I Got a Tax Notice: What to Do (And What NOT to Do)

The Tax Department Sent You a Notice. Your Next 48 Hours Decide Whether This Costs Rs 0 or Rs 2 Lakh.

Most tax notices are routine — automated mismatches, minor corrections, processing intimations. But the difference between someone who resolves a notice in 30 minutes and someone who ends up paying Rs 1.5 lakh in penalties and CA fees is almost always the same: what they did in the first 48 hours after opening that envelope or email.

The income tax department issued over 3 crore intimations and notices in AY 2024-25. Most were Section 143(1) processing intimations. A small fraction were scrutiny or reassessment notices. The response you need depends entirely on which section number appears on your notice.

This guide covers every notice type, the exact response timeline, what documents you need, when you can handle it yourself, and when you need a CA — with real penalty numbers, not vague warnings. If you haven’t filed yet, read the ITR filing guide — which form, AIS verification, and mistakes to avoid first. If you are still deciding between old and new regime, read old vs new tax regime — which saves more at your salary.

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Step 1: Don’t Panic. Identify the Notice Type.

The section number on your notice determines everything — your deadline, the severity, and your response strategy.

Notice Section	What It Means	Severity	Your Deadline
143(1)	CPC processed your return and found a mismatch	Low	30 days
139(9)	Your return has a defect (wrong form, missing schedule)	Medium	15 days
142(1)	AO wants specific documents or information	Medium	As stated (usually 15 days)
143(2)	Your return has been selected for scrutiny	High	As stated in notice
148/148A	Income escaped assessment — reassessment	High	7-30 days
156	Demand notice — pay this amount	High	30 days
245	Department wants to adjust your refund against past demand	Medium	30 days

First action: Read the section number. Not the amount. Not the language. The section number.

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Step 2: Verify the Notice Is Real

Before you respond to anything, confirm it is genuine. Fake tax notices are an epidemic — the department itself has flagged phishing emails from domains like incometaxindiafilling.gov.in (note the extra “l”) and incometaxindiarefund.in.

How to verify in 60 seconds:

1. Every genuine notice has a Document Identification Number (DIN)
2. Go to incometax.gov.in
3. Click “Authenticate Notice/Order” under Quick Links
4. Enter your PAN, document type, assessment year, and issue date
5. If the DIN matches — it is real. If not — report it to [email protected]

Red flags of fake notices:

• Sender email is NOT from @incometax.gov.in
• Notice asks you to click a link to “claim refund” or “update bank details”
• PAN, name, or assessment year on the notice is incorrect
• No DIN on the document
• Asks for credit card or banking credentials

If the notice is real and shows on the portal, proceed. If it is only on email/SMS and does not show on the portal, verify the DIN before taking any action.

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Step 3: Check Your AIS and Form 26AS BEFORE Responding

This is the step 90% of people skip — and it is the most important.

The Assessing Officer already has your data. The Annual Information Statement (AIS) contains 46+ categories of your financial information, reported automatically by banks, brokers, AMCs, registrars, and employers. Before you respond to any notice, you need to see what the department sees.

Download from the e-filing portal:

• Login → AIS → Download AIS (PDF or JSON)
• Login → View Form 26AS (for TDS/TCS credits)

What AIS contains (most people have no idea):

Data Category	Reported By	Threshold
Salary income	Employer	All amounts
Interest income (savings, FD)	Banks	All amounts
Dividend income	Companies/RTAs	All amounts
Mutual fund transactions	AMCs/Registrars	All purchases & redemptions
Share transactions	Brokers	All buy/sell
Cash deposits (savings)	Banks	Rs 10 lakh/year aggregate
Cash deposits (current)	Banks	Rs 50 lakh/year aggregate
Property purchases	Sub-registrars	Rs 30 lakh+
Credit card payments	Card issuers	Rs 10 lakh/year
Foreign remittances	Authorized dealers	Rs 7 lakh+
FD/RD	Banks/NBFCs	Rs 10 lakh/year
Rent received	Tenant (TDS on rent)	Rs 50,000/month
Gifts received	None — but bank credits flagged	Rs 50,000+ from non-relatives

If your AIS has errors — submit feedback on the portal BEFORE responding to the notice. You can flag entries as “duplicate,” “not mine,” or “incorrect amount.” Only 12% of taxpayers use this feedback mechanism.

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Section 143(1) — The Most Common Notice (And Usually Not Scary)

What happened: CPC Bangalore processed your return and the computer found a difference between what you reported and what is in AIS/26AS/TDS data.

Common triggers:

• FD interest not reported (bank reported it via SFT)
• TDS credit mismatch between your ITR and Form 26AS
• Arithmetic error in income or deduction computation
• Claiming a deduction not allowed under your chosen regime

What the intimation looks like:

You will see one of three outcomes:

1. No adjustment — your computation matches. Refund (if any) is processed.
2. Tax payable increased — the CPC adjusted income upward or disallowed a deduction.
3. Refund reduced — the CPC found income you did not report.

What to do:

If the adjustment is…	Action	Deadline
Correct (you missed income or made an error)	Pay the additional tax + interest on the portal	30 days
Wrong (CPC made an error or data is incorrect)	File rectification request under Section 154	Within 4 years
Partially correct	Pay the correct portion, file rectification for the rest	30 days for payment

How to file a 154 rectification:

1. Login to e-filing portal
2. Go to Services → Rectification
3. Select Assessment Year and Communication Reference Number
4. Choose “Taxpayer is correcting data in the filed return”
5. Upload the corrected XML

Cost to fix yourself: Rs 0. This is a 30-minute task on the portal.

When to hire a CA: Only if the adjustment exceeds Rs 50,000 and you disagree with the computation.

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Section 139(9) — Defective Return (The 15-Day Bomb)

What happened: Your return has a technical defect — wrong ITR form, missing schedule, incomplete information.

Common triggers:

• Filed ITR-1 when you had capital gains (should be ITR-2 or ITR-3) — this is common for people who sold crypto, stocks, or mutual funds
• Did not fill Schedule FA (foreign assets) despite having foreign investments
• Missing Schedule CG when you sold property or shares
• Income from house property not reported in the correct schedule
• TDS claimed but income against that TDS not shown

Why this is dangerous: You get exactly 15 days to fix it. If you miss this deadline, your return is treated as never filed. This triggers:

• Section 234A interest: 1% per month on unpaid tax
• Section 234F penalty: Rs 5,000 (or Rs 1,000 if income < Rs 5 lakh)
• Loss of carry-forward of capital losses and business losses
• You must file a fresh return (if the deadline has not passed) or file a condonation request to CBDT

What to do:

1. Login to e-filing portal → Pending Actions → Worklist
2. Click on the 139(9) notice
3. Read exactly what defect is identified
4. File a revised return correcting the defect (not a fresh return — a response to the notice)
5. Submit within 15 days of the notice date

Can you get more time? Yes — write to the AO requesting an extension before the 15 days expire. This is discretionary, not guaranteed.

Cost to fix yourself: Rs 0 if the defect is just a wrong ITR form. You are re-filing with the correct form.

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Section 142(1) — The Department Wants Documents

What happened: The Assessing Officer wants specific information or documents before completing assessment.

What they typically ask for:

• Bank statements for a specific period
• Proof of deductions claimed (rent receipts, 80C investments, 80D insurance)
• Details of high-value transactions flagged in AIS
• Source of funds for a specific deposit or investment
• Details of cash deposits exceeding Rs 10 lakh

What to do:

1. Read the notice carefully — respond ONLY to what is asked
2. Gather the specific documents requested
3. Upload your response on the e-filing portal under e-Proceedings
4. Keep the response factual and concise — do not volunteer extra information
5. Save the acknowledgement receipt

Critical mistake to avoid: Do not provide more information than asked. If the AO asks for bank statements from April-September, do not send the full year. Extra information creates new questions.

Penalty for non-response: Rs 10,000 per instance under Section 272A. And the AO can proceed to best judgment assessment under Section 144.

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Section 143(2) — Scrutiny Assessment (This Is Serious)

What happened: Your return has been selected for detailed examination. This could be random selection, risk-based selection by the system, or triggered by specific red flags.

Timeline: The notice must be issued within 3 months from the end of the FY in which the return was filed. For returns filed by July 31, 2025 — the last date for issuing scrutiny notice is June 30, 2026.

What to expect:

• Multiple rounds of document requests
• Virtual hearings through the faceless assessment portal
• The AO may question income sources, deductions, expenses, and investments
• The process can take 6-12 months

What to do:

1. Hire a CA immediately. This is not a DIY situation. Scrutiny assessment fees range from Rs 15,000-50,000 but the stakes are much higher.
2. Respond to every query within the given timeline
3. Attend every virtual hearing (or have your CA attend with authorized representation)
4. Provide only what is asked — nothing more
5. Keep copies of every submission and response

What NOT to do:

• Do not panic-agree to the AO’s proposed additions to income
• Do not sign any statement without understanding it
• Do not miss a single hearing date — it gives the AO grounds for ex-parte order
• Do not try to negotiate informally — the faceless system is recorded

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Section 148/148A — Reassessment (Your Old Returns Are Being Reopened)

What happened: The AO has information that income escaped assessment in a previous year.

Time limits:

Condition	How Far Back
Normal cases	3 years from end of relevant AY
Escaped income > Rs 50 lakh with evidence	10 years from end of relevant AY
Search cases (raids)	Up to 10 years

The 148A procedure (mandatory before 148):

1. AO issues notice under Section 148A(b) — tells you what information suggests income escaped
2. You get 7-30 days to respond with your explanation
3. AO considers your response and passes order under Section 148A(d)
4. If the AO decides to proceed, a formal notice under Section 148 is issued
5. You must then file a return for that assessment year

What to do:

1. Check if the notice is within the time limit. Courts regularly quash time-barred notices — even notices issued days past the deadline have been struck down.
2. Hire a CA or tax advocate immediately
3. Respond to the 148A(b) notice with full documentation
4. If the 148 notice is issued, file a return even if you disagree — not filing means Section 144 best judgment
5. Filing a return does NOT mean you accept the reopening — it preserves your right to contest

When to go to court: If the notice is time-barred, if the AO did not follow the 148A procedure, or if the “information” relied upon is factually incorrect. Writ petitions to High Courts have a strong success rate for procedural violations.

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Section 144 — What Happens When You Do Nothing (Best Judgment Assessment)

This is what happens when you ignore everything. The AO estimates your income based on whatever data is available — AIS, SFT reports, bank statements obtained directly from banks, information from other taxpayers or deductors.

The damage:

• Income is typically estimated 2-5x your actual income because the AO has no reason to give you benefit of the doubt
• Penalty under Section 270A: 50% of tax on underreported income, 200% of tax on misreported income
• Interest under Sections 234A, 234B, 234C continues accruing
• The demand is enforceable — the department can attach your bank accounts, garnish salary, or initiate recovery proceedings

Real scenario: A salaried employee earning Rs 8 lakh per year had Rs 3 lakh in unreported FD interest. They ignored a 142(1) notice. The AO assessed total income at Rs 32 lakh (treating all bank credits as income), resulting in a tax demand of Rs 6.2 lakh + penalty + interest — totalling over Rs 10 lakh. The employee then had to spend Rs 1.5 lakh on a CA to appeal and get it reduced over 18 months.

Can you undo a 144 order? Yes — file an appeal with CIT(A) within 30 days. But you must pay at least 20% of the disputed demand to get a stay on recovery. And the process takes 12-24 months.

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The 9 Mistakes That Turn a Routine Notice Into a Disaster

1. Ignoring the Notice

The #1 most expensive mistake. A Rs 2,000 mismatch ignored becomes a Rs 50,000 demand under Section 144. Every notice requires a response. No exceptions.

2. Not Verifying If the Notice Is Fake

Phishing notices are epidemic during July-December. People click links, share PAN and bank details, and lose money. Verify the DIN on the official portal before any action.

3. Missing the 139(9) 15-Day Deadline

This is the only notice with an automatic “death penalty” for your return. Miss 15 days and your return is treated as never filed. Set a calendar reminder the day you receive it.

4. Responding Without Checking AIS First

You need to see what the department sees before you explain anything. If your AIS shows Rs 3 lakh in FD interest and you reported Rs 0, saying “I forgot” is not a strategy. Download AIS, reconcile, then respond with facts.

5. Volunteering Extra Information

If the AO asks for your bank statement from April to September, send April to September. Not the full year. Not your investment portfolio. Not your spouse’s returns. Extra information creates new questions. Answer precisely what is asked.

6. Paying a Disputed Demand Without Appealing

Once you pay, getting the money back requires a refund application — which can take 2-3 years. If you believe the demand is wrong, file an appeal within 30 days and request a stay. Pay only the undisputed portion.

7. Hiring the Wrong Professional

A CA who files your Rs 50,000 salary return is not necessarily equipped for a Rs 5 lakh reassessment case. For scrutiny and reassessment notices, ask: how many notice cases have you handled? What was the outcome? Get 2-3 quotes before committing.

8. Not Keeping Proof of Response

Every response submitted on the e-filing portal generates an acknowledgement. Download and save it. If the department claims you did not respond, you need proof. Screenshot the submission confirmation. Save the PDF.

9. Panicking and Calling Random “Tax Consultants”

Google ads for “income tax notice help” are dominated by firms that charge Rs 10,000-25,000 for a 30-minute 143(1) rectification you could do yourself for free. Before calling anyone, identify the section number and read this guide.

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When You Can Handle It Yourself vs. When You Need a CA

Notice Type	Self-Serviceable?	When to Hire a CA
143(1) intimation	Yes — rectification on portal	Adjustment > Rs 50,000 and you disagree
139(9) defective return	Yes — re-file correct form	Multiple defects or business income involved
142(1) document request	Mostly yes — upload requested docs	Request involves business income or high-value transactions
143(2) scrutiny	No	Always — stakes are too high
148/148A reassessment	No	Always — legal complexity requires expertise
156 demand	Depends — pay if correct	Demand exceeds Rs 25,000 and you disagree

CA Fee Reality Check:

Service	Metro (Rs)	Tier-2 (Rs)
143(1) rectification	2,000-5,000	1,000-3,000
139(9) defective return fix	3,000-8,000	2,000-5,000
142(1) document response	5,000-15,000	3,000-10,000
143(2) scrutiny assessment	15,000-50,000	10,000-25,000
148 reassessment	25,000-2,00,000+	15,000-1,00,000+
CIT(A) appeal	30,000-1,50,000	20,000-75,000
Per hearing attendance	2,000-5,000	1,000-3,000

Always get 2-3 quotes. CA fees are negotiable, especially for straightforward cases.

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The New Income Tax Act 2025: What Changes From April 2026

The Income Tax Act, 1961 is being replaced by the Income Tax Act, 2025, effective April 1, 2026. Key changes affecting tax notices:

“Assessment Year” is dead. The new Act uses “Tax Year” instead. Income earned during FY 2026-27 onwards falls under the new Act. Notices for income earned before April 2026 will continue under the 1961 Act. For the complete old-to-new section mapping, see Income Tax Act 2025 vs 1961 — every section that changed.

Reassessment notices: only from JAO. From April 2026, only the Jurisdictional Assessing Officer can issue Section 148 notices — not faceless assessment centres. The proceedings remain faceless, but the initiation power is now jurisdictional.

Block assessment timelines extended. For search cases, the assessment completion timeline increases from 12 months to 18 months starting FY 2026-27.

Everything else continues. Faceless assessment scheme, e-proceedings, DIN requirements, and the AIS/SFT reporting framework all carry forward unchanged.

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Response Checklist: What to Do in the First 48 Hours

1. Read the notice completely. Identify the section number, assessment year, and what is being asked.
2. Verify it is genuine. Check DIN on incometax.gov.in. If email-only, check the sender domain.
3. Note the deadline. Put it in your calendar with a reminder 5 days before.
4. Download your AIS and Form 26AS for the relevant assessment year.
5. Compare AIS data with your filed ITR. Identify any mismatch.
6. For 143(1) or 139(9): Start the rectification/correction on the portal yourself.
7. For 142(1): Gather the specific documents requested. Respond on the e-proceedings portal.
8. For 143(2) or 148: Call a CA today. Not next week. Today.
9. Save everything. Download the notice, your response, and the acknowledgement.
10. Do NOT call the number on the notice if it looks suspicious. Use only the official portal.

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Penalty Quick Reference

Offence	Section	Penalty
Non-response to notice	272A	Rs 10,000 per instance
Underreporting income	270A	50% of tax on underreported amount
Misreporting income	270A	200% of tax on misreported amount
Late filing (income > Rs 5L)	234F	Rs 5,000
Late filing (income ≤ Rs 5L)	234F	Rs 1,000
Interest on unpaid tax	234A/B/C	1% per month
Not filing return at all	276CC	Prosecution — imprisonment 6 months to 7 years (tax > Rs 25,000)

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The Bottom Line

A tax notice is not a raid. It is not an accusation. In 80% of cases, it is a computer-generated mismatch that you can fix in 30 minutes on the e-filing portal.

The people who end up paying Rs 1-2 lakh in penalties are not tax evaders — they are ordinary salaried individuals who ignored the notice, missed the deadline, or panicked and made it worse.

Read the section number. Verify it is real. Check your AIS. Respond within the deadline. That is it.

If it says 143(1) or 139(9) — you can almost certainly handle it yourself. If it says 143(2) or 148 — call a CA the same day you receive it.

The tax department is not your enemy. But the clock is.

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Related Guides

• ITR Filing Guide: Which Form, AIS Verification & Mistakes That Trigger Notices — File correctly the first time and most notices never happen
• Old vs New Tax Regime: Which Saves More at YOUR Salary? — The breakeven calculation at every salary level
• Zero Tax Up to Rs 12.75 Lakh: The Exact Salary Structure You Need — CTC restructuring to minimize taxable income
• Income Tax Act 2025 vs 1961: Every Section Number That Changed — Old-to-new section mapping (80C → 123, 143 → 268)
• Crypto vs Stocks vs Mutual Funds: Post-Tax Returns Compared — Capital gains tax differences that trigger AIS mismatches