A Guide to handle a notice for Non-Filing of Income Tax Return

Here is how you can handle a notice for Non-Filing of Income Tax Return:

IT Notice for Non-filing of ITR

Mr. Rakesh Mourya is a regular Income Tax payer who files his Income Tax Return every year on time. For the financial year 2013-14, he skipped filing the IT Return as he changed his job and also his gross income did not exceed the standard deduction limit. One fine morning, while checking his email he saw a notice from the Income Tax Department for Non-filing of Income Tax Return. In the same year, he made some Fixed deposits in his bank account and also received interest on his deposits. It captured the attention of the Income Tax Department and as a result IT Department decided to send a notification to Mr. Mourya to seek clarification for Non-filing of IT Return.

It was not only Mr. Mourya but many people who were filing tax returns in the previous years but did not file the tax return for the assessment year 2014-15 received the notice from the IT Department for Non-Filing of Income Tax Return.

The IT Department has been collecting information on financial transactions of the individuals through Non-filers Monitoring System (NMS) for the identification of non-filers and has been sending the notice for the clarification of the same through SMS, emails or Post. As per the report from the IT Department, the number of non-filers has been raised to 58.95 lakhs compared to 22.09 lakhs in the year 2014.

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What is Non-filers Monitoring System (NMS)?

It is a pilot project introduced by the Income Tax Department for prioritising action against non-filers with potential tax liabilities. Data analysis has been carried out to identify non-filers about whom specific information is available in various sources such as Centralised Information Branch (CIB), Annual Information Return (AIR), TDS/TCS Statement, etc. The identified non-filers are informed through SMS, e-mails and letters in batches.

The information collected through Annual Information Return (AIR), Centralised Information Branch (CIB), TDS/TCS Statement, etc. based on which notice has been sent to the non-filers is listed below:

Annual Information Return (AIR)

Annual Information Return (AIR) for “high-value financial transactions” is necessitated to make available under S ection 285BA of the Income-tax Act, 1961 by ‘specified persons’ in respect of ‘specified transactions’ registered or recorded by them during the financial year. The ‘specified persons’ and the ‘specified transactions’ as listed in the Rule 114E of the Income-tax Rules, 1962 is depicted in the table below:

Annual Information Return

Also read: All about Income Tax Scrutiny Notice

Centralised Information Branch (CIB)

The Income Tax department in 1975 formed the Central Information Branch (CIB) for strengthening tax database. In August 2011, a new directorate was set up under a DGIT which included the former intelligence set up and CIB set up. The directorate was named as “Directorate of Income Tax (Intelligence & Criminal Investigation)”. It was created to adhere to new norms regarding the exchange of information and greater transparency by the financial institutions.

Some of the CIB codes that may show up on your income tax notice are listed in the table below:

• Centralised Information Branch (CIB):

TDS/TCS Statement

Some of the codes that could show up on your income tax notice with respect to your TDS/TCS Statement are listed in the table below:

TDS or TCS Code
Few other codes which may reflect in the notice from the Income Tax department for non-filing of tax returns are listed in the table below:

Other codes

How to respond to the notice for Non-filing of Income Tax Return

In the majority of cases, the Income Tax Department sends the notice through an SMS or email. You can reply to the notice through the e-filing website by following the steps mentioned below:

1. Login to the e-filing website using the link below:

Click here to login to efiling website

Below is the screen shot of the page for your reference:

eFiling home page

Note: Registered users can log in with their user-id and password by clicking on “Login Here” button. If not registered, you can click on “Register Yourself” button to get yourself registered.

2. Once, you have logged in to your account the below page will appear, click on the “Compliance” tab.

eFiling Compliance page
You need to either click on “View and Submit Compliance” or “View My Submission”.

View and Submit Compliance: This may be selected when you want to enter a fresh response.
View My Submission: This has to be selected to view the previously entered response.

3. Submit Response: It is divided into two parts as explained below:

I. To submit the response first you have to click on “View and Submit Compliance”, and then on “Filing of Income Tax Return” tab, the below page will appear on your screen:

Filing your income tax return

On this page, you will be able to check the details of the assessment year for which the return is not filed and of which the Income Tax Department has received the information from the third party. You can choose one of the below response options:

• ITR has been filed
• ITR has not been filed

If you choose the option “ITR has been filed”, then you need to provide the mode of filing the ITR (either e-Filed or Paper Filing), date of filing the ITR and acknowledgement number. If the ITR is e-Filed, the status will be automatically updated.

If you choose the option “ITR has not been filed”, then you need to choose one of the following reasons:

• Return Under Preparation
• Business has been closed
• No Taxable Income
• Others

Below is the attached screenshot for your reference:

ITR not filed

Note: If you select “Others” as the reason, then you have to compulsorily enter the remarks.

Also read: Income Declaration Scheme 2016: Revised deadline to pay taxes on your black money

II. Related Information Summary:

Third party information is shown separately in the “Related Information Summary” tab. You are required to choose one of the following options under this tab:

Self-Investment/ expenditure is out of exempt income: You have to select this option if the third party information relate to investment/expenditure that belong to you and the same is out of income exempt from tax under Income-tax Act, 1961.

Self-Investment/ expenditure is out of accumulated savings: You have to select this option if the third party information relate to investment/expenditure that belong to you and the same is out of the accumulated savings.

Self-Investment/ expenditure is out of foreign income: You can choose this option if the third party information relate to investment/expenditure that belongs to you and the same is out of foreign income.

Self-Investment/ expenditure is out of gifts/ loans from others: You have to select this option if the information from the third party relate to investment/expenditure that belong to you and the same is out of gifts/loans from others.

Self-Income from transaction is exempt: You can choose this option if the third party information relate to income/receipts that belong to you and the same is exempt under Income-tax Act, 1961.

Self-Income from transaction is below taxable limit: You can choose this option if the third party information relate to income/receipts that belong to you and the taxable income there from is below taxable limit under Income-tax Act, 1961.

Self-Income from transaction relate to different Assessment Year: You have to select this option if the third party information relate to income/receipts that belong to you and the same is taxable in some other year as per the provisions of the Income-tax Act, 1961.

Self-Not Known: You can choose this option if the third party information relate to income/receipts that belong to you and there is any other explanation.

Other PAN: You have to select this option if the third party information relate to some other taxpayer. In such a scenario, the PAN of such other taxpayer is to be provided compulsorily.

Not Known: You can choose this option if you don’t have any details about the third party information.

I need more information: You can choose this option if you know about the third party information but is seeking for more information to submit a response.

Once you have filled all the details under both the tabs, you can click on the “Submit” button to submit the response. After submission, you can take out the printout of the response for your own record. The Income Tax Department will verify the response submitted by you and if found satisfactory, the case will be closed.

Note: Please make sure that you enter the correct details or you might be asked for more information in the event of any discrepancies.

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Final Words

So if you have received any notice from the Income Tax Department, don’t panic and follow the steps mentioned above to file your Income Tax Return. In case, if you have any doubt, consult a Tax Professional or a Chartered Accountant before submitting your response. Submitting wrong information may further lead your case for the scrutiny by the Income Tax Department.

Do make sure that you submit your response within the prescribed time limit or your case may get forwarded to the assessing officer and based on the severity of the case, if required action under Section 271F or Section 276CC may be taken.

Under Section 271F, if you are required to furnish a return of your income, as required under sub-section (1) of section 139, and you fail to furnish such return before the end of the relevant assessment year, you shall be liable to pay, by way of penalty, Rs 1,000 to Rs 5,000. On the other side, Section 276CC of the Income Tax Act has the provision for prosecution, punishable with stringent imprisonment of three months to seven years along with a fine.

However, you need not have to worry if don’t have any taxable income. Income Tax Department just want you to furnish your response on the e-filing income tax portal.

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