Part 1: Advisory Guidelines for Responding to Income Tax Compliance Notices
Receiving an income tax compliance notice can be a daunting experience, but responding proactively is crucial to avoid penalties and ensure a smooth interaction with the Income Tax Department. Here are guiding steps to navigate through the process:
1. Stay Informed:
Regularly check your registered email and mobile number for communication from the Income Tax Department. Ensure they are up-to-date on the e-filing portal. Be aware of the compliance initiatives, such as Project Insight, and understand the objectives of voluntary compliance set by the Income Tax Department.
2. Login to the Compliance Portal:
- Visit the e-filing portal at https://incometaxindiaefiling.gov.in/.
- Click on the ‘Compliance Portal’ link under “My Account” or “Compliance” tab.
- Ensure timely login to respond to the issues presented. Failure to do so may lead to complications.
3. Understand the Case:
- Carefully review the compliance issues presented in the e-verification tab of the Compliance Portal.
- Familiarize yourself with the terminologies used by referring to user guides in the Resources section of the Compliance Portal.
4. Respond Structurally:
- Use the Compliance Portal as the dedicated platform for e-verification and submitting responses on compliance-related issues.
- Choose the appropriate response template category, such as Taxability of Transaction/Receipt, Taxability of Transaction Relating to Sale of Immovable Property, Source of Funds, or Source of Funds and Taxability of Income.
5. Address Non-filing of Return Cases:
- If your case involves non-filing of return, understand the identified issues and the potential tax liabilities.
- Provide structured responses through the Compliance Portal, ensuring clarity on your tax position.
6. Proactive e-Verification:
- Keep an eye on notifications via email and SMS about pending e-verification cases on the Compliance Portal.
- Update your email address and mobile number on the e-filing portal to ensure you receive all relevant communications.
7. Utilize Additional Query Requests:
- Be prepared for the possibility of additional query requests from the Income Tax Department.
- Respond promptly and provide any further information or clarifications requested through the Compliance Portal.
8. Track Response History:
- Regularly check the response history in your Non-filing of Return case to monitor the progress and ensure all responses are recorded accurately.
- Download copies of previous responses for your records.
9. Engage in e-Campaign Initiatives:
- Access the e-Campaign tab in the Compliance Portal to participate in initiatives such as Significant Transactions, Non-filing of Return, and High-Value Transactions.
- Submit responses as applicable, ensuring accuracy and compliance with the predefined rules.
10. Be Responsive to Feedback:
- Respond promptly to any feedback or queries raised by the Income Tax Department.
- Utilize the ‘Change Response’ option to revise your response if needed.
11. Maintain Transparency:
- Always provide accurate and truthful information in your responses.
- If the displayed information does not belong to you, select the appropriate response to clarify.
12. Regularly Monitor Case Lifecycle:
- Stay informed about the status of your case in the Compliance Portal.
- Take note of closure messages and ensure your case is marked as ‘Verified’ after filing a valid Income Tax Return.
13. Seek Professional Advice if Needed:
- If you find the compliance issues complex or challenging, consider seeking advice from a tax professional.
- Professional guidance can help ensure accurate responses and compliance with tax laws.
Part 2: Procedural Steps for Responding to Income Tax Compliance Notices
Login to Compliance Portal:
- Visit the e-filing portal: Go to https://incometaxindiaefiling.gov.in/.
- Access Compliance Portal: Click on the ‘Compliance Portal’ link under “My Account” or “Compliance” tab.
- Redirect to Compliance Portal: You will be redirected to the Compliance Portal.
- Note: Logging in is crucial; without it, you won't be able to respond to the presented issues.
Login to e-filing Portal:
- For new users: Click on “Register Yourself,” fill mandatory fields, and login after successful registration.
- For registered users: Use your user ID and password created during registration to log in.
Non-filing of Return Cases:
3.1 Identification of e-verification case
- Understand Non-filing case: Recognize issues related to non-filing, potential tax liabilities, and sources of identification (AIR, SFT, CIB, TDS/TCS Statement, and STT).
3.2 Case View
- Examine the case: View issues in the e-verification tab, select an issue, and provide a structured response.
- Access case-related information: Information is visible in the e-verification tab.
- Clarify terminologies: Refer to user guides in the Resources section of the Compliance Portal.
Respond Online:
4.1 Online Response
- Login to e-filing portal: Access the Compliance Portal, go to the e-verification tab, view the case, and submit the response.
- Online submission only: Responses must be submitted online.
- Preferred browsers: Use Internet Explorer 11, Mozilla, or Chrome for optimal viewing.
- Non-filing response: Log in, view the case, select "ITR has not been filed," and provide details.
- Filed return response: Log in, view the case, select "ITR has been filed," provide submission details, and submit the response.
- Confirmation: A confirmation message will appear upon successful submission.
- Modify responses: Edit/revise the submitted response at any time.
- Additional information: Be prepared to provide more details if further verification is required.
4.2 Response Template Categories
- Choose template: Select the appropriate response template category such as Taxability of Transaction/Receipt, Sale of Immovable Property, Source of Funds, or Source of Funds and Taxability of Income.
Additional Query Requests:
5.1 Additional Query Request
- Understand query request: ITD may raise additional queries for more information.
- Notification: Expect notifications via email, SMS, calls, and letters.
- Access and respond: Login, go to the e-verification tab, view the case, and click on ‘Click here for Details’ to respond.
Response History:
6.1 Response History
- View history: Check the response history in the e-verification tab.
- Download previous responses: Download PDFs of previous responses available for download.
Case Lifecycle:
7.1 Case Lifecycle
- Verification: ITD will verify your online response.
- Case closure: If found satisfactory, the case will be closed.
- Unsatisfactory response: May undergo detailed verification.
- Section 142(1) notice: Respond by providing acknowledgment, filing a return, or stating reasons if not liable to file.
- Post-filing return: If filed, the case will be marked as closed with 'Verified' status.
- Closure notification: A message will indicate case closure on the Compliance Portal.
Engage in e-Campaign Initiatives:
8.1 Accessing e-Campaign
- Access e-Campaign: Log in, click on e-Campaign, select 'Financial Year,' and submit responses under relevant categories.
8.2 Feedback Submission
- Feedback options: Choose options like 'Information is correct,' 'Not fully correct,' 'Relates to other Person/Year,' 'Duplicate,' or 'Denied.'
- Multiple revisions: Change responses multiple times if needed.
- Bulk submissions: Select multiple transactions, choose feedback options, and submit responses in bulk.
- Download in Excel: Download an Excel file with information details without feedback.
8.3 View Submitted Response
- View responses: Log in, click on ‘e-Campaign,’ select 'Financial Year,' view information details, and click on "View Response."
These steps guide you through the process of responding to income tax compliance notices efficiently, ensuring compliance with the regulations and minimizing the risk of penalties
