Income Tax Notices for Salaried Employees: How to Respond

TL;DR Summary:
143(1), Intimation: Auto-generated after ITR processing. Could mean no action needed, a refund, or a demand. Respond within 30 days if a demand is raised.143(2), Scrutiny Notice: The department wants to examine your return in detail. Selected via CASS or manually. Must be issued within 3 months of the FY end. Don’t ignore it; get a CA involved.148, Escaped Income: Department believes you under-reported or hid income in a prior year. They must follow a mandatory pre-notice process (148A) before issuing this. Can go back 3–10 years, depending on the amount.139(9), Defective Return: Your ITR has a technical error like wrong form, blank schedules, or tax not paid. You get 15 days to fix it. If you don’t, your return is treated as never filed.245, Refund Adjusted: You have a refund due, but also an old outstanding demand; the department sets one off against the other. You get 30 days to object if you think the demand is wrong.156, Tax Demand: Formal payment notice after an assessment. Pay within 30 days or interest kicks in at 1% per month. You can appeal, but the demand doesn’t pause automatically.131, Summons: The department is calling you formally, on record, possibly under oath. Non-compliance is a legal offence. Take professional tax advice before attending.

Most taxpayers don’t know what a notice means, what triggered it, or what action is expected from them. This is why understanding the different income tax notices types is crucial.

There are seven key income tax notice types issued under the Income Tax Act, 1961. Each has a distinct trigger, a defined window for response, and specific consequences for if you don’t comply.

This guide breaks down all of these income tax notices in simple language with information on why you may have received and what to do.

Notice Under Section 143(1) — Intimation After ITR Processing

This is the most common communication you will receive from the Income Tax Department.

This is not technically a “notice” in the legal sense, it’s a system-generated intimation sent by the Centralised Processing Centre (CPC), Bengaluru, after your Income Tax Return (ITR) has been processed.

For this notice, the CPC runs an automated comparison between your ITR and data available with the department from Form 26AS, Annual Information Statement (AIS), and Form 16.

This intimation comes in three forms:

No Difference: Your return is accepted as filed. You usually receive a confirmation, and no further action is required.
Refund: You have paid more tax than your actual liability. The intimation will show the excess amount, and a refund will be issued to your registered bank account.
Tax Demand: There’s a shortfall in your tax payment. The intimation acts as a demand notice, specifying the exact amount you need to pay.

The third variant is where taxpayers need to pay close attention.

Why Did You Receive This Notice:

Mismatch with AIS/Form 26AS: This is the primary reason. For example, if interest from your savings account appears in your AIS but you omitted it from your ITR.
Arithmetical Errors: Simple mistakes in calculations, applying the wrong tax slab, or incorrect addition of figures can trigger a notice.
Incorrect TDS Credit Claim: You may have claimed TDS based on your Form 16, but the credit isn’t fully reflected in Form 26AS, possibly due to a PAN mismatch or delayed filing by the deductor.
Disallowed Deductions: If you claim a deduction that does not match the information in the department’s records, the system will disallow it and raise a demand.
Tax Regime Inconsistencies: Claiming deductions under the old tax regime while filing under the new tax regime will lead to automatic adjustments.

Time Limit and Response Deadline

The department must issue this intimation within nine months from the end of the financial year in which you filed your return.

Once you receive the notice, you have 30 days to respond from the date of issue. Do not ignore this deadline.

If you miss it, the department will process your return based on the information available with them, which could result in a confirmed tax demand

How to Respond

Authenticate First: Ensure the notice is genuine. All valid communications carry a unique Document Identification Number (DIN). You can verify this DIN on the e-filing portal’s homepage under ‘Authenticate Notice/Order’.
Analyse the Discrepancy: Log in to the e-filing portal and go to ‘e-Proceedings’. Open the notice and carefully examine the adjustment made. Compare it with your AIS and Form 26AS to understand the exact mismatch.
Submit Your Response Online: You must submit your response through the e-filing portal only. There’s no need to visit the tax office.
If you agree with the demand: Pay the tax demand online through the portal. After payment, submit the challan as your response.
If you disagree with the demand: You can file a rectification request under Section 154. Or, you can file a revised return if the deadline for that assessment year hasn’t passed.

If you feel overwhelmed or there is a complex mismatch or significant tax demand, a CA or tax advisor can help you review the notice and draft an appropriate response.

Notice Under Section 143(2) — Scrutiny Assessment

A notice under section 143(2) is the income tax scrutiny notice. It means your income tax return has been selected for scrutiny assessment.

The Assessing Officer (AO) wants to confirm that you have not understated your income, overstated your losses, or underpaid your tax.

Unlike Section 143(1) this is a formal legal notice. Ignoring it is not an option.

What Triggers a Scrutiny Notice

Cases for scrutiny are selected either through the Computer Assisted Scrutiny Selection (CASS) system or manually, based on specific risk parameters. Common triggers include:

A significant mismatch between your ITR and Form 26AS, AIS, or TIS data
High-value transactions reported in AIS that don’t align with declared income
Large deductions claimed under sections like 80C, 80D, or 80G without clear supporting documentation
Significant year-on-year variation in income or tax paid
Cash deposits or property purchases disproportionate to your income
Foreign assets, foreign income, or DTAA claims that require deeper verification

Remember, this notice is not proof of wrongdoing. It is the department’s way of verifying that your return is accurate.

Types of Scrutiny: Limited vs Complete

Limited Scrutiny: The AO can examine only the specific issues mentioned in the notice. For example, a mismatch in TDS credit or a large cash deposit. The AO cannot expand the scope without approval from a higher authority.

Complete Scrutiny: The AO can examine all aspects of your return including income, deductions, exemptions, capital gains, foreign assets, and more. This applies to returns selected through manual parameters, cases with search history, or high‑risk profiles

Time Limits

A notice under section 143(2) must be issued within three months from the end of the financial year in which the return was filed.

For AY 2025-26, the scrutiny notice must be issued by June 30, 2026. A notice issued beyond this window is invalid and can be challenged.

How to Respond

Authenticate: Log in to the e‑filing portal. Go to Pending Actions > e‑Proceedings. Download the notice and verify the DIN.
Identify the issues: The notice will list the specific discrepancies or flagged items.
Gather documents: Including – filed ITR and computation sheet, Form 16, Form 26AS, AIS, bank statements for the relevant year, investment proofs (LIC, PPF, ELSS), rent agreements for HRA, medical insurance receipts, donation receipts, capital gains papers, and any document specifically requested.
Prepare a point‑by‑point response: Answer only what is asked. Over‑disclosure is a common mistake that can lead to expanded scrutiny. Do not volunteer information about other income heads unless required.
Submit: Upload your response and supporting documents through the e‑Proceedings tab on the portal. The deadline is usually 15 to 30 days from the date of the notice. Do not miss it.
Follow up: The AO may issue further questionnaires under Section 142(1) seeking additional details. Respond to each within the given time.

Final Outcome

After completing the scrutiny, the AO will pass an assessment order under Section 143(3). This order can:

Accept your return as filed
Make adjustments, increasing your income or disallowing deductions
Raise a tax demand

The assessment order must be passed within 12 months from the end of the relevant assessment year.

If you disagree with the order, you can file an appeal before the Commissioner of Income Tax (Appeals) within 30 days of receiving the order.

We at PKC recommend seeking help from a qualified CA at this stage because scrutiny assessment involves legal interpretations, documentation, and representation.

Notice Under Section 148 — Income Escaped Assessment

A notice under Section 148 means the Income Tax Department believes that some of your taxable income from a previous year was not fully assessed or completely escaped tax altogether.

This notice is the formal document that reopens a completed assessment and is one of the most serious notices .

Common Reasons You Received This Notice

AIS mismatches showing unreported high‑value transactions
Bank deposits exceeding your declared income
Purchased immovable property but did not explain the source of funds
Information from third parties like banks and stock exchanges.
Your AIS shows interest income, dividend income, or capital gains that are not fully reported in your ITR

Reform from Finance Act 2021

Before 2021, the department could issue a Section 148 notice directly. That often led to arbitrary reopenings based on weak or borrowed information.

The Finance Act 2021 inserted Section 148A, which now requires the AO to follow a mandatory process before issuing any notice under Section 148:

Step	What the AO Does	Your Right
1	Conducts an inquiry with prior approval of specified authority	You are entitled to see the evidence
2	Serves a show‑cause notice under Section 148A(b) asking why reassessment should not be initiated	You get 7 to 30 days to respond with your explanation and supporting documents
3	Reviews your response and passes a reasoned order under Section 148A(d)	If the AO agrees with you, the case is dropped. If not, the Section 148 notice follows

Only if the AO determines that a case exists does the formal section 148 notice get issued.

Time Limits for Reopening

The Finance Act 2021 also revised the time limits:

Up to 3 years from the end of the relevant Assessment Year. It applies in all cases where the AO has reason to believe income has escaped assessment.
Up to 10 years applies only where the escaped income involves assets (including foreign assets) expenditure, entry, or transaction and the escaped amount is likely ₹50 lakh or more. Strict conditions apply before the AO can go back this far.

How to Respond

Log in to the e‑filing portal. Go to Pending Actions > e‑Proceedings. Download the notice and verify the DIN.
Request the recorded reasons for reopening so you can respond effectively.
File a return for the relevant assessment year mentioned in the notice,if needed. The deadline is generally 30 days from the date of the notice.
Reconcile AIS, Form 26AS, and bank statements, and upload a point-by-point reply with supporting documents.
Upload your return and supporting documents through the e‑Proceedings tab. If you disagree with the notice itself, you can file objections separately.
After that, the AO may ask for more details and will complete the reassessment within the statutory time limit applicable to that case.

The quality of your response can prevent the case from being reopened altogether. This is why engaging a tax professional is recommended.

If you ignore a Section 148 notice, the AO will proceed with a best judgment assessment under Section 144.

The officer will estimate your income based on available information, usually resulting in higher tax demand and penalties.

Notice Under Section 139(9) — Defective Return

A notice under section 139(9) means the Income Tax Department has found a defect in your filed return.

The defect does not necessarily mean fraud or misrepresentation. It usually means something is technically incomplete or inconsistent.

The department is required to give you a chance to fix it, but if you don’t act within the specified time, your return is treated as if it was never filed.

Common Reasons of Defective Return:

Wrong ITR form used: You filed ITR-1 but your income includes capital gains. Or you filed ITR-3 but your business turnover exceeds the threshold requiring a different form.
Tax not fully paid: You filed your return but did not pay the entire self-assessment tax or advance tax shown as payable.
Income missing against TDS credits: Your Form 26AS shows TDS deducted on interest income, but your return does not include that interest.
Mismatched income and TDS data: The numbers in your return do not match what the department has in its records.
Audit report not attached: You are required to get your accounts audited under Section 44AB but did not attach the audit report or the report was filed after the return.
Incomplete or inconsistent schedules: You left mandatory fields blank. Or your numbers in one schedule do not match another schedule.
Verification missing: You did not verify the return, either digitally or physically.

The department must specify the exact defect in the notice. A vague notice that does not clearly state the defect is legally questionable.

No Time Limit to Issue the Notice

Unlike other notices like Section 143(2) or Section 148, there is no statutory time limit for issuing a Section 139(9) notice.

The department can issue this notice at any time after receiving your return, even months later. However, the notice must be issued before the assessment is completed.

Time Limit to Respond

You are given 15 days from the date of the notice (or such further period as the AO may allow) to correct and resubmit the return.

If you fail to rectify the defect within the given period, your return will be treated as invalid, as if it was never filed.

This carries serious consequences: you become liable for penalties under section 271F, interest for default in filing, and loss of the right to carry forward certain losses.

How to Respond

Authenticate the notice on the e-filing portal. The notice will specify the exact defect and the time limit to respond.
Understand the defect. Read the notice carefully. Identify what is missing or incorrect.
Rectify the defect. If the defect is in the return itself, you must file a revised return under Section 139(5). The revised return supersedes the original return. You must file it within the time limit specified in the notice. If the defect is a missing attachment , you can upload the missing document through the portal without filing a revised return. The exact process will be specified in the notice.
Submit your response online.
After submission, you will receive an acknowledgement. Save a copy. The department will process the rectified return.

If the defect is more complex, consult a CA before resubmitting to avoid triggering a fresh defect or mismatched data.

Notice Under Section 245 — Refund Adjusted Against Demand

A notice under Section 245 means the Income Tax Department plans to take your current year’s refund and apply it against old tax dues you allegedly owe from previous years.

Instead of giving you the full refund, they will deduct what you owe and give you the difference.

The notice informs you about this proposed adjustment and gives you time to respond. You can agree with the demand, or you can contest it if you believe the old demand is incorrect or already paid.

How it Works

Before making the adjustment, the department is required to issue an intimation to you informing you of the proposed set-off and giving you a chance to respond. This is usually 30 days.

Courts have strongly enforced this requirement.

The intimation will specify:

The refund amount due to you
The outstanding demand it is being adjusted against
The assessment year to which the demand pertains

Common Reasons You Received This Notice

You filed a return but did not pay the full tax shown as payable
Your claimed TDS credit exceeds what the department’s records show
You claimed deductions (like 80C, 80G) that the department later disallowed, creating a demand
An old demand is still shown as outstanding even though you have already paid or corrected it
The department’s system shows a demand, but you have proof of payment or reversal

How to Respond

Log in to the income tax e-filing portal using your PAN and password.
Navigate to Pending Actions → Response to Outstanding Tax Demand or check under e-Proceedings for the Section 245 intimation.
Review the notice carefully. Note the assessment year of the demand, the exact amount, and the reason stated for the demand. Check whether this demand has already been paid, stayed by a court, or is under appeal.
If you agree with the demand: Select “Agree” and submit. The department will adjust the refund amount against the old demand and release the balance, if any.
If you disagree fully or partially: Select “Disagree with Demand.” You must provide specific reasons and upload supporting documents. Acceptable documents include payment challans, Form 26AS, Form 16, rectification orders under Section 154, or stay orders from appellate authorities.
Submit online through the portal. No physical correspondence is required or accepted.

When you might dispute this

You can challenge a Section 245 adjustment if:

No prior intimation was issued.
The demand is stayed by an appellate authority. If you have a stay order from the Commissioner (Appeals), ITAT, or High Court, the demand cannot be recovered, including through refund adjustment.
The demand has already been paid. You have payment proof, but the department’s system still shows it as outstanding.
The demand is time-barred for recovery. If the department has not initiated recovery proceedings within the prescribed period, the demand may not be enforceable.
The intimation is defective. Any notice without a valid Document Identification Number (DIN) is legally invalid.

In these situations, you can file a rectification request under Section 154, or approach the Commissioner (Appeals) or High Court if the department ignores your valid objections.

Notice Under Section 156 — Tax Demand Notice

A notice under section 156 is a formal demand for payment. It is issued whenever an AO completes an assessment and determines that tax, penalty, fine, interest, or any other sum is payable by you.

This notice is the outcome of a completed process. You may have received a Section 143(1) intimation, gone through a Section 143(2) scrutiny, or faced a Section 148 reassessment.

Once the final order is passed, if any amount remains unpaid, the department issues this demand notice.

When is it Issued

Section 156 notices follow:

Completion of scrutiny assessment under section 143(3)
Completion of best judgement assessment under section 144 (where returns are not filed or information is not furnished)
Completion of reassessment under section 147/148
Imposition of penalty by the AO

The notice will clearly state the amount payable, the head under which it is due (tax, interest, penalty), and the relevant assessment year.

Deemed Demand Notices

You may receive a demand notice without seeing “Section 156” written anywhere.

Several other intimations are deemed to be notices of demand under Section 156. This means the same rules apply.

Communication	When It Is Deemed a Section 156 Notice
Intimation under Section 143(1)	When it shows a tax, interest, or penalty payable after CPC processing
Intimation under Section 200A(1)	When TDS processing results in a demand
Intimation under Section 206CB(1)	When TCS processing results in a demand
Notice under Section 210(3)	When AO demands higher advance tax payment

The Section 143(1) intimation you receive after filing your ITR becomes a demand notice if it shows a payable amount.

Do not ignore it just because it is called an “intimation.” The payment obligation is the same.

Time Limit to Respond

You must pay the demand within 30 days of receiving the notice.

Failure to pay within this period results in the demand being treated as an arrear, attracting further interest under section 220(2) at 1% per month on the unpaid amount.

Your Options on Receiving Demand Notice

Pay the demand: If you agree with the assessment, pay through the income tax portal using Challan 280.
File an appeal: If you disagree, file an appeal before the Commissioner of Income Tax (Appeals) under section 246A. Filing an appeal does not automatically stay the demand, but you can apply for a stay of demand (typically 20% of the demand is required to be paid while the stay is granted).
Request rectification: If the demand is based on an apparent error in the assessment order, file a rectification application under section 154.

Do not let a section 156 demand go unaddressed.

The department has significant powers of recovery including attachment of bank accounts and assets once a demand becomes an arrear.

How to Dispute a Section 156 Notice

To dispute a Section 156 notice, challenge the underlying order that created the demand.

If the issue is an apparent mistake, file a rectification request under Section 154 within the statutory four-year period.

If you disagree with the assessment on merits, file an appeal before CIT(A) in Form 35 within 30 days of service of the relevant order or notice of demand.

Filing the appeal does not automatically stop recovery, so a separate stay application may be required.

Notice Under Section 131 — Summons for Information

A notice under section 131 is a summons. It is a legal order requiring you to appear, provide information, or produce documents.

This is not a routine notice. It is issued when the department believes that voluntary cooperation may not be forthcoming, or when a formal, on-record examination is required.

Section 131 Summons: 131(1) vs. 131(1A)

Section 131(1) is used by the Income Tax Department when a proceeding is already pending, such as scrutiny or reassessment, to compel attendance and collect evidence.

Section 131(1A) can be used even without a pending proceeding if the authority has reason to suspect concealment of income or assets. It is often used at a pre-investigation stage.

Who can Receive Summon Notice

The summons are not limited to taxpayers. It can be issued to:

The taxpayer under examination
Third parties like banks, employers, business associates, or any person likely to possess relevant information
Directors, partners, or key managerial personnel of a company or firm under investigation

The income tax authority issuing the summons has powers to examine the person on oath, require production of specific documents, and record statements.

Common Reasons You Received This Summons

Trigger	What the Department Suspects
Bank deposits not matching declared income	Unexplained cash credits under Section 68
Large‑value property purchase without clear source	Undisclosed income used for acquisition
Discrepancies between AIS/TIS and your ITR	Suppressed income or inflated deductions
Business expenses that seem excessive	Bogus claims or non‑genuine transactions
Information from third parties (banks, registrars, other government agencies)	Concealment requiring deeper verification
KYC or bank account opening form details	Identity mismatch or source of funds issue

Consequences of Non‑Compliance

Refusing to attend, failing to produce documents without valid reason, or providing false information in response to a section 131 summons are serious offences under the Income Tax Act and can result in penalties and prosecution.

Beyond fines, non‑compliance allows the department to draw adverse inferences against you. In assessment proceedings, the officer may estimate your income based on the limited information available, often resulting in a higher tax demand.

How to Respond:

Verify the DIN on the e‑filing portal’s homepage under ‘Authenticate Notice/Order’.
Identify the specific sub‑section invoked (131(1) or 131(1A)). Determine the documents requested, the questions asked, and the deadline for compliance. The notice will specify whether you need to appear in person or submit documents electronically.
Gather relevant documents. Common requests include: bank statements for the relevant period, account opening forms and KYC documents, source of funds proof for deposits, investment and loan papers, business ledgers and vouchers, invoices and receipts. Do not produce documents that are not requested. Over‑disclosure can lead to expanded scrutiny.
Consult a CA or tax lawyer. Do not attend a summons alone. You have the right to legal representation. The assessee can seek legal assistance and be represented by a professional or legal counsel. A CA can review the notice, advise on your rights, prepare you for questioning, and accompany you during the appearance.
Respond online or appear in person if the summons requires. Bring all requested documents and your authorised representative.
If you cannot meet the deadline, request an extension in writing before the due date. The AO has discretion to grant reasonable extensions.

Summary Comparison Table — All 7 Notice Types

Notice Type	Trigger	Response Window	Key Risk if Ignored
143(1):Intimation after ITR processing	Automated CPC processing of return	30 days (for demand)	Interest on unpaid demand; recovery proceedings
143(2)”Scrutiny assessment	Risk-based or CASS selection	As per AO’s schedule	Ex-parte assessment; adverse order
148Income escaped assessment	Undisclosed/under-reported income in prior years	7–30 days (for 148A); as per AO thereafter	Reassessment with penalty; prosecution in severe cases
139(9): Defective return	Incomplete/incorrect ITR	15 days	Return treated as invalid; penalty under 271F
245:Refund set-off against demand	Outstanding demand in prior AY	30 days to object	Refund adjusted without your input
156:Tax demand notice	Post-assessment tax/penalty dues	30 days to pay	Recovery action; 1% per month interest on arrears
131: Summons for information	Investigation or detailed verification	As specified in summons	Penalty; prosecution for non-compliance

FAQs on Types of Income Tax Notices

1. Can I receive multiple income tax notices at the same time?

Yes. Multiple notices under different sections can be active simultaneously. For example, you could receive an intimation under section 143(1) for one assessment year while a scrutiny notice under section 143(2) is pending for another. Each notice is independent and needs a separate response.

2. How do I know if an income tax notice is genuine?

All legitimate notices from the Income Tax Department are available on the e-filing portal under “e-Proceedings” or “Pending Actions.” If you receive a notice by email, cross-verify it on the portal before responding. Notices are also issued with a DIN. A notice without a DIN (except in certain emergency situations explicitly allowed by CBDT) is not valid.

3. What happens if I miss the response deadline for a scrutiny notice?

If you do not respond to a section 143(2) notice or comply with the AO’s requirements, the AO can complete the assessment ex parte, i.e., without your input, based on available information. This almost always results in an unfavorable assessment order with additional tax demand.

4. Do I need a CA to respond to every income tax notice?

Not necessarily. A routine section 143(1) intimation with a minor mismatch can often be resolved by the taxpayer directly on the portal. However, for section 143(2) scrutiny notices, section 148 reassessments, and section 131 summons, professional representation is strongly advised.

5. What is the best way to avoid income tax notices?

File your returns accurately and on time. Ensure your TDS claims match Form 26AS and AIS before filing. Report all income even if it falls below the exemption threshold. Respond to AIS discrepancies through the portal before filing your ITR. Maintaining clean documentation throughout the year is far less stressful than dealing with notices after the fact.