June 30 represents the final deadline for the income tax department to issue scrutiny notices under Section 143(2) for income tax returns filed during FY 2025-26. According to reports from Mint, while the deadline for filing income tax returns is still some time away, this date is crucial for taxpayers who have already submitted their returns. A 'scrutiny assessment' is initiated when the tax department wants to verify certain details in a return, such as income reported, deductions claimed or specific transactions, and receiving such a notice does not necessarily mean the taxpayer has done anything wrong. As per NDTV Profit, until June 30, the Income Tax Department can select certain tax returns for detailed examination, send scrutiny notices and verify income, deductions, exemptions and other details claimed by taxpayers.
As reported by Mint, a notice under section 143(2) is issued when the assessing officer suspects discrepancies in a return filed by a taxpayer. Key situations include mismatches between Form 26AS or AIS and the ITR filed, turnover mentioned in GST records not matching tax audit reports, disproportionate deduction amounts to income levels, and high-value transactions not disclosed in income returns. According to NDTV Profit, a scrutiny notice may be issued if the department finds mismatches between the income declared in the return and information available through Form 26AS, AIS, TIS, bank records or other financial disclosures. A return may be selected if tax officials have conducted searches or surveys related to the taxpayer, if the return is linked to an ongoing reassessment or if there are large or suspicious financial transactions that do not match the income reported in the tax return.
Under the new Income Tax Act, 2025 (effective from AY 2026-27), the faceless assessment scheme operates through the National Faceless Assessment Centre (NFAC) which coordinates all proceedings electronically. As per NFAC communications, taxpayers receiving faceless assessment intimation are advised to periodically check their e-Filing account and respond to communications within specified deadlines. The scheme eliminates physical interaction with assessing officers, with all proceedings conducted through the e-Filing portal. While not legally mandatory, professional representation can significantly improve response quality and reduce the risk of additions and penalties.
According to Mint, taxpayers who receive scrutiny notices can respond through the income tax portal by navigating to Worklist, clicking on E proceedings, choosing the notice, and selecting 'View Notice' and 'Submit Response'. As per NDTV Profit, if you receive a scrutiny notice, you can check it through your registered email, postal address, or by logging into the Income Tax e-filing portal. Log in to the portal, go to 'Worklist' and then 'e-Proceedings', open the notice, and submit your response. You can either agree with the notice and upload the required documents or disagree and provide reasons for your response. Once submitted, you will receive a transaction number confirming successful submission. The department may seek supporting documents such as bank statements, salary records, investment proofs, deduction certificates and details of financial transactions, and officials then compare these documents with the information reported in the return before finalising the assessment.
As reported by Mint, taxpayers who fail to respond to income tax notices within the stipulated time period face severe consequences. Such defaulters may be subject to a penalty of ₹10,000 under Section 272A for each failure to respond. In some cases, the assessing officer can proceed with a best judgment assessment under Section 144 based on available information, which can result in higher taxable income being assumed and increased tax and penalty payable. If taxpayers choose to dispute higher tax demands, they must pay a minimum of 20% of the tax due before filing an appeal with higher authorities. In more serious cases of non-compliance or deliberate misreporting, matters may escalate to prosecution, which can lead to imprisonment if proven. If you do not respond to the notice, this could result in additional tax demands, penalties, interest charges, or delays in receiving refunds.
