Many taxpayers are currently focused on the upcoming income tax return filing deadline. But there is another important date that deserves attention, i.e., June 30. While it may not matter to everyone, it is significant for those who have already filed their returns and could be selected for scrutiny by the Income Tax Department.
Receiving a tax notice can sound worrying, but it does not automatically mean you have done something wrong. In many cases, the department simply wants to verify certain details mentioned in your return. Understanding why a notice is issued and how to respond can help avoid unnecessary stress.
June 30 is the last date by which the Income Tax Department can issue a scrutiny notice under Section 143(2) for returns filed during FY 2025-26.
A scrutiny assessment begins when This may include checking income disclosures, deductions claimed, tax payments, or certain financial transactions.
The purpose is to ensure that the information provided in the return is accurate and complete.
A notice may be issued when the assessing officer finds discrepancies or unusual patterns in a taxpayer’s return. One of the most common reasons is a mismatch between the income reported in the return and the details available in Form 26AS or the Annual Information Statement (AIS).
In some cases, turnover reported in GST records may not match the figures disclosed in tax filings. Taxpayers who claim deductions that appear unusually high compared to their income may also attract attention.
The tax department may also seek clarification if high-value transactions reflected in official records have not been reported in the return. Similarly, property sale transactions recorded with registration authorities but missing from the tax return can trigger scrutiny.
With the increasing use of technology, the department now has access to a wide range of financial and digital transaction data. Advanced analytics and artificial intelligence tools are being used to identify returns that may require closer examination.
Meanwhile, mistakes can happen while filing tax returns. If you discover an error after submitting your ITR, it does not necessarily mean a scrutiny notice will follow.
Taxpayers have the option of correcting certain errors by filing an Updated Return (ITR-U), subject to applicable conditions and additional tax liability.
Tax experts often suggest fixing genuine mistakes voluntarily rather than waiting for the department to raise questions later.
A scrutiny notice is usually sent to the taxpayer’s registered email address and may also be delivered to the registered postal address. Taxpayers can also check for notices by logging into the income tax e-filing portal.
Once logged in, the notice can be accessed through the e-Proceedings section. The taxpayer can review the details and submit a response online. Depending on the nature of the notice, supporting documents or explanations may need to be uploaded.
After the response is submitted successfully, the portal generates a transaction number as confirmation.
Tax experts at B S Sridhar & Co., Chartered Accountants, warn that failing to respond to a notice issued under Section 133(6) can have serious consequences. The Income-tax Act allows the department to impose penalties if a taxpayer does not provide the information or documents requested.
Under Section 272A(2)(c), a taxpayer may face a penalty of Rs 10,000 for failing to comply with the notice without a valid reason. If the non-compliance continues, additional penalties may also be imposed.
Moreover, if the notice has been issued directly to the taxpayer as part of an ongoing scrutiny or assessment, the Assessing Officer (AO) may proceed with a best-judgement assessment. In such cases, the officer can complete the assessment based on the available information, which could lead to a higher tax liability.
Simply put, a scrutiny notice should not be seen as a reason to panic. More often than not, it is simply a request for clarification or supporting evidence. Taxpayers who keep their records organised and respond within the prescribed time can usually handle the process smoothly.
As June 30 approaches, it may be worth checking that all information in your return is accurate and that no communication from the tax department has gone unnoticed.