Income Tax Notice Explained: Why It Comes, Types of Notices, and How to Respond Smartly

Income Tax Notice: Full Guide to Meaning, Reasons and How to Respond

Receiving an Income Tax notice can make anyone anxious, but not every notice is a sign of trouble. Many times, the Income Tax Department simply wants clarification or additional details related to your tax filings. Understanding why a notice arrives, the types of notices issued under different sections of the Income Tax Act, and the correct way to respond can save you from penalties and unnecessary stress.

This guide breaks down everything you need to know — in simple and clear language.

Why Does the Income Tax Department Send Notices?

An Income Tax notice is an official correspondence issued when the department needs to:

✔ Verify information filed in your ITR
✔ Seek additional documents or clarification
✔ Correct any mismatch in reported income
✔ Ensure tax compliance under the law

A notice may arrive due to mismatches between your ITR and the data available from banks, employers, investment platforms, Form 26AS, or AIS. It can also come if:

• You didn’t file your return despite taxable income

• Large cash transactions are seen in bank accounts

• High-value investments or spending does not match declared income

• Incorrect deductions or exemptions are claimed

• TDS reported by employer doesn’t match your return

Ignoring a notice can lead to penalties or legal action, so prompt attention is essential.

Major Types of Income Tax Notices and Their Meaning

Here are the most common types of notices and when they are issued:

📌 Section 142(1): Request for Additional Information

The department sends this notice when:

• Your ITR lacks proper details or supporting documents

• You have not filed a return and are asked to do so

It is generally the first step in a tax assessment inquiry.

📌 Section 133(6): Verification of Financial Information

Issued when:

• Your declared income does not match with AIS, 26AS or bank records

• The department wants the source of high-value spending or investments clarified

It is mainly a verification notice.

📌 Section 143(1): Intimation After Processing ITR

Once your ITR is electronically reviewed, you may receive intimation stating:

• Refund is due

• Additional tax is payable

• No discrepancies found

This is the most common and simplest form of notice.

📌 Section 143(2): Detailed Scrutiny Notice

Sent when the tax officer finds inconsistencies during initial assessment.
Your income sources, deductions and expenses undergo a deeper review.
Penalties may apply if errors are proved.

📌 Section 148: Reassessment Notice

Issued when the department believes you have:

• Underreported your income

• Hidden certain financial details

This is a high-severity category notice and must be addressed quickly.

📌 Section 245: Adjustment of Refund with Outstanding Tax

If you are due for a refund but have pending tax from a previous year, the department adjusts it and informs you through this notice.

📌 Section 156: Demand Notice for Tax, Penalty, or Interest

This notice specifies the due amount and last date for payment after assessment.

📌 Section 139(9): Defective Return Notice

Sent when major errors or missing information exist in your ITR.
You must revise and resubmit your return within the allowed time.

What to Do When You Receive an Income Tax Notice?

Follow these steps:

1. Read Carefully – Understand the reason and required action

2. Verify Authenticity – Cross-check notice on the income tax portal

3. Gather Documents – Form 16, bank statements, investments, 26AS, AIS etc.

4. Respond on Portal – Go to “Pending Actions → e-Proceedings”

5. Submit Clear Explanation – Provide facts with proper attachments

6. Keep Proof – Save acknowledgment for future reference

7. Track Updates – Regularly check email and portal notifications

Timely and correct response helps avoid penalties and further inquiries.

Final Thoughts

Income Tax notices are a part of compliance and transparency — not always a reason to panic. The best approach is to stay informed, keep accurate records, and respond promptly whenever a notice is issued. When required, seek help from a tax expert to ensure smooth resolution and complete peace of mind.