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12 ways to deal with an Income Tax notice
July, 23rd 2015

Any communication from the Income Tax department, especially receiving a notice from them, can send shivers down anyone's spine. However, there are chances that it might only be a routine enquiry or a request for simple clarification.

An Income Tax notice can be issued for varied reasons, and there's no standard solution to deal with them. There are various kinds of Income Tax notices.

Here are 12 golden steps to follow in response to any kind of IT notice you may receive.

1) Don't Panic or Ignore: Your first reaction would be to press the panic button or ignore the notice completely. Both these ways are wrong. The key is to handle the situation carefully and sincerely, or you may end up paying a penalty of up to Rs 10,000 along with the tax payment.

2) Is it issued to your PAN card number? The Income Tax department issues notices based on the PAN card and not on the basis of names. So make sure that the notice is issued to your PAN card, and not to someone else who may have a similar name or date of birth as yours.

3) Identify the reason behind the notice: Reasons could be a simple mismatch in TDS or inconsistency in your returns, or some serious concerns like income concealment. It can also be a survey or scrutiny of accounts.

4) Validity: Check the validity of the notice and the timely issuance. Also check the section under which the notice has been issued.

5) Issuer Details: Notice will mention the officer in-charge, his or her designation, signature, address with details of ward and circle number. Verify these details to avoid being cheated.

6) DIN: If the notice is delivered online, then check the Document Identification Number.

7) Gather the documents: Start collecting the documents that the department has requested via the notice. Documents needed can vary depending on the gravity of the notice.

8) Letter: Prepare a covering letter along with the set of documents.

9) Acknowledgement: Prepare two set of all the documents required, along with a copy of the covering letter. Get your copy stamped to maintain personal records, and as a proof of submission of the documents thereby complying with the notice.

10) Reply on time: Always respond to the notice on time even if you are unable to collect the required documents. You can even ask for some time to gather all the documents. Timely response will help establish that you are honest, and cooperating with the law.

11) Preserve the envelope: If you receive the notice in an envelope, keep it safely as it will have the Speed Post number that will work as evidence of its delivery to you.

12) Seek professional Help: If the gravity of notice is high then it would be prudent to have a CA represent you; otherwise you can follow the above steps and represent yourself in most of the cases.

One of the major steps that you need to take regardless of the notice, is to keep a track record of all your tax papers and financial transactions in the last six years. This will help you substantiate your claims in case of any scrutiny.

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