimed and further information about
the profits computed, enabling the officer to conduct a further detailed
enquiry.
This is called scrutiny assessment.
Notice under Scrutiny Assessment
The assessing officer might
require the assessee to furnish evidence to perform a scrutiny assessment. In
this case, he issues a notice under section 143(2).
Time Limit for the Issue of Notice u/s 143(2)
3 months from the end of the
relevant financial year on which the return on income is furnished.
For example, the Return was
furnished on 19/02/2025. The financial year ends on 31 March 2025, so the
notice needs to be issued by 30 June 2025.
Time Limit for Response to Notice
The response should be submitted
by the assessee within the time limit specified in the notice.
Consequence of Non-Compliance of Time Limit
Penal consequences under section
271.
The assessing officer would
proceed to assess the income himself, based on whatever information is
available. He would demand tax from the assessee as per his calculation,
without providing any opportunity for the assessee to explain. This is called
the Best Judgement Assessment u/s 144.
Note: Anyway, we can make
a requisition under section 119(2) to the CBDT to relax the time limit. The
assessing officer can relax the time limit at his discretion.
Section 148 - Notice on Income Escaping Assessment
What is Income Escaping
Assessment?
The assessee would not have
furnished certain income in the returns and it would have been missed out by
the assessing office on his regular assessment. In this case, the assessing
officer has the power to re-assess the income of the assessee in the particular
financial year.
It could also be that the
assessing officer has not conducted any assessment on the return under
question, and the time limit for normal assessment under section 143 has
elapsed. In these situations, he has the power to re-open the return under question
and conduct assessment.
This is the concept of income
escaping assessment.
Notice on Income Escaping Assessment
A Show Cause Notice is issued to
the assessee, allowing him to explain himself under section 148A. If the
assessing officer is still unsatisfied, a notice under section 148 is issued.
It is to be noted that notice for income escaping assessment
can be issued only when the assessing officer has information indicating that
the income has escaped the assessment.
Notice under this section cannot be issued for cases that
are already under an appeal.
Illustration: Notice u/s 148 is issued on 15th January 2025.
The end of Jan is 31st Jan. 3 months from 31st Jan - 30th April 2025. Return to
be within 30th April 2025.
Time Limit for Issue of Notice Under Section 148
|
Particulars |
Upto 31st August 2024 |
After 31st August, 2024 |
|
Normal Cases |
3 years from the end of the Relevant Assessment Year |
3 years and 3 months from the end of the Relevant Assessment Year |
|
|
Example: For income of Rs.30,00,000 escaped in FY 2020-21, Relevant
Assessment Year is Rs.2021-22. Since this is before 31st August 2024, the
time limit is 31st March, 2025 |
|
|
Specified Cases |
10 years from the end of the Relevant Assessment Year. |
5 years and 3 months from the end of the Relevant Assessment Year |
|
|
Example: For income of ₹60,00,000 escaped in FY 2020-21, Relevant
Assessment Year is 2021-22. Since this is before 31 August 2024, the time
limit is 31 March 2032. Example: For income of ₹60,00,000 escaped in FY 2024-25, the Relevant
Assessment Year is 2025-26. Since this is after 31 August 2024, the time
limit is 31 March 2031. |
|
Normal Cases: If the
income escaped assessment is less than ₹. 50 Lakhs as per the information
available with the Assessing Officer
Specified Cases: If the
income escaped assessment is ₹. 50 Lakhs or more as per the information
available with the Assessing Officer.
Time Limit for Response to Notice
In the notice under section 148,
the assessing officer requires the assessee to file a return of income within 3
months from the end of the month the notice is issued.
Consequence of Non-Compliance of Time Limit
Best Judgment Assessment u/s 144.
However, the assessee can make a
requisition under section 119(2) to the CBDT for a relaxation of the time
limit. The assessing officer can relax the time limit at his discretion.
Section 156 - Demand Notice
At the end of the assessment by
the assessing officer, an assessment order is passed, determining the amount of
tax, interest, and penalty payable by the assessee. Wherever it is found that
an amount is recoverable from the assessee as tax, interest, and penalty, the
assessing order must be sent along with a demand notice.
Time Limit for Response to Notice
The assessee should pay the
demand notice within 30 days of the notice. In exceptional cases, the assessing
officer, with the prior approval of the Joint Commissioner, can reduce or
extend the period or allow payment by instalment.
If the assessment order is not accompanied by a demand notice, the
assessee does not need to pay tax, interest, or penalty.
Consequence of Non-Compliance of Time Limit
Interest at 1% per month or part
thereof if the payment is not made within 30 days.
Penalty as imposed by the
assessing officer.
Section 139(9) - Defective Notice
After the assessee files the
return of income, when the assessing officer finds the return filed defective,
he sends an intimation to the assessee. Therefore, the assessee is provided
with an opportunity to rectify the defect.
Time Limit for Response to Notice
In normal cases, the assessee
should file a response to the intimation within 15 days of the issue of notice.
However, the assessee can request
the assessing officer to relax the time limit, and the assessing officer has
the discretion to do so.
Consequence of Non-Compliance of Time Limit
If the assessee does not file a
response within the specified time limit, the return that was filed will be
treated as invalid. It will be considered as if the assessee has not filed a
return at all.
