Taxpayers are in for a surprise come June 30: if you filed your income tax return (ITR) during the 2025-26 financial year, you may receive a scrutiny notice under Section 143(2) by then.
Who might get audited?
According to tax experts, income tax scrutiny notices are typically issued in cases where the tax authority has raised suspicions about tax evasion or discrepancies in the return filed. Some common scenarios that may attract the Income Tax Department’s attention include:
- Unusual income sources or large cash transactions;
- Undisclosed foreign assets or income;
- Incorrect or inflated claims for deductions and exemptions;
- Failure to pay tax on capital gains or dividends;
- Discrepancies in TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) credits.
These issues can arise due to a variety of reasons, such as errors in calculation, incorrect reporting, or even deliberate misrepresentation. If your return is selected for scrutiny, you can expect to receive a notice from the tax authority, which may require you to submit additional documentation or explanations.
What to do if you receive a tax notice?
Receiving a tax notice can be daunting, but it’s essential to remain calm and respond promptly to the notice. Here’s a step-by-step guide to help you navigate the situation:
1. Read the notice carefully: Understand the reasons cited for the scrutiny and the specific issues raised by the tax authority.
2. Gather supporting documents: Collect all relevant records, including bank statements, invoices, receipts, and any other documents that support your income and expenses.
3. Respond to the notice: Address the specific issues raised in the notice and provide clear explanations for the discrepancies or errors. You can submit your response in writing or electronically, depending on the tax authority’s instructions.
4. Seek professional help: If you’re unsure about how to respond or need assistance in preparing your documentation, consider consulting a tax professional or a chartered accountant.
What this means for you: If you filed your ITR during FY 2025-26, June 30 is the deadline to receive a scrutiny notice under Section 143(2). Being prepared and knowing how to respond to a tax notice can help you avoid any potential penalties or complications. Don’t get caught off guard – review your return, gather your documents, and be ready to respond if you receive a notice.
