How to read and understand Income Tax Notices ?

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Of late there has been an increase in the number of people who are being served notices by the income tax department. One of the major reasons behind this is the improvement in the norms for monitoring, which has been a consequence of tightening in the laws concerning the information that the taxpayers are supposed to provide. A lot of people nowadays are also filing their taxes on the internet and this has made it easier to process the data and the time taken to do the same has come down as well. This is also one of the reasons why it has become harder now to not disclose details pertaining to income or any transaction that involves a lot of money.
The stricter monitoring by the income tax department has also made it really tough to provide incomplete details regarding income. Once someone who has done such an activity buys something very costly, which is beyond the capacity of his or her declared income, the income tax department serves him or her a notice and asks the concerned person to state the source from which the money for the said transaction has come. However, as per the experts if someone receives such a notice there is no need to be bothered.
This is because receipt of an income tax notice does not make anyone a criminal. It could be that there may have been a minor mistake while filing the income tax returns and that could have led to the present situation. Experts say that it is advisable to provide a reply to the same within the stipulated period, which normally does not extend for more than 30 days. The individual who has been sent the notice can go him or herself for that purpose or reply by post. In the reply it is also important to attach the necessary documents such as proofs of investment and income.
In case the notice is very complex it is better to seek the advice from an expert on taxes. Quite often it has been seen that someone’s employer may have deducted an amount from someone’s salary and then not filed the returns. In such a case the employee needs to take the initiative to complete the process in order to avoid being penalized by the IT department. These notices can be served for a maximum period of 6 assessment years prior to the time of notification. If the filing is delayed then the department can take a fine of INR 5000 for each year.


However, it needs to be remembered that this fine is not a mandatory one and can be waived off in case the presiding officer decides to do so. As per experts if the taxpayer has made no mistake in paying the taxes he or she will not be penalized for the delay in filing the returns.     

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