Overview of Income Tax Provisions

Importance of Filling Income Tax Return :

According to income tax laws, filing the Income Tax return and updating your Income-tax Return status is obligatory for every individual or entity whose income exceeds the threshold limit mentioned in the Income Tax Act-1961.

1. Filing the return on time is the first and foremost necessity for claiming the Tax refund, by providing the adequate income and tax payment details.

2. File your return online is desirable so that it is processed faster, and it doesn't have to go through the bureaucracy.

3. Check your Income Tax Return status and ITR V acknowledgement to see if it's reflecting the tax refund correctly.

4. Also, get TDS Refund Back, if your client or employer deduct your TDS while making payment, it might be that you're eligible for Tax Refund. On Income Tax Return filling you can claim your TDS credit and get a refund back excess TDS deducted over your net tax liability.

Income Tax Refund :

An income tax refund is issued by the Income Tax department after a taxpayer files income tax return. The income tax refund is the difference between the tax levied and tax paid amount which a taxpayer acquires after filing the income tax return. As per Sections 237 to 245 of the Income Tax Act, 1961, an ITR Refund is allotted only after a taxpayer-paid the excess amount of tax than the actual tax amount.

Who Can Get an Income Tax Refund ?

In following cases, an individual or business entity can acquire a tax refund :

1. If you have paid advance taxes on the base of self-assessment and have paid more amount than actual tax liability.

2. If excess TDS has been subtracted from your salary or bank deposits or security interest or debenture interest.

3. If the regular tax liability gets decreased due to any error during the regular assessment process.

4. If you have paid taxes in abroad for the related income you have taxed in India, you can claim a refund. This is mentioned under the rules of DTAA.

5. If you have neglected to claim tax benefits or deductions against any tax saving investment.

6. If the tax paid amount is in a negative figure even after considering paid tax and reductions claimed.

Conditions of Income Tax Refund Online :

There are numerous income tax provisions available in Form 26AS which income tax authorities issue Income Tax Refund to taxpayers. Below is an exhaustive list which includes types of ITR Refund issued commonly.

We categorize income tax Refund in various cases :

1. Not Determine ITR Refund

2. Income Tax Refund already paid by cheque

3. Income Tax Refund failed because of incorrect bank details

4. ITR Refund Expired

5. ITR Refund Returned

6. Income Tax Refund adjusted against last year's outstanding demand

How Can We Help You Get ITR Refund ?

We have income tax specialists in our team who can understand and claim the reason for the income tax Refund served to you.

Our professionals not only help you advise what steps to be taken in response to income tax refund but also can represent income tax authorities on behalf of you.

Our professionals will investigate the issue, request supportingdocuments/information; also provide guidance regarding the income tax refund procedure.

Types of Income Tax returns :

ITR 1 :	Individuals who are resident (excluding not ordinarily resident) with total income up to ₹50 lakh from sources like salary, one house property, other sources (excluding lottery and racehorses), and agricultural income up to ₹5,000.
ITR 2 :	Individuals and HUFs not eligible for ITR-1 who do not have business or professional income. This covers those with income from capital gains, foreign assets, or agricultural income over ₹5,000.
ITR 3 :	Individuals and HUFs with income from business or profession who are not eligible for ITR-1, ITR-2, or ITR-4.
ITR 4 :	Resident Individuals, HUFs, and Firms (excluding LLPs) using the presumptive taxation scheme with total income up to ₹50 lakh.
ITR 5 :	Firms, BOIs, Co-operative Societies, LLPs, AOPs, and AJPs
ITR 6 :	Companies (excluding those claiming Section 11 exemption).
ITR 7 :	Persons, including companies, required to file returns under specific Sections (139(4A), 139(4B), 139(4C), or 139(4D)).

Benefits of Filing Income Tax returns :

Though According to income tax laws, filing the return and updating your ITR status is mandatory for every individual or entity whose income exceeds the threshold limit mentioned in the Income Tax Act-1961. There are certainly many benefits of filing of ITR :

1. Avoid Penalty up to INR 10,000/- : The government has introduced a new section in the Income Tax Act-1961, i.e. section 234F wherein failing to file ITR on due date July 31, attracts a mandatory penalty of 5,000/- that may extend up to 10,000/- if not filed before 31st December, of the relevant assessment year.

2. Avoid Tax Notice of non-filling of ITR : In case you fail to duly file your Income Tax Return, you may get a tax notice from the Income Tax department, which would land you up in trouble. Better you timely fulfil the ITR filing process.

3. Get TDS Refund Back : If your client or employer deduct your TDS while making payment, it might be that you're eligible for Tax Refund. On filing Income Tax Return, you can claim your TDS credit and get a refund back excess TDS deducted over your net tax liability.

4. Ease in Availing Loans : Income Tax Return is a primary requirement of the bank and financial institution while sanctioning the loan. Income declared in Income Tax Return depicts your financial credibility which helps you to sanction loan easily.

5. Can take input or carry forward losses : Timely filing of income tax return make you eligible to carry forward your business & capital losses, if any, during a financial year which can be adjusted against income earned in the subsequent years and ultimately save your taxes.

Why Do You Get an Income Tax Notice ?

There can be various reasons for issuance of income tax notice. Income Tax Notice may be received to just request the furnishing of information or may be to start the assessment or any other income tax proceedings.

Reasons can be :

1. Non-filing of Income Tax Return

2. Mismatch of Form 26AS with declared income.

3. Non- Disclosure of Income

4. Not declaring details of assets and investments made.

5. Abnormal cash transactions

6. For filing the defective return

7. If you have done high-value transactions during the year

8. If your return is picked for scrutiny

9. For tax evasion in earlier years

10. and many more...

Types of Income Tax Notices :

There are numerous income tax provisions under which income tax authorities issue notices to taxpayers. Below is an exhaustive list which contains types of notices issued commonly.

We categorize income tax notices in critical and non-critical segments to understand the sensitivity of income tax notices.

Non-Critical Income Tax Notices :

1. Non-filing of Income Tax Return : This notice may ask you to file income tax return since there may be large value transactions or any entry available in Form 26AS.

2. Confirmation Balance u/s 133(6) of the Income Tax Act, 1961 : Sometimes Income tax authority issued a notice to ask you to confirm the balance outstanding of the 3rd party with you, just to cross verify.

3. Intimation u/s 143(1) of the Income Tax Act, 1961 : This is automated generated income tax return processing intimation order. This notice gives you a comparative statement of the income and other particulars declared by you in income tax return and particulars accepted or not accepted by the income tax authority. This may raise income tax demand which requires to be paid or rectified with the help of professionals.

4. Defective Return Notice u/s 139(9) of the Act, 1961: This notice is received when the income tax authority found any particular in the income tax return filed not aligned with the income tax rules. In such cases, you need to rectify mistakes and refill the income tax return.

Critical Income Tax Notices :

1. Notice under Section 143(3) : This notice is received when the income tax return filed is picked for scrutiny. Now, the Income tax officer will call upon all information to examine all the possible sources of the income. Income tax officers shall add the income found which is not declared in ITR and impose heavy penalties.

2. Notice under Section 148 : This notice is received when the income tax official found some information that taxpayer has concealed the income and not paid tax on it.

How to Respond When You Receive an Income Tax Notice ?

An encounter with the income tax department is usually filled with stress. Ensure the below before taking any further steps.

1. Is it really your name on the income tax notice ?

2. Is your Pan Number mentioned correctly ?

3. Which assessment year such notice relates to ?

4. Is there a correct document identification number [DIN] ?

If all particulars are correct in the notice, then you must need to reply to the notice within time.

What If Not Replied to The Income Tax Notice ?

If you don't answer the income tax notices within the specified time, there can be various implications :

Non-compliance of a tax notice not only attracts a penalty of 10,000 for non-compliance of notice but may lead to the best judgment assessment by the tax officer against you.

In other words, if you choose to be silent then income tax officers may add income based on the information available with them whether correct or wrong and charge a tax along with heavy penalties.

Furthermore, some non-compliances of income tax act contain prosecution punishment also.

Hence, we suggest you file a timely reply to the income tax notice.

How Can We Help You Get Rid-Off Income Tax Notice ?

We have income tax experts in our team who can understand the reason for the income tax notice served to you.Our professionals not only help you advise what steps to be taken in response to income tax notice but also can represent income tax authorities on behalf of you.

Our professionals will investigate the issue, request supporting documents / information, draft a legal reply to the income tax notice and file a response to the notice before income tax authorities.

What are Income Tax Assessments ?

Income tax assessment is the process of scrutinizing and reviewing the income declared by assessee in their income tax returns.

At the end of each financial year, all individuals and entities are required to file an income tax return by self-computing the amount of income earned during the financial year and pay the tax due.

After the filing of an income tax return by the taxpayer, Income tax authorities select suspicious income tax returns and send notice to conduct manual income tax assessment. Income tax authorities scrutinize whether the income declared is correct or not.

Types of Income Tax Assessment :

Under the Income-tax Law, Income tax officials can conduct given below four principal assessments :

1. Assessment under section 143 (1) : ITR system based processing

2. Assessment under section 143 (3) : Scrutiny assessment

3. Assessment under section 144 : Best judgment assessment

4. Assessment under section 147 : Income escaping assessment

Income Tax Assessment :

1. Assessment Under Section 143(1) - An Auto-Processing of ITR : This is a preliminary assessment and is referred to as a summary assessment without calling the assessee (i.e., the taxpayer). This is an Auto Process of the return of income.At this stage, the complete income or loss is computed after making the following adjustments (if any), namely :
   1. Any arithmetical error or incorrect claim is apparent from any information in the return
   2. Disallowance of loss claimed under section 139(1)
   3. Disallowance of expenditure shown in the audit report but not considered
   4. Disallowance of deduction claimed u/s 10AA, 80IA to 80-IE under section 139(1)
   5. Addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been covered in computing the total income in the return.
   • Time-limit to complete assessment - Processing under section 143(1) can be filed within one year from the end of the financial year in which the return of income is filed.
2. Assessment Under Section 143(3) - Manual Assessment Of ITR : This is a comprehensive assessment and is referred to as scrutiny assessment.At this stage complete scrutiny of the return of income will be taken out is to confirm the correctness and genuineness of income, various claims, deductions, etc., made by the taxpayer in the return of income.
   • Time-limit to complete assessment - As per Section 153, the time limit for assessing section 143(3) is : -
     1. Within 21 months from the completion of the assessment year in which the income was first assessable. [For the assessment year 2017-18 or before]
     2. 18 months from the completion of the assessment year in which the income was first assessable. [for the assessment year 2018-19]
     3. 12 months from the completion of the assessment year in which the income was first assessable [For the assessment year 2019-20 and onwards]
3. Assessment Under Section 144 - Best Judgment Assessment : This is an assessment carried out as per the most approving judgment of the Assessing Officer based on all relevant material he has gathered.This assessment is taken in cases where the taxpayer fails to respond to income tax notices or fails to comply with the requirements specified in section 144.
   As per section 144, the Assessing Officer is under an obligation to assess the best of his decision in the following cases :

   1. If the taxpayer fails to file, the return demanded within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5).
   2. If the taxpayer fails to comply with all the terms of a notice proceeded under section 142(1).
   • Time Limit to complete assessment : As per Section 153, the time limit for assessing section 144 is: -
     1. Within 21 months from the completion of the assessment year in which the income was first assessable. [For the assessment year 2017-18 or before]
     2. 18 months from the completion of the assessment year in which the income was first [for the assessment year 2018-19]
     3. 12 months from the completion of the assessment year in which the income was first assessable [For the assessment year 2019-20 and onwards]
4. Assessment Under Section 147 - Income Escaping Assessment : Assessment under section 147 is carried out if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year.
   Assessment under section 147 is carried out if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year.

   1. Within 9 months from the completion of the financial year in which the notice under section 148 was served (if notice is served before 01-04-2019).
   2. 12 months from the completion of the financial year in which notice under section 148 is served (if notice is served on or after 01-04-2019).

   • Time Limit to complete assessment : As per Section 153, the time limit for assessing section 147 is : -
     1. Within 9 months from the completion of the financial year in which the notice under section 148 was served (if notice is served before 01-04-2019).
     2. 12 months from the completion of the financial year in which notice under section 148 is served (if notice is served on or after 01-04-2019)

   Time-limit for issuance of notice under section 148 : - Assessment under section 147 is carried out if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year :

   1. Notice under section 148 can be declared within 4 years from the completion of the relevant assessment year. If the left income is Rs. 1,00,000 or more and certain other conditions are satisfied, then notice can be issued up to 6 years from the end of the relevant assessment year.
   2. In case the left income relates to any asset (including financial interest in any entity) located outside India, notice can be issued up to 16 years from the end of the applicable assessment year.

How to respond to Income Tax Assessment Notice ?

Getting a notice from the income tax department can leave you in panic mode.

Assure the below before taking any further steps : -

1. Is it really your name on the income tax assessment Notice ?

2. Is your Pan Number mentioned correctly ?

3. Which assessment year such tax notice relates to ?

4. Is there a correct document identification number [DIN] ?

If all particulars are correct in the Income Tax Assessment Notice, then you must reply to the Income-tax department within time as specified in the income tax notice. Our professional can help you understand the nature of Income Tax Assessment notice received and assist you in representing before the income tax authorities as per income tax rules.

What if not replied to the Income Tax Assessment ?

If you don't answer the income tax Assessment notice within the specified time, there can be various implications :

Ignorance of Income tax notice and non-cooperation during income tax assessment not only attracts heavy penalties but may lead to the best judgment assessment by the tax officer against you. Some non-compliances of the income tax act contain prosecution punishment also.

Hence, we suggest you file a timely reply to the income tax assessment notices and cooperate in income tax assessments.

How can we help you in Income Tax Assessment ?

We have income tax experts in our team who can assist you in the income tax assessment till the disposal of the income tax case.

Our professionals not only help you advise what steps to be taken in response to income tax assessment notices but can also represent income tax authorities on behalf of you.