Replying to an Income Tax Notice: Scrutiny, Reassessment and Appeals

An income tax notice is a formal communication from the Income Tax Department asking you to explain, correct, pay or produce something about your return or your income. Most notices arrive by email and on the e-filing portal, carry a Document Identification Number (DIN), and give a fixed time to respond. IMAK Advisory, an ICAI-registered CA firm in Bengaluru, helps individuals and businesses across India understand each notice, prepare a documented reply and, where needed, file and argue appeals.

A notice is not an accusation. Many are generated automatically when the return does not match the Annual Information Statement, Form 26AS or another party's report; others ask for documents before an assessment. What turns a routine income tax notice into a costly one is usually silence, a reply that misses the deadline, or a reply that answers a different question. This page explains how to check whether a notice is genuine, what the common notices mean, how much time each gives, how scrutiny and reassessment work, how appeals are filed, how GST notices differ, and what our role covers.

• Defective return notices and intimations after processing
• Scrutiny and inquiry notices, including faceless assessments
• Reassessment notices and show-cause notices before reassessment
• Demand notices, refund adjustments and rectification
• Penalty notices
• Appeals before the Commissioner (Appeals) and the Income Tax Appellate Tribunal
• GST notices, replies and appeals

Fake tax emails and messages are common, and they usually create urgency: a refund on hold, a bank account about to be frozen, a penalty to be paid today. Before you open a link or reply, confirm that the income tax notice is real.

1. Look for the DIN on the notice; communications issued from 1 October 2019 generally carry one.
2. Open the e-filing portal yourself – type incometax.gov.in in the browser, never through a link in the email.
3. Use "Authenticate Notice/Order issued by ITD" and enter the DIN, or your PAN, document type, assessment year and date of issue with your mobile number.
4. Log in and check e-Proceedings and the worklist; a genuine notice usually appears there.
5. If it does not appear and cannot be authenticated, do not pay, click or share anything; report it on the portal.

The department does not ask for passwords, card details, bank PINs or OTPs by email or message. Any message that does is fake, however official it looks.

The section quoted on the notice tells you what the department wants. The table lists the notices we see most often under the Income-tax Act, 1961, with the new section numbers where the Income-tax Act, 2025 now applies.

1. Read the notice fully: section, assessment year, the specific question, the documents asked for and the response date.
2. Download your return, computation, Form 26AS and AIS for that year, and any earlier notices.
3. Identify the cause: a mismatch, a missing document, a large transaction, or information from a third party.
4. Collect evidence for each point: bank statements, invoices, agreements, broker statements, gift deeds, loan papers.
5. Draft a reply that answers each point in order, with a reference to each attached document.
6. Submit on the e-Proceedings section of the portal before the due date and download the acknowledgement.
7. If you need more time, request an adjournment on the portal before the date, with a reason.
8. Track the proceedings until an order is passed, and check the order against your reply.

A good reply to an income tax notice is short, specific and documented. Long general explanations, or documents attached without explanation, invite further questions.

Faceless Assessment and Hearings

Most scrutiny assessments are now faceless: notices, replies and orders are exchanged electronically through the portal, without a visit to an office. Where a variation is proposed, you get a show-cause notice and a draft before the final order, and in many cases you can request a personal hearing by video conference. Responding fully at the draft stage is often the best chance to avoid an adverse order.

Banks, registrars, mutual funds, brokers and card issuers report large transactions to the department every year through statements of financial transactions. When these do not match your return, an income tax notice or an e-campaign message often follows. Typical triggers include:

• Cash deposits above the reporting limits in savings or current accounts
• Purchase or sale of immovable property
• Large investments in mutual funds, shares, bonds or fixed deposits
• High credit card payments
• Foreign travel and foreign remittances
• Sale of shares or units where capital gains were not reported

The reply should trace each transaction to its source: income already taxed, savings from earlier years, a loan, a gift from a relative, or the sale of another asset. A short table linking each amount to a document is far more persuasive than a general statement that the money was "from savings".

The most common income tax notice for salaried people and pensioners is a mismatch between the income in the return and the income reported by others. Interest from a deposit not reported, a second employer's salary missing, or TDS claimed that the deductor never deposited are typical examples.

• Compare the return line by line with Form 26AS and the AIS
• If the income was genuinely missed, accept the adjustment and pay any balance
• If an AIS entry is wrong, submit feedback on the AIS with evidence and say so in the reply
• If TDS was deducted but not deposited, ask the deductor to correct its TDS return and keep proof of the deduction
• If the mismatch is due to a timing difference between years, explain it with the year-wise figures

A scrutiny notice means the department will examine the return in detail. The notice states whether the scrutiny is limited to particular issues or is complete. Limited scrutiny focuses on the issues listed – for example, large cash deposits, high-value property purchases or a mismatch in capital gains – and the reply should address those issues fully and only those.

• Prepare a reconciliation of income in the return with the AIS and Form 26AS
• Explain the source of large deposits and investments with evidence
• Keep books, bank statements and supporting documents for the year ready
• Reply to each questionnaire within the time given, or request an adjournment in time
• Read the show-cause notice and draft order carefully; that is the stage at which errors can still be corrected

Reassessment allows the department to reopen a year where it believes income has escaped assessment. Under the current procedure, the officer first issues a show-cause notice with the information relied on, considers your reply, and only then decides whether to issue a reassessment notice.

• Time limit: generally three years and three months from the end of the relevant assessment year; up to five years and three months where the income that escaped assessment is ₹50 lakh or more
• Show-cause stage: you receive the information the department relies on and can explain why reassessment is not justified
• After the reassessment notice: a return for that year must be filed within the time given, and the assessment then proceeds
• Under the Income-tax Act, 2025, the show-cause, reassessment notice and time-limit provisions are in Sections 281, 280 and 282

The show-cause stage is the most important. A clear, documented reply – for example, showing that a property purchase was funded from disclosed savings and a bank loan – can end the matter before reassessment begins.

A demand notice tells you an amount is payable under an order. Before paying, check whether it is correct: many demands come from TDS not matched, a mistake in processing, or a demand already paid.

• Check the outstanding demand on the e-filing portal and the order it comes from
• If the demand arises from an error apparent from the record, apply for rectification on the portal
• If you disagree with the order on merits, appeal within the time allowed and consider applying for a stay of demand
• If the department proposes to adjust a refund against an old demand, respond online, agreeing or disagreeing with reasons
• Pay any undisputed part to limit interest

Not every wrong order needs an appeal. If the mistake is apparent from the record – a TDS credit not given, an arithmetic error, a figure picked up wrongly from the return – a rectification request on the e-filing portal is usually quicker. Rectification has its own time limit counted from the end of the financial year in which the order was passed, and it cannot be used for issues that need debate or fresh evidence. Where both rectification and appeal are possible, the appeal deadline should not be missed while waiting for rectification.

Filing an appeal does not by itself stop recovery of a demand. You can ask the assessing officer to keep the demand in abeyance while the appeal is pending. Under the department's instructions, a stay is usually granted when a portion of the disputed demand is paid, though the officer can accept a lower amount in suitable cases. If the officer refuses, the request can be taken to a higher authority. Until a stay is granted, the department may adjust refunds against the demand, so the stay request should be filed soon after the appeal.

A penalty notice usually follows an assessment that added income or disallowed a claim. It is a separate proceeding, and it deserves a separate reply. The law distinguishes between under-reporting and misreporting of income, and the reply should address which applies, whether there was a reasonable cause, and whether any immunity or relief provided in the law can be claimed. An appeal against the assessment does not automatically stop a penalty proceeding, so both need attention.

If you disagree with an assessment or penalty order, you can appeal. The first appeal goes to the Commissioner of Income-tax (Appeals) or the Joint Commissioner (Appeals), and the second to the Income Tax Appellate Tribunal (ITAT).

Late appeals can be admitted if there was sufficient cause for the delay, but the reasons must be explained with evidence. An appeal should be filed only when the facts and the law support it; where they do not, rectification, a revised computation or payment may be the better route.

Grounds of Appeal and Evidence

The grounds of appeal set the boundaries of the case. They should be specific – the addition, the section and the reason it is wrong – and supported by documents that were placed before the officer. New evidence at the appeal stage is admitted only in limited circumstances, which is one more reason to reply fully at the assessment stage.

GST notices come from the GST department, not the Income Tax Department, and follow the GST law. The most common are:

• Scrutiny of returns (Form ASMT-10), asking you to explain differences found in your returns
• Intimation before a show-cause notice (DRC-01A), giving a chance to pay or explain before formal proceedings
• Show-cause notices for tax not paid or credit wrongly claimed, under the sections that apply to the period
• Notices proposing cancellation of registration, usually for non-filing
• Notices for non-filing of returns

GST appeals go first to the appellate authority and then to the GST Appellate Tribunal, which began functioning in 2025. Time limits and pre-deposit rules differ from income tax, so each GST notice is checked against the GST law on its own terms.

The department also sends e-campaign messages, emails and SMS – for example, about a high-value transaction in the AIS that does not appear in your return, or foreign assets that may not have been reported. These are not formal notices under any section, and they do not usually carry a fixed reply date. They are, however, a signal that the department has information, and ignoring them can lead to a formal notice later. The right response is usually to check the AIS, give feedback where an entry is wrong, or revise or update the return where income was missed.

The e-filing portal allows a taxpayer to authorise a representative to act in proceedings. Using this facility means your representative can view notices and file replies under their own login, with a record of who submitted what, instead of sharing your password. We prefer this route for every notice we handle; where it is not available for a proceeding, replies are filed from your login during a screen-share with you present.

• The notice itself, with the DIN and the response date
• Your return, computation and acknowledgement for the year
• Form 26AS and the AIS for the year
• Bank statements for all accounts for the year
• Purchase and sale documents for property, shares and other assets
• Loan, gift and inheritance documents for large receipts
• Books of account and the audit report, if any
• Earlier notices, replies and orders for the same year

Businesses receive notices that individuals rarely see. The department compares the tax audit report with the return, turnover in the return with turnover in GST returns, and expenses claimed with TDS deducted on them. Questions about purchases from suppliers who did not respond to the department, cash payments, loans from related parties and unexplained credits in the books are common in business scrutiny.

• Keep the tax audit report, GST returns and books reconciled with each other before any notice arrives
• Hold transport documents, stock records and bank payments for large purchases, not just invoices
• Keep confirmations from lenders, with their PAN and bank statements, for loans received
• Document the business reason for transactions with related parties

A business that keeps these reconciliations every year can answer most scrutiny questions in days rather than weeks.

1. Authenticate the notice and note the section, year and response date.
2. Read the questions and list the documents needed for each.
3. Review your return, AIS and Form 26AS for that year to find the cause.
4. Collect evidence from you, your bank, broker or employer.
5. Draft a point-by-point reply and share it with you for approval.
6. File the reply on the portal through authorised representative access, and save the acknowledgement.
7. Track the proceeding, respond to further questions and review the order when it is passed.

You receive a short note at each stage, so you know what was filed and what is pending.

We do not publish fees. Our team shares the exact total after reviewing the notice and your documents. The main factors are:

• The section and type of notice
• Number of issues and years involved
• Volume of documents and transactions to reconcile
• Whether a hearing or video conference is involved
• Whether an appeal, and at which level, is needed
• Time available before the response date

Any tax, interest or penalty is paid by you directly to the government and is separate from our professional fees.

A Salaried Employee With a Mismatch Notice

A salaried employee received an income tax notice proposing an adjustment because the AIS showed interest from a fixed deposit that the return left out. The interest was genuine, so the reply accepted the adjustment, paid the small balance and avoided a longer proceeding. A second entry in the AIS belonged to a joint holder; feedback was submitted on the AIS with the bank's certificate.

A Property Purchase Under Reassessment

A professional received a show-cause notice saying the purchase of a flat four years earlier was not explained by the income in his returns. The reply traced the payment to a housing loan, the sale of an earlier property and gifts from parents, each supported by documents, and the officer dropped the proposal at the show-cause stage.

A Small Business With a Disallowance

A trading firm's scrutiny assessment disallowed part of its purchases because some suppliers did not respond to the department's notices. The firm appealed to the Commissioner (Appeals) with transport documents, bank payments and stock records showing that the goods were received and sold. The appeal focused on evidence that had been placed before the assessing officer, which strengthened the case.

• Ignoring an email because it looks routine, and missing the response date
• Replying to a fake notice through a link in an email
• Answering a different question from the one asked
• Sending documents without an explanation of what each one shows
• Filing a vague reply at the show-cause stage and saving evidence for appeal
• Paying a demand without checking it, or ignoring it without appealing
• Missing the appeal deadline while waiting for the department to reconsider
• Treating the penalty notice as part of the assessment rather than replying to it separately

Notices for Years When No Return Was Filed

If a notice asks for a return for a year you did not file, file the return with complete and correct income within the time given. Non-filing notices are increasingly triggered by AIS data such as interest, share sales or property transactions.

NRIs Receiving Notices

NRIs often receive notices about property sales, interest or high-value transactions reported in India. Residential status and treaty positions must be explained with travel records and foreign tax documents.

Notices About Foreign Assets

Residents who hold foreign shares, bank accounts or property but did not report them in Schedule FA increasingly receive messages and notices, often based on information exchanged with other countries. A revised or updated return, where still possible, and a clear explanation of the asset's source are usually the first steps; penalties under the black money law make early action worthwhile.

Notices After a Family Member's Death

Notices for a deceased person's income are answered by the legal heir after registering as a representative on the portal. We handle these calmly and at your pace, with only the documents the proceedings need.

Search, Survey and Summons

Searches, surveys and summons involve statements on oath and specialised procedure. We work alongside a tax advocate in these matters and recommend legal counsel from the start.

• We are not the Income Tax Department or GST department, and cannot withdraw or cancel a notice
• We do not promise that an addition will be deleted or a penalty dropped
• We do not file replies with facts we know are untrue, or documents we have not seen
• We do not represent clients before High Courts or the Supreme Court; we work with advocates for those matters
• We do not help anyone avoid receiving or responding to a notice

Not every income tax notice needs a professional. If an intimation simply confirms your return or a refund, no reply is needed. If a proposed adjustment is for a small amount of interest you genuinely missed, you can usually accept it online yourself. Come to us when the notice involves scrutiny, reassessment, a large demand, penalty, a refund adjustment you disagree with, or when you are unsure what is being asked.

1. Is the notice genuine, and does it appear on my portal account?
2. Which section and assessment year does it relate to?
3. What exactly is being asked, and by which date?
4. Which documents do I have, and which must I get from banks, brokers or employers?
5. Is the issue limited to one transaction, or does it affect the whole return?
6. If an order goes against me, what are the appeal deadlines?

Notices often involve bank records, property papers and family matters. As chartered accountants we follow ICAI's confidentiality rules. Your documents are seen only by the team preparing the reply, portal access is handled through your own login or authorised representative access, and nothing is shared with third parties without your consent. We also keep a dated record of every submission made on your behalf.

• Notice authenticated on the portal
• Section, year and response date noted
• Return, Form 26AS and AIS for the year downloaded
• Each issue listed with its evidence
• Reply drafted point by point with document references
• Reply submitted and acknowledgement saved
• Adjournment requested in time if needed
• Order checked against the reply
• Appeal deadline noted if the order is adverse

Our only office is in Whitefield, Bengaluru. Because notices, replies and faceless assessments are handled online, we assist taxpayers in every state and NRIs abroad. Where a hearing in person is required in another city, we discuss in advance how it will be handled. We do not have offices in other cities.

What is an income tax notice?

It is a formal communication from the Income Tax Department asking you to explain, correct, pay or provide information about your return or income, usually within a set time.

How do I check whether an income tax notice is genuine?

Use "Authenticate Notice/Order issued by ITD" on incometax.gov.in with the DIN or notice details, and check the e-Proceedings section after logging in yourself – never through an email link.

Where can I see notices on the e-filing portal?

After logging in, open Pending Actions and e-Proceedings. Notices, replies and orders for each year are listed there.

What happens if I ignore an income tax notice?

The officer may complete the assessment on the information available, add income, raise a demand and start penalty proceedings. Ignoring a notice almost always costs more than replying.

How much time do I get to reply?

The time is stated on the notice, often 15 or 30 days. If you need more time, request an adjournment on the portal before the due date, with a reason.

What is a Section 143(1) intimation?

It is the result of processing your return. It may confirm the return, show a refund, or show adjustments and a demand that you can accept, pay or rectify.

What is a scrutiny notice under Section 143(2)?

It means your return has been selected for detailed assessment, either limited to specific issues or complete. You need to submit documents and explanations for the issues raised.

How far back can the department reopen my return?

Generally three years and three months from the end of the assessment year, and up to five years and three months where escaped income is ₹50 lakh or more, after a show-cause stage.

What should I do about a demand notice?

Check whether the demand is correct. Seek rectification for errors, appeal if you disagree on merits, and pay any undisputed amount to limit interest.

How do I appeal against an income tax order?

File Form 35 online before the Commissioner (Appeals) within 30 days. A further appeal goes to the ITAT in Form 36 within two months from the end of the month in which the order is communicated.

Can a late appeal be accepted?

Yes, if there was sufficient cause for the delay. The reasons must be explained with supporting documents.

Is a GST notice the same as an income tax notice?

No. GST notices come from the GST department under the GST law, with different forms, time limits and appeal routes.

What changes for notices under the Income-tax Act, 2025?

Proceedings for tax year 2026-27 onward follow the new Act with new section numbers – for example, reassessment notices are under Section 280. Older proceedings keep the 1961 Act references.

Can a chartered accountant represent me in income tax proceedings?

Yes. Chartered accountants can act as authorised representatives before income-tax authorities and the ITAT. High Court matters need an advocate.

Do you guarantee that a notice will be closed in my favour?

No. The outcome depends on the facts, the evidence and the officer or appellate authority. What we commit to is a timely, complete and documented reply.

How much does a notice reply cost?

We do not publish fees. The total depends on the type of notice, issues and years involved, and our team shares the exact total after reviewing the notice and your documents.

Income Tax Return · Tax Planning · Tax Audit · GST Registration and Returns · NRI Taxation · TDS and TCS Compliance · Statutory Audit

Send a copy of the notice, the return for that year and any earlier correspondence. Our team will check its authenticity, explain what is being asked and confirm the response date and the documents needed.

Contact Details

Office Address

IMAK Advisory, ITPL Main Rd, Pattandur Agrahara, Whitefield, Bengaluru, Karnataka 560066, India

Phone

+91 79798 50684 (call or WhatsApp)

Email

imakadvisoryteam@gmail.com

Sources: Income Tax Department, Appeals and Revision (incometaxindia.gov.in); e-filing portal service "Authenticate Notice/Order issued by ITD" (incometax.gov.in); Outlook Money on verifying notices (23 July 2026); Taxscan (30 December 2025) and TaxHeal (April 2026) on new section numbers under the Income-tax Act, 2025; GST portal for GST notices. Checked 2 November 2026.