Saturday, April 20News That Matters

Notice received from Income tax department re Compliance – What to do ?


Many people are now receiving notice from Income tax department regarding non filing of income tax returns for last few years ( 2012-2013, 2011-2012, 2010-2011, 2009-2010.) . Income tax department asks them to reply within 10 days .

Income tax department is collating information from various sources and sending notices to non-filers. they are requested to submit the Compliance Form on efiling website.

Also Read NewsIncome Tax Dept to send notices to further 21.75 lakh “non-filers”

There is no need to Panic just because you have received the notice. A notice does not necessarily mean you have committed a crime and even a minor error in tax return can invite a notice from the tax department.

When you can get an IT Notice?

Also Read –  How to File Income Tax return (ITR) online – Step by Step Guide for eFiling

1) Return not filed –  Many employees donot have returns assuming that they donot need to do so as their employer has deducted TDS and issued Form 16. But this is not correct.  You need to file the returns even if TDS is deducted by employer.

2) Mismatch in TDS deducted & TDS claimed:   There might be mitmatch between that TDS claimed by you in IT return & actual TDS showing in your Form 26AS.  There might be possibility that your emplyer has not credited the TDS deducted in your account or credited someone else’s account by mistake. In that case, you need to ask your employer to rectify their TDS return.

3) Notices for High value transactions :  The tax department is closely scrutinising high value transactions for  individuals – for e.g cash deposits worth Rs 10 lakh or more in a year, credit card purchases of Rs 2 lakh or more, mutual fund investments of Rs 2 lakh or more, or purchase of bonds and debentures worth Rs 5 lakh or more in a year, sale or purchase of property worth Rs 30 lakh or more  etc.  So, taxman may send you a notice asking you to file a return and explian sources of income.

4) Non disclosure of Income –  If you have not disclosed income – for e.g Bank Interest, Incoem from Shares, etc, The Income tax department may send you notice for that.

Some of the codes mentioned in Information summary of Income Tax notice :

  • CIB-403 – Time deposit exceeding Rs 2 lakh
  • Cash deposit above Rs 50000
  • TDS return – Interest other than Section 194A
  • Credit Card payment more than Rs 2 lakh
  • CIB-321 Share transactions Rs 20000
  • CIB-184, CIB-411,
  • TDS-92A, TDS-92B (TDS return salary to employee), TDS 94A
  • TDS return – Insurance commission
  • CIB-183 Time deposit of Rs 100000
  • CIB-410 cash deposit aggregating of Rs 200000
  • Transfer of Immovable property
  • Interest in Bank exceeds Rs 50000

Below are some of the information’s collected by compliance management cell through AIR, CIB and TDS return for which notice is being served to non-filer.

1. Annual Information Return(AIR)

AIR-001: Cash deposits aggregating to Rs. 10,00,000/- or more in a year in any savings account
AIR-002: Paid Rs. 2,00,000/- or more against credit card bills
AIR-003: Investment of Rs. 2,00,000 or more in Mutual Fund
AIR-004: Investment of Rs. 5,00,000/- or more in Bonds or Debenture
AIR-005: Investment of Rs. 1,00,000/- or more for acquiring shares
AIR-006: Purchase of Immovable Property valued at Rs. 30,00,000/- or more
AIR-007: Investment in RBI Bond of Rs. 5,00,000/- or more

2. Central Information Branch (CIB)

CIB- 94: Sale of Motor Vehicle
CIB-151: Transfer of immovable property
CIB-154: Transfer of capital assets where value declared for the purpose of stamp duty is more than sale value
CIB-157: Purchase of Immovable property valued at Rs. 5 lakhs or more
CIB-183: Time deposit of Rs 1,00,000/-
CIB-185: Purchase of Bank Draft of more than Rs. 50,000/- in cash
CIB 321: Share Transactions more than Rs. 20,000/-
CIB-403: Investment in Fixed Deposit/Time Deposit exceeding Rs. 2,00,000/-
CIB-406: Payment made against Credit Card more than Rs 2,00,000/-
CIB-410: Cash deposit aggregating of Rs 200000 on a day
CIB-502: Contract of Rs. 10,00,000/-or more in the Commodities Exchange
CIB-514: Interest paid by co operative credit Society
CIB: Payment in connection with foreign travel amount exceeding Rs. 1,00,000/- at one time
CIB: Payment to Hotel and Restaurants exceeding Rs. 1,00,000/- at one time
3. TDS return

TDS-94A : TDS Return – Interest other than interest on security (section 194A)
TDS-92B : TDS Return – Salary to Employees (section 192)
TDS-195 : TDS Return – Payment to Non-residents (Section 195)
TDS-196A : TDS Return – Income in repspect of Units of Non-residents (Sectio 196A)
Note : Details o transactions in TDS/TCS can be views in income tax website under menu “view Credit Statement (Form 26AS) in “My Account”

4. Stock Broker

STT-01: Purchase of equity share in a recognised stock exchange
STT-02: Sale of equity Share (settled by actual delivery or transfer) in a recognised stock exchange
STT-03: Sale of equity Share (settled by otherwise than by the actual delivery or transfer) in a recognised stock exchange
STT-04: Sale of option in securities (derivative) in a recognised stock exchange
STT-05: Sale of Futures (derivative) in a recognised stock exchange
5. Others:

EXC-001: Cash transactions exceeding Rs. 10,00,000/- in a month
EXC-002: Turnover from services reported in Service Tax Return

Depending on the information summary mentioned in notice, you will need to send your reply.

How to reply to the Tax notice?

If you have received notice from Income Tax Department, DO NOT Panic. Simply respond to the notice  and furnish the information requested by the department.

It wil be good to prepare a manual return for that year & see if there is any shortfall in taxes paid. Pay the taxes accordingly.

If your case is complex, then take help of a Tax expert.  Not responding to the notice could cost you a lot of time, money and peace of mind and in extreme circumstances could also lead to imprisonment.


Compliance Section:  GO to Compliance Setion . Select Whether Return Filed or Not Filed & Select Reason

In “Related Information Summary” tab ,  check if the transactions belongs to you. If yes, Just Select SELF. If the transactions doesnot belong to you, then you can select “I need more information” etc.


File Belated Returns

If you have missed filing IT returns on time, you can file it within 1 year from the end of relevant assessment year . Upto 31-3-2015, you can file returns for following years:

AY 2014-2015 (FY 2013-2014)
AY 2013-2014 (FY 2012-2013)

Read – Hurry – you can file income tax returns for last 2 years by 31st March

Pay due Taxes (even if you cannot file returns for old years)

If there is any tax due as per your calculation, it is better to pay it immediately. Even if you cannot file return after it is time barred, you can still pay taxes for that assessment year.

Select Challan 280 & then select relevant assessment year & pay taxes.

I have created this post, to compile these queries & responses so that all members can benefit.

If you have received IT notice, please ASK your queries below using Comments Section.


Important Links

How to File Income Tax return (ITR) online – Step by Step Guide for eFiling

How to quick e-file ITR1 & ITR 4S online for FREE – Step by Step Guide

How to other ITR forms online (using excel upload) for FREE – Step by Step Guide

Income tax slab rates for FY 2014-2015 (AY 2015-2016)

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