MP Resident Gets Rs 113 Crore Income Tax Notice: Here Why You Could Get One And What To Do

A resident of Madhya Pradesh, who earns about Rs. 53,000 a month was recently served with an income notice to pay Rs. 113 crore for alleged transactions in 2011-12.

The income tax department says that the man is a promoter of a diamond trading company, based on evidence. The man, on the other hand, says that other than his permanent account number (PAN) and photo, none of the other evidence so presented belongs to him. He is a victim of fraud, he says.

Apparently, this is not the first time that he has been served with a notice. Previously, he was served with a penalty notice of Rs 3.49 crore by the income tax department following which he made an appeal, which also caught the attention of the Prime Minister’s Office (PMO).

Even as the PMO and the Economic Offenses wing are still investigating his penalty notice of Rs. 3.49 crore, he has now been served with a new notice of Rs 113 crore, which has left him shocked.

The income tax department suspects that the Madhya Pradesh resident underreported his income.

The income tax department requires all individuals with taxable income to file their income tax returns (ITRs) on time. Some taxpayers may, however, receive an income tax notice despite filing their returns within the deadline. This does not necessarily imply any wrongdoing, but requires a prompt and proper response by the taxpayer.

So, here’s how you should respond if you get a notice from the income tax department.

How To Respond

As a first, you should verify the basics, such as your name, PAN, and the name of the officer who issued the notice.

To reply to the notice, log on to www.incometaxfiling.gov.in. Go to the income tax account under ‘My Account’, and click on the ‘Response to Outstanding Tax Demand’ tab. Then, select the correct assessment year, and click on ‘Submit’. You can either agree with the demand or disagree with it. Click on ‘View’ to check what you have submitted.

A non-compliance with a tax notice can result in interest, a penalty of Rs 10,000 for up to the total due, or prosecution for up to a year.

Reasons For Tax Notices

Here are some other instances for which you can get served with an income tax notice.

•  High-value transactions, such as large cash deposits, property purchases, and luxury items, could attract tax authorities’ attention if they are not reported on time.
• Incomplete documentation when filing ITR can also lead to an income tax notice. Taxpayers must attach all requisite documents in support of deductions and total income in a financial year. Late filing or non-filing of ITR will also result in an income tax notice.
• The notices you get can also be part of a random scrutiny. Therefore, if you have paid your taxes correctly and on time, there is no need to worry.
• The claiming of excessive deductions may also attract scrutiny from tax officials, which may lead to a notice