Income Tax Notices — Types, Meaning and How to Respond in India

Receiving an income tax notice is not uncommon — and it does not always mean you have done something wrong. Many notices are routine processing communications. However, some require immediate, carefully drafted responses to avoid assessments and penalties. This guide explains every major type of income tax notice and exactly what to do when you receive one.

Section 143(1) — Intimation (Most Common)

This is an automated intimation, not a real notice. The IT department's CPC (Centralised Processing Centre) in Bengaluru sends this after processing your ITR. It either confirms your return as filed, or proposes adjustments (e.g., a mismatch between your income and TDS records). If no additional demand is raised, no action is needed. If a demand is raised, you can either accept and pay, or file a response online if you disagree.

Section 139(9) — Defective Return Notice

Issued when the IT department considers your return "defective" — for example, incomplete ITR filing, missing schedules or incorrect form used. You must respond and rectify the return within 15 days of receiving the notice. Failure to rectify within the prescribed time results in the return being treated as if it was never filed.

Section 143(2) — Scrutiny Notice

This is the most serious type of notice. The Assessing Officer selects your case for detailed scrutiny (either random or based on data matching) and issues this notice within 6 months of end of the assessment year. You must appear before the Assessing Officer or provide detailed information and documents about your income, expenses, investments and assets. Engaging a CA or tax advocate is strongly advisable here.

Section 148 — Notice for Reassessment

Issued when the AO has "reason to believe" that income chargeable to tax has escaped assessment. The time limit for issuing this notice is 3 years from the end of the assessment year in most cases (10 years if the escaped income exceeds ₹50 lakh). Respond carefully — this notice reopens closed assessments.

Section 245 — Refund Adjustment Notice

Issued when the department proposes to adjust your income tax refund against outstanding demands from previous years. If you agree, the refund is adjusted. If you disagree, respond within 30 days stating your reasons.

Section 156 — Demand Notice

A simple demand notice stating the amount of tax payable following an assessment. Pay the demand within 30 days to avoid interest at 1% per month and enforcement action.

Section 271 — Penalty Notice

A notice proposing penalties — for concealment of income, furnishing inaccurate particulars, failure to maintain books of accounts, etc. The penalty under Section 271(1)(c) for concealment is 100% to 300% of the tax sought to be evaded.

How to Respond to an Income Tax Notice

• Note the notice date, DIN (Document Identification Number) and response deadline immediately
• Identify the specific section under which the notice is issued
• Gather all relevant documents (ITR, Form 26AS, AIS, bank statements, invoices)
• Log in to the IT portal (incometax.gov.in) — most responses are filed online
• Draft a clear, factual response addressing each specific query
• Submit with supporting documents before the deadline

Conclusion

Income tax notices require prompt, professional attention. The right response, filed on time, can resolve most notices without additional tax or penalty. SPOTON's CA team has handled hundreds of IT notices for Kerala businesses and individuals. Contact us the moment you receive any income tax communication.