Income Tax Notice Received? Don’t Panic – Complete Guide 2026
Over 7.8 crore income tax returns were filed for AY 2026-27 — a new record. And as the department works through that pile, a lot of people are opening an email or portal notification with “Income Tax Department” in the header and immediately assuming the worst. The calls start coming in September every year: “I got a notice — what does it mean? Am I in trouble? Do I need to come to your office urgently?”
The honest answer in most cases: no, you are not in trouble. The most common income tax notice — an intimation under Section 143(1) — simply says “your return has been processed.” If the numbers match, you read it and move on. You do not even need to respond. But there are a handful of notices that do carry real deadlines and real consequences if ignored. Knowing which is which is the entire game. This guide tells you exactly that — for every notice type currently being issued under both ITA 1961 and the new Income Tax Act 2025.
The Notice Landscape — All Types at a Glance
| Notice Type | Section | What It Means | Action Required? | Deadline |
|---|---|---|---|---|
| Intimation | 143(1) | Return processed — comparison of your figures vs department’s computation | Only if demand raised | 30 days if demand |
| Defective Return | 139(9) | Error in your ITR — incomplete or inconsistent information | ✅ Yes — mandatory | 15 days from notice |
| Scrutiny Notice | 143(2) | Your return selected for detailed examination | ✅ Yes — mandatory | Specified in notice |
| Inquiry Notice | 142(1) | Department wants documents or information before assessment | ✅ Yes — mandatory | Specified in notice |
| Demand Notice | 156 | Tax, interest, or penalty is payable | ✅ Yes — pay or dispute | 30 days |
| Refund Adjustment | 245 | Your refund is being set off against prior demand | ✅ Accept or dispute | 30 days |
| Show Cause (Reassessment) | 148A | Department has information suggesting income escaped assessment | ✅ Yes — respond | Usually 7–30 days |
| Reassessment Notice | 148 | Issued after 148A process — return must be filed again | ✅ Yes — mandatory | Specified in notice |
| Penalty Notice | 270A / 271 | Department proposes a penalty on underreported or misreported income | ✅ Yes — respond or pay | Specified in notice |
Section 143(1) — The Notice That Is Not Really a Notice
If I had to guess, I would say 60–70% of the “I got a notice” calls I receive in September are about Section 143(1) intimations. And in at least half of those, the intimation is simply confirming that the return was processed and everything matches. There is nothing to do except acknowledge you received it.
The 143(1) intimation compares your filed return against the department’s database — TDS from Form 26AS, income from AIS, exemptions you claimed. Three outcomes are possible:
- No demand, no refund: Figures match exactly. File it and forget it.
- Additional refund determined: Department calculated a higher refund than you claimed. Good news — check your bank account.
- Demand raised: Department’s computation shows you owe more tax. This requires action — either pay the demand or dispute it within 30 days.
Section 139(9) — Defective Return Notice
This notice means there is something structurally wrong with your return — not a tax calculation difference, but an error in the form itself. Common reasons:
- Wrong ITR form used — for example, a person with capital gains filing ITR-1
- Income disclosed but no tax computed on it
- Schedules left blank that should have been filled
- PAN-Aadhaar mismatch
- Incomplete personal information
You must respond within 15 days from the date of notice — or such extended time as the Assessing Officer allows. The response is filed online via the e-proceedings portal. If you do not respond, the return is treated as if it was never filed — with all the consequences of non-filing.
Section 143(2) — Scrutiny Notice
This is the notice people genuinely should pay attention to. A 143(2) notice means your return has been selected for detailed scrutiny — the Assessing Officer (AO) will examine your return, income claims, deductions, and supporting documents in depth.
Selection for scrutiny can be:
- Computer-based (CASS): The AI-driven system flagged a pattern — high deductions, AIS mismatch, unusual income movement
- Manual: AO-initiated on specific grounds — large cash deposits, significant property transactions, specific CBDT directives
The 143(2) notice must be issued within 3 months from the end of the financial year in which the return was filed. For AY 2026-27 returns filed in July 2026, the scrutiny notice deadline is June 30, 2027. A notice issued after this date is barred by limitation and can be challenged.
The response involves providing the documents and explanations requested — typically through the e-proceedings portal. All scrutiny proceedings are now faceless under the Faceless Assessment Scheme — no physical visits to tax offices. Responses are submitted online.
Section 148A and 148 — Reassessment: The Most Serious Notices
These notices arise when the department has information — from third parties, AIS, SFT filings, or internal intelligence — suggesting that income was not reported in a prior year. The process now has a mandatory pre-notice step introduced by the Finance Act 2021.
The Mandatory 148A Process
- 148A(b) — Show Cause Notice: Department gives you an opportunity to explain why reassessment should not be done. You get 7–30 days to respond with your explanation and supporting documents.
- 148A(d) — Order: After considering your response, the AO passes an order stating whether the case warrants reassessment or not. If yes, a 148 notice follows.
- 148 — Reassessment Notice: Only issued after the 148A order. You must file a return for the relevant assessment year within the deadline specified in the notice — treating the 148 notice as if it is a new ITR deadline.
Time Limits for Reassessment (Finance Act 2024 Amended)
| Situation | Time Limit from End of Relevant AY |
|---|---|
| Escaped income below ₹50 lakh — no specific information | 3 years — cannot be reopened beyond this |
| Escaped income above ₹50 lakh — with specific information | 5 years |
| Search cases, survey cases | 10 years (in specific circumstances) |
Section 245 — Refund Adjusted Against Old Demand
This is not a threat — it is a notification. Under Section 245, the department can apply your current-year refund against any outstanding tax demand from a prior year. Before doing so, they must send you a 245 intimation giving you 30 days to respond.
You have two choices:
- Agree: If the old demand is correct and unpaid — accept the adjustment. The refund is offset, and the balance (if any) is released.
- Dispute: If the demand is wrong, already paid, or under appeal — respond within 30 days with your explanation and supporting documents. Do not stay silent. A non-response is treated as acceptance and the adjustment proceeds automatically.
The E-Proceedings Portal — How to Respond
All income tax notices for AY 2026-27 must be responded to through the e-Proceedings facility — not by visiting the tax office, not by posting a letter. The portal is the only valid channel.
- 1Login to incometax.gov.in with your PAN and password.
- 2Go to Pending Actions → e-Proceedings. All notices pending your response are listed here with their deadlines.
- 3Click on the notice to view it. Download and read it fully before drafting your response.
- 4Click “Submit Response”. For most notices, you have three options: Agree (admit the position), Partially Agree, or Disagree (with explanation). Choose the correct one — do not agree to a demand you are disputing.
- 5Upload supporting documents — bank statements, TDS certificates, purchase deeds, investment proofs. Upload as PDF. Maximum file size per document is typically 5 MB.
- 6Submit and download the acknowledgement. This is your proof that you responded within the deadline.
What Triggers an Income Tax Notice — The 2026 Data Points
The department’s risk-based selection system has become significantly more sophisticated. The Annual Information Statement (AIS) now aggregates data from over 40 reporting entities — banks, registrars, brokers, foreign remittance handlers, crypto exchanges, and more. Mismatches between AIS data and your filed return are the primary trigger for automated notices in 2026.
The most common triggers I see in practice:
- High-value cash deposits not explained by income — particularly post-₹10 lakh threshold SFT reports
- Property purchase where the registered value significantly exceeds the declared source of funds
- Large capital gains in shares or property not declared in ITR
- TDS credit claimed but employer not deposited — TRACES mismatch
- Foreign remittances under LRS not explained — bank reports to AIS
- Business receipts in bank account significantly higher than declared turnover
- High credit card spend relative to declared income
- Crypto transactions reported by exchanges — especially unreported gains
- Rental income from properties that appears in registrar data but not in ITR
Fraud Notices — The Growing Problem in 2026
As more people become aware that income tax notices are a reality, fraudsters have become more sophisticated. Several clients have called me about notices that looked exactly like official department communications — same letterhead, same format, realistic-sounding section numbers. Some even had fake DINs designed to look authentic.
How to tell the difference:
| Genuine Notice | Fraud Notice |
|---|---|
| Accessible on incometax.gov.in portal → e-Proceedings | Not found on portal — sent only by email or WhatsApp |
| DIN verifiable at incometax.gov.in/verify-notice | DIN either absent or not verifiable |
| Asks you to respond on the portal | Asks you to call a number or click a link |
| No request for immediate payment to avoid arrest | Threatens arrest, asks for immediate payment |
| Addressed with your correct PAN and name | Often generic or with errors in personal details |
Real Cases From My Practice
Case 1 — The 143(1) Panic, Delhi Salaried Employee
A software engineer called me in September after receiving a notice with “Income Tax Department” prominently displayed. He had not opened it — just the subject line was enough to set off alarm bells. It was a 143(1) intimation. His return had been processed, figures matched exactly, demand: zero. He needed to do nothing at all. The call lasted four minutes. This represents the majority of “notice” situations I encounter.
Case 2 — The 245 Surprise, Mumbai Freelancer
A freelancer expected a ₹68,000 refund. She received only ₹15,000. A 245 intimation had gone to her old email — she missed it. The department had adjusted ₹53,000 against an AY 2022-23 demand she had assumed was settled. When we investigated, the demand was legitimate — she had underpaid self-assessment tax that year and never received a formal demand notice. The ₹53,000 was correctly adjusted. The lesson: check your portal’s outstanding demand tab proactively, do not wait for an adjustment to surprise you.
Case 3 — The 148A That Was Timed Out, Bengaluru IT Professional
A client received a 148A notice for AY 2020-21 in March 2026. The notice alleged that rental income from a Hyderabad property had been underreported. The limitation period for that AY (escaped income below ₹50 lakh, no specific third-party information) was 3 years from the end of AY 2020-21 — meaning the deadline was March 31, 2024. The notice arrived two years too late. We filed a detailed limitation objection. The AO dropped the proceedings. Knowing the time limits saved our client from a potentially disruptive reassessment.
🔗 Income Tax Reassessment Time Limits — Complete Guide 2026
Frequently Asked Questions
Q1. I received a notice email but cannot find it on the portal. Is it genuine?
Almost certainly not. Every genuine Income Tax notice is accessible on the e-filing portal under Pending Actions → e-Proceedings, and carries a verifiable DIN at incometax.gov.in. If a notice exists only in your email and is not on the portal — treat it as fraudulent until you can verify it through the official portal. Do not call any number in the email or click any links.
Q2. My 143(1) shows a demand of ₹12,000. Must I pay it?
You have two choices within 30 days: pay it, or dispute it. If you believe the demand is wrong — for example, TDS credit was disallowed because of a Form 26AS mismatch that has since been corrected — submit a rectification request under Section 154 explaining the error. If the demand is correct, pay it promptly to avoid interest under Section 220(2) at 1% per month from the 31st day.
Q3. The scrutiny notice asks for documents I do not have. What do I do?
Submit what you have within the deadline, explaining in writing what is missing and why. Request an extension if needed — write back through the e-proceedings portal before the deadline expires. Never miss a deadline without communicating. An ex-parte assessment (passed without your participation) is significantly harder to challenge than one where you engaged throughout the process.
Q4. I received a 148A notice for income I reported 3 years ago. Is this normal?
Depends on the amount and the grounds. For income below ₹50 lakh, the reassessment window is 3 years from the end of the relevant AY. For above ₹50 lakh with specific information, it is 5 years. Calculate your specific limitation carefully. If the notice is time-barred, raise the limitation defence explicitly in your 148A response — do not simply answer on the merits as if the notice is valid.
Q5. I ignored a 143(2) scrutiny notice. What happens now?
The AO will pass an ex-parte best judgement assessment under Section 144 — computing your income based on available information, typically unfavourably. This results in a demand notice (Section 156), interest, and potentially penalty under Section 270A. The best course now is to immediately file an appeal against the ex-parte order to the Commissioner (Appeals) under Section 246A within 30 days of the demand notice, and engage a CA immediately.
Conclusion
An income tax notice is not a verdict. It is a question — and in most cases, either the question is routine (143(1) processed notice) or it has a straightforward answer that a well-maintained set of records and a calm response can resolve. The taxpayers who get into serious trouble with notices are almost always those who either panic and make reactive decisions, or ignore deadlines until a default assessment is passed against them.
The protocol is simple: verify the DIN first. Identify the section and type. Check the deadline. Gather relevant documents. Respond through the e-proceedings portal — calmly, completely, and on time. For 143(1) intimations with no demand — do nothing. For everything else — respond before the deadline, every time, without exception.
With 7.8 crore returns filed for AY 2026-27, many more notices will follow in the coming months. Most of them will mean nothing. A few will need a careful, documented response. None of them need panic.
Related Guides
For more practical tax updates visit: TaxPremia.com
i