Quick answerRespond to every income tax notice within the time it gives, through the e-proceedings section of the e-filing portal, with a reasoned reply and supporting documents. If the assessment still goes against you, appeal to the Commissioner (Appeals), then the Income Tax Appellate Tribunal, and on questions of law to the High Court. The Income-tax Act 2025 applies from 1 April 2026, but assessments and reassessments for earlier years largely continue under the Income-tax Act 1961, so the correct law must be identified first.
- Law
- Income-tax Act 2025; 1961 Act for earlier years
- Assessment
- Mostly faceless, online
- First appeal
- CIT(A), within 30 days
- Second appeal
- ITAT, within 2 months
The Income-tax Act 2025 and older years
The Income-tax Act 2025 replaced the Income-tax Act 1961 from 1 April 2026. It uses a single "tax year" in place of the old previous year and assessment year, and it renumbers and regroups most provisions. The substance of assessment, reassessment, penalty and appeal is broadly carried forward.
Proceedings relating to earlier years, including scrutiny of returns filed under the 1961 Act and reassessment of those years, are generally governed by the 1961 Act through the savings provisions. Many notices issued in 2026 therefore still cite the old section numbers, such as Section 143(2) for scrutiny or Section 148 for reassessment. Because the section numbers have changed, we read each notice to confirm which Act and which provision it is issued under before replying, rather than relying on familiar numbers.
Common income tax notices and what they mean
| Notice (as commonly known) | What it means | What to do |
|---|
| Intimation after processing (old 143(1)) | A computational adjustment or mismatch with AIS or Form 26AS | Check the mismatch; file a rectification or response online |
| Defective return notice (old 139(9)) | The return is incomplete or inconsistent | Correct within the time allowed or the return may be treated as invalid |
| Scrutiny assessment notice (old 143(2) and 142(1)) | The return is selected for detailed examination | Reply to each query with documents; request a video hearing if needed |
| Reassessment notice and show cause before it (old 148A and 148) | The officer believes income has escaped assessment | Reply to the show cause with objections on time limit and merits |
| Notice of demand (old 156) | Tax, interest or penalty is payable | Pay, or appeal and apply for stay |
| Information or summons (old 133(6) and 131) | Information is sought, often about high-value transactions | Provide accurate information; take advice before giving statements |
Notices are served by email and on the portal. Check the e-proceedings tab regularly: a notice is treated as served even if you did not open the email.
Scrutiny and faceless assessment
Most scrutiny assessments are now faceless: the case is allotted to an assessment unit through the National Faceless Assessment Centre, all communication is online, and the taxpayer never meets the officer. Before an adverse order, a show cause notice with the proposed additions must be issued, and the taxpayer can ask for a personal hearing by video conference.
Good replies are specific. For cash deposits, we show the source with bank trails and books; for unexplained credits, we prove the identity and creditworthiness of the lender and the genuineness of the transaction; for capital gains, we establish cost, holding period and exemptions. Vague replies and documents uploaded without explanation are the most common reason additions are confirmed.
Reassessment has strict time limits. Under the 1961 Act as amended from 1 September 2024, a notice can ordinarily be issued within three years from the end of the relevant assessment year, and up to five years only where the income escaping assessment is ₹50 lakh or more. A notice issued beyond these limits, or without following the show cause procedure, can be challenged.
Appeals: CIT(A), ITAT, High Court
| Forum | Time limit | Scope |
|---|
| Commissioner (Appeals) or Joint Commissioner (Appeals) | 30 days from the order or demand | Facts and law; can enhance as well as reduce |
| Income Tax Appellate Tribunal (ITAT) | 2 months from the appellate order | Final fact-finding authority |
| High Court | 120 days | Substantial questions of law only |
| Supreme Court | By special leave | Questions of law |
The first appeal is filed online with a small fee that depends on the assessed income. Delay can be condoned for sufficient cause, but should be avoided. Additional evidence at the appellate stage is admitted only in limited circumstances, so the record built during assessment matters.
Stay of demand. Filing an appeal does not stop recovery. Under CBDT instructions the officer ordinarily grants stay on payment of 20% of the disputed demand, and can accept less in suitable cases. We apply for stay at the same time as the appeal.
Penalty, prosecution and search
Penalty. For under-reported income the penalty is 50% of the tax on it, rising to 200% where the under-reporting is due to misreporting, such as suppressed facts or false entries. Immunity from penalty and prosecution can be sought in some cases by accepting the assessment and paying the tax, provided no appeal is filed. A penalty notice should be answered on its own terms, even if the addition is under appeal.
Prosecution. Wilful attempt to evade tax, failure to file returns, and failure to deposit TDS deducted can lead to prosecution before a special court. Many such offences can be compounded under CBDT guidelines on payment of compounding charges. We reply to prosecution show cause notices and handle compounding applications.
Search and survey. During a search, statements are recorded on oath and assets may be seized. A statement made under pressure can be retracted, but only promptly and with reasons. Searches lead to a separate block assessment, and we handle the explanation of seized material, the assessment and the appeals.
Mistakes that turn small notices into large demands
- Not checking the portal, so the reply deadline passes and a best judgment assessment follows.
- Filing an updated or revised return in response to a notice without considering its effect on the proceedings.
- Replying without reconciling the AIS, Form 26AS and books first.
- Missing the 30-day appeal window and then struggling to get delay condoned.
- Ignoring a demand during appeal instead of seeking a stay.
For routine compliance, see our income tax return filing and business tax filing services.
How our fees are worked out
Government fees in income tax matters are limited to the appeal fee, which is small and depends on the assessed income. Our professional fee depends on the type of proceeding (a mismatch response, a scrutiny assessment, a reassessment, a penalty or an appeal), the number of issues and the volume of records to be reconciled. We quote a fixed fee for each stage in writing after reading the notice, so you know the cost before we file anything.
Documents you need
Bring the notice and the return it relates to, and anything that explains the transactions in question.
- The notice or order received, with the DIN
- Income tax return and computation for the year
- AIS, TIS and Form 26AS for the year
- Bank statements for the accounts in question
- Books of account, invoices and agreements relevant to the issue
- Property or investment purchase and sale documents
- Earlier replies, orders and appeals for the same year
- E-filing portal login or authorisation for us to act
How we handle it for you
Read the notice
We identify the Act, the provision, the issue and the deadline, and tell you the real exposure.
Collect and reconcile
We reconcile your return with AIS, Form 26AS and bank records before drafting.
Reply or represent
We file a reasoned reply online and attend video hearings where needed.
Appeal and stay
If the order is adverse, we file the appeal and stay application within time.
Follow through
We pursue the matter before the ITAT and, on questions of law, the High Court.
Why clients choose ProudLegal
Advocates who appear in courtYour matter is drafted and argued by enrolled advocates, not call-centre staff.
Company and tax filings in-houseCompany secretaries and tax professionals handle registrations and returns.
Fees agreed in writingYou receive a written fee quote before any work begins.
Updates on WhatsApp and emailEvery hearing date, filing and document is shared as it happens.
Please note: this page explains the law and procedure in general terms as on 30 October 2026. Fees, limits and timelines change, and the facts of each case matter, so take advice on your own papers before acting.
Frequently asked questions
What should I do if I receive an income tax notice?
Read the notice for the section, the issue and the deadline, log in to the e-filing portal's e-proceedings tab, and file a reasoned reply with documents before the due date.
Does the Income-tax Act 2025 apply to my old notice?
The 2025 Act applies from 1 April 2026. Proceedings for earlier years generally continue under the 1961 Act, so old section numbers may still appear in notices.
How many years back can the tax department reopen my case?
Under the 1961 Act as amended from September 2024, ordinarily three years from the end of the assessment year, and up to five years where escaped income is ₹50 lakh or more.
What is a faceless assessment?
An assessment conducted entirely online through the National Faceless Assessment Centre, without personal contact with the officer, with a right to request a video hearing.
What is the time limit to appeal against an assessment order?
Thirty days to the Commissioner (Appeals) and two months from that order to the ITAT.
Do I have to pay the demand while my appeal is pending?
Unless stay is granted, yes. The officer ordinarily grants stay on payment of 20% of the disputed demand.
What is the penalty for under-reporting income?
50% of the tax on the under-reported income, and 200% where the under-reporting is because of misreporting.
Can an income tax prosecution be compounded?
Many offences can be compounded under CBDT guidelines by applying and paying compounding charges, subject to conditions.
