E-assessment: How to file a reply to ITR scrutiny notices issued by the tax department

The finance minister, Nirmala Sitharaman while presenting the Union budget in July 2019 stated that the new scheme of e-assessment would be launched in a phased manner in the current financial year, i.e., financial year 2019-20.

This new scheme is expected to bring a paradigm shift in the way tax assessments are carried out in India. This process eliminates person-to-person contact to the extent it is technologically feasible and also provides a fair and transparent framework of assessments.

For financial year (FY) 2017-18 or assessment year (AY) 2018-19, 58,322 taxpayers who had filed their income-tax returns (ITR) were served notices of scrutiny. These cases have been selected under the first phase under the e-assessment Scheme 2019. Notices were served to tax payers before September 30, 2019.

According to experts, those who have got notices had declared foreign income and assets in their ITR. The income tax department can pick up ITRs for scrutiny till up to six months from the end of the financial year in which the return was filed. For every notice from the tax department, a particular procedure needs to be followed to file a reply under the e-assessment Scheme.

Earlier, taxpayers or their chartered accountants or representatives were required ot physically visit the tax department office and get the issue sorted out. But now there is a “e-proceeding" facility. The aim is to eliminate person-to-person contacts with the tax department and make the whole process transparent. Under “e-proceeding", recourse is available to file electronic responses for the notices for all limited and complete scrutiny cases.

Apart from sending emails and SMSes, the department also uploads tax notices in your e-filing account. After you receive such an email, access your income-tax account and see if there are any demands or arrears are pending in your name from the department. You can reply to all the tax notices online through the account.

If you receive a notice, go through it carefully and respond within the time frame mentioned in the notice. For every notice received from the tax department, a particular procedure needs to be followed to file a reply. Most of these responses can be filed online through your income tax account, unless the tax department has specifically asked you to appear personally.

Make sure that you reply to all the tax notice as per the procedure. If you fail to comply with the notices, you may have to pay a penalty or face prosecution, depending on the nature of the case. The penalty could be as high as 300% of the dues and the jail term can go up to seven years.

If you have a genuine reason for the delay in replying to the notice then you should request for an extension either by approaching the respective assessing officer or through the department’s online portal. If you find income tax notices complicated, get the help of a chartered accountant or other tax experts.

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