Once an Income Tax Return (ITR) is submitted, the Centralised Processing Centre (CPC) conducts preliminary checks comparing reported details against internal data (including Form 26AS, AIS, and TIS). Receiving a post-filing communication is a routine operational procedure, but understanding the type of notice received is crucial to taking timely and accurate action.
Key Tax Notices & Timelines
| Notice Type | Section | Triggers / Reasons | Required Action | Action Timeline |
| Intimation / Tax Demand | Section 143(1) | Mismatch in reported income, incorrect TDS credit, or disallowed deduction. | Pay outstanding tax or submit online response (rectification/revised return). | Within 30 days of service |
| Defective Return | Section 139(9) | Incomplete information, missing schedules, or invalid ITR form selection. | Submit a corrected return through the e-Filing portal. | 15 days from receipt |
| Inquiry Notice | Section 142(1) | Seeking missing documents, clarification, or proof of specific transactions. | Upload requested documents/proofs on the portal. | As specified in the notice |
| Scrutiny Notice | Section 143(2) | Selection of the return for detailed audit/examination by the tax officer. | Complete response to detailed questionnaire via e-Proceedings. | As specified in the notice |
Action Plan: How to Handle a Section 143(1) Tax Demand
If the Section 143(1) intimation shows an additional tax demand, taxpayers have 30 days to respond on the portal before recovery proceedings or interest levies commence.
Step 1: Pinpoint the Discrepancy
Check Column A (As reported by Taxpayer) against Column B (As computed by CPC) in the intimation to identify the cause:
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TDS Mismatch: Employer or deductor entered an incorrect PAN or filed quarterly TDS returns late.
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Unreported Income: Omission of bank fixed deposit (FD) interest or dividend income reflected in the Annual Information Statement (AIS).
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Tax Calculation/Clerical Error: Math error, wrong tax regime selection, or improper claim under chapter VI-A deductions.
Step 2: Choose the Correct Statutory Remedy
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Pay the outstanding amount using e-Pay Tax on the e-filing portal (Select Type of Payment: Tax on Regular Assessment – Code 400).
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Submit the transaction reference/challan details under
Pending Actions > Response to Outstanding Demand.
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If the Demand is Due to a CPC/System Error:
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Do not pay the demand simply to clear the alert.
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Go to
Services > Rectificationand file a request under Section 154 for mistakes apparent from the record (e.g., system failed to grant TDS credit that exists in Form 26AS).
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If the Demand is Due to a Taxpayer Error or Omission:
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If the statutory window remains open, submit a Revised Return correcting the missing details or omitted income streams.
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Risks of Ignoring Tax Notices
Consequences of Non-Compliance:
Failing to respond to a valid Section 143(1) tax demand within 30 days can result in the taxpayer being declared an “assessee in default”. This triggers simple interest at 1% per month under statutory provisions, auto-adjustment against future tax refunds, or administrative recovery proceedings.
