A majority of the notices is sent in the normal course of processing returns & might be for routine enquiry or a request for simple clarification

What to do when you receive an Income Tax notice?

1. Don’t Ignore: Handle the situation carefully and sincerely, or you may end up paying a penalty of up to Rs 10,000 along with the tax payment.Income-tax-assessment-scrutiny
2. Back to basics: Check the whether the notice is really meant for you by checking basic things like PAN, Name, Assessment year it related to issuing officer, signature, address with details of ward and circle number. Verify these details to avoid being cheated. To see details, go to E filling website see know your AO.
3. Preserve the envelope: If the notice comes by snail mail, preserve the envelope. It serves as proof of the dates on which it was posted and received.
4. DIN: If the notice is delivered online, then check the Document Identification Number.
5. Identify the reason behind the notice: By normal reading one can easily indentifies the reason behind notice. Reasons could be a simple mismatch in TDS or inconsistency in your returns, or some serious concerns like income concealment. It can also be a survey or scrutiny of accounts.
6. Validity: Check the validity of the notice and the timely issuance. Also check the section under which the notice has been issued. For example: A notice under Section 143(3) for scrutiny assessment has to be served within six months of the end of the financial year in which the return was filed. If served later than this period, it will be considered invalid.
7. Gather the documents: Start collecting the documents that the department has requested via the notice. Documents needed can vary depending on the gravity of the notice, usually scrutiny notice may ask for several documents, including bank statements, pay-slips, rent receipts and brokerage statements. While it may not be possible to put all this together in the short time.
8. Letter: Prepare a covering letter along with the set of documents.
9. income-tax-notice9. Acknowledgement: Prepare two set of all the documents required, along with a copy of the covering letter. Get your copy stamped to maintain personal records, and as a proof of submission of the documents thereby complying with the notice.
10. Reply on time: Always respond to the notice on time even if you are unable to collect the required documents. You can even ask for some time to gather all the documents. Timely response will help establish that you are honest and cooperating with the law.
11. CA help:- If the notice is simply about a factual matter, such as an arithmetical error, TDS mismatch or deduction amount, a taxpayer should respond on his own, Only when it is a serious issue, such as a notice for scrutiny or reassessment under Section 148, should one get a professional to respond. But A chartered accountant will be better equipped to deal with the situation and provide apt responses.