How to Respond to an Income Tax Scrutiny Notice
A practical, step-by-step guide for Indian taxpayers on understanding, preparing for, and replying to an income tax scrutiny notice — without panic.
"Receiving a tax scrutiny notice is not an accusation — it is a question. Answer it clearly, completely, and on time."
What is an Income Tax Scrutiny Notice?
When the Income Tax Department finds discrepancies in your ITR — mismatches with Form 26AS, unusual deductions, high-value transactions, or simply a random selection — it may issue a scrutiny notice under the Income Tax Act, 1961. Scrutiny does not mean you have done anything wrong. It is a verification process, and a timely, well-documented response is all that is required in most cases.
Types of Scrutiny Notices
| Notice Type | Section | What It Means | Deadline |
|---|---|---|---|
| Intimation | 143(1) | Auto-generated mismatch alert; not a full scrutiny | 30 days from receipt |
| Scrutiny notice | 143(2) | Formal scrutiny of your ITR by the AO | 15–30 days (as specified) |
| Reassessment | 148 | Income believed to have escaped assessment | File fresh ITR within 30 days |
| Inquiry notice | 142(1) | Asks for books, returns, or documents before assessment | As specified in notice |
Step-by-Step: How to Respond
- Read the notice carefully — Identify the section, assessment year, specific queries, and deadline. Confirm the notice is addressed to your PAN.
- Log in to incometax.gov.in → Pending Actions → e-Proceedings. All notices after 2021 must be responded to online.
- Gather supporting documents — Pull together all evidence relevant to the queries raised.
- Draft a clear, point-by-point response — Address each query separately. Be factual, concise, and cross-reference each document.
- Submit before the deadline — Upload your response and download the acknowledgement. Never let a deadline pass without requesting an extension in writing.
- Attend the hearing if required — You can appear yourself or authorise a CA through a valid power of attorney.
Consequences of Not Responding
- Ex-parte assessment (Section 144): The AO makes a best-judgment assessment without your input — almost always unfavourable.
- Penalty under Section 271(1)(b): Up to ₹10,000 for each failure to comply with a notice.
- Interest on additional tax demand: Charged under Sections 234A, 234B, and 234C.
- Prosecution under Section 276: In extreme cases of wilful non-compliance.
Quick Summary
An income tax scrutiny notice is manageable if you stay calm, act promptly, and respond with evidence. Read the notice → identify the section and queries → gather documents → draft a point-by-point reply on the e-filing portal → submit before the deadline. Never ignore a notice, and never miss a deadline without requesting an extension in writing.
Received a scrutiny notice? Contact BNKS & Associates for expert tax notice response support.