Income Tax Return Filing is one of the most important aspects of personal finance management. If your gross total income (before allowing any deductions under section 80C to 80U) exceeds the basic exemption limits as prescribed by the Income Tax Department, you have to mandatorily file your Income Tax Return for that Financial Year (or Assessment Year).
Non-filing of ITR may attract penalties and also has severe consequences.
What if you have genuine reason(s) for not filing your income taxes? You might have quit your job and started your own business and assuming there is no taxable income in the first year , and you do not file taxes. How IT department considers these kind of non-filing cases?
Let me explain to you my own real-life experience. I was employed in the Information Technology (IT) industry till 2009-10 and filed my Income Tax Returns every year. In 2010 I had quit my job to pursue CFP (Certified Financial Planner) course full-time and also to start my own consultancy firm ReLakhs Financial Services.
In the Financial Year 2010-11 (AY 2011-12), I did not file my Income Tax Return as my gross total income was below the applicable basic exemption limit. But, during that FY, I had booked few Time Deposits (FDs) out of my previous year’s savings and also there were some TDS entries in my Form 26AS towards ‘Interest on Securities’.
As I did not file my Tax Return, I had received ‘non-filing of Income Tax Return Notice’ from the IT department. This is a compliance notice asking me to furnish information/reasons for not filing my ITR. They had also enclosed annexure with the information on my time-deposits (FDs).
Like-wise, there can be genuine reasons for not filing your taxes but you may end-up receiving compliance notice from the Department.
Latest update (22-Jan-2019) : The Income Tax Dept has identified several potential non-filers who have carried-out high value transactions in Financial Year 2017-18 but have still not filed Income Tax Return for Assessment Year 2018-19 (relating to FY 2017-18). The Department has now enabled e-verification of these NMS cases to reduce the compliance cost for taxpayers by soliciting their response online. Non-filers are requested to assess their tax liability for AY 2018-19 and file the Income Tax Returns (ITR) or submit online response within 21 days.
In this post let’s discuss – What is non-filing of income tax return notice? How to respond to non-filing of income tax return notice? How to handle notice from the Income Tax Department for non-filing of ITR? How to check the status of your response online?
Non-Filing Monitoring System
The Non-filers Monitoring System (NMS) is a pilot project which has been initiated by the Tax Department to prioritize action on non-filers with potential tax liabilities.
The IT dept carries out ‘data analysis’ to identify non-filers about whom specific information is available through various sources such as;
- Annual Information Return (AIR) (High Value Financial Transactions information report. Read : How Tax dept tracks High Value Financial Transactions?)
- Centralized Information Branch (CIB)
- TDS/TCS Statements etc. (Read: What is Form 26AS?)
Through NMS around 12.19 lakh, 22.09 lakh and 44.07 Lakh non-filers with potential tax liabilities have been identified in 2013, 2014 & 2015 respectively..
The identified non-filers are informed by SMS, e-mails and letters. The below image is the letter received by one of my friends for non-filing of income tax return. (Click on the images to open them in new browser windows)
How to reply to non-filing of Income Tax Return Notice AY 2019-20?
In most of the cases, the IT department sends notices by emails or by SMS. You can respond to the notice through your income tax e-Filing Account. There is no need of personal presence in this matter.
Below are the step by step guidelines on how to respond to the notice;
- Login to your e-Filing account at incometaxindiaefiling.gov.in with your user name and password. If you do not have a login id password, you may have to register yourself first.
- Click on ‘Compliance Menu Tab’. Here you can view information about your non-filing status.
- Click on ‘View and Submit Compliance’ to submit your response to the non-filing compliance notice. (You can find another option ‘view my submission’. If you have already submitted your response, you can click on this option to view it)
- You can find three options i) e-Sahyog, ii) Filing of Income Tax Return & iii) Related information summary.
- If you have already filed your ITR and if the IT dept sent you a notice regarding any mis-matches then you need to provide information by clicking on e-Sahyog. This tab may not applicable for non-filing cases. (Read: Everything you would like to know about e-Sahyog online facility)
- Click on ‘Filing of Income Tax Return’ to update your ‘response’ & ‘reason’ for not filing your income tax return for a specific Assessment Year.
- Response can be either ‘you have filed ITR’ after receiving the notice (or) ‘ITR has not been filed’.
- Reason can be, i) Return under preparation, ii) Business has been closed, iii) No Taxable income & iv) others
- The third tab ‘related information summary’ will have details about the third-party information received by the tax department. For example : You might have booked Fixed Deposits with your banker and they would have deducted TDS on them. So, you need to mention whether this information relates to ‘self’ and the source of such income/expenditure (reason). Another example can be, you would have received ‘Gift’ in cash mode and invested in Shares. These reasons can be as below;
- Self & Investment/ expenditure is out of exempt income
- Self & Investment/ expenditure is out of accumulated savings
- Self & Investment/ expenditure is out of gifts/ loans from others
- Self & Investment/ expenditure is out of foreign income
- Self & Income from transaction is exempt
- Self & Income from transaction is below taxable limit
- Self & Income from transaction relate to different Assessment Year
- Self & Not Known
- Other PAN (This option is to be selected if the third party information relate to another taxpayer. In this case, the PAN of such other taxpayer is to be mandatorily provided.)
- Not Known (This option is to be selected if the taxpayer has no information about the third party information.)
- Need more information
- After providing all the required details, you can click on ‘submit’ button.
- You will receive an acknowledgement number for the submitted response.
- You can view the status of your response by clicking on ‘compliance tab’ and then on ‘view my submission’.
- Click on the ‘compliance Ack Number’ link to know the status of your response. You can click on ‘response pdf’ to download your response as a PDF file. The response submitted online by you (taxpayer) will be verified by the ITD (Income Tax Department) and if found satisfactory, the case will be closed.
Conclusion
If you make a huge or high-value financial transactions there are chances of getting a notice for non-Filing of Income Tax Return from the compliance Management cell. It doesn’t necessarily mean that income tax department is looking at you as a tax evader.
You may be an NRI (with no taxable income in India) invested huge money in a property located in India and you may end up in getting a notice for non-filing of return.
Kindly note that if there is no taxable income then there is no need to pay tax (or) file income tax return. You are only requested to furnish your response in the compliance module on the e-filing income tax portal. You can respond to the notice online. The entire procedure is very simple.
In case if you have to respond to the notice by post, you can enclose document proofs (if any) to support/justify your response. If you do not submit your response within the prescribed time-limit, your case might be transferred to the concerned Assessing Officer (AO). He/she may take up your case for scrutiny.
If you consider your case as a complex one, kindly consult a Chartered Accountant.
I hope you find this post useful & informative. Kindly share your comments.
Continue reading :
- How Income Tax Dept tracks the High Value Financial Transactions?
- Income Tax Dept’s latest Helpline Numbers
- How to check Income Tax Refund Status – FY 2017-18 (AY 2018-19)?
(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post published post date : 16-April-2016)
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Hi ,
I just want to know when option of ” Other PAN ” would be used.
In case share trading is done in wife account using her PAN but source of funds are from husband account then in such cases OTHER PAN should be used mentioning husband PAN or does this option is used for some other purpose.
Dear Asheet,
If one gifts amount (without any consideration) to spouse (wife) then any taxable income realized from such amount is added to husband’s income (PAN) only.
Yes I understand that ,My query is in respect to “Other PAN” option ,in this case Husband PAN should be mentioned under this option while replying to income tax authorities by wife.
Is this correct.
Dear Asheet,
Yes.
“This option is to be selected if the third party information relate to another taxpayer. In this case, the PAN of such other taxpayer is to be mandatorily provided.”
You may also consult a CA in this regard!
Hi Srikanth,
Thanks for such an informative article.
I Request you to please answer my query:
Today I have received msg from IT Department for not filing of ITR for FY 2018-19.
In 2017 may I have sold an ancestors property for Rs 28 L and deposited in bank as FD and and also purchased a plot on 2018 Jan for 14 L.(Presently I am jobless for past 6 yrs, and running my family with interest and my wife salary) I have never filed the return because my net taxable income never exceeded taxable threshold limit.
So my question is do i need to file taxes for FY-2017-2018? or I can select “Not liable to file return of income”.
Could you please advise me what should I do !
Thanks in advance for your assistance!
Hello Mr. Reddy,
I have received a non filing if it return – reg. Notice from the IT dept for the assessment year 2013 -14. I was not working in the FY 2012-13. However, me and my husband received the possession of a joint property in this period. My husband has declared the same in his IT return.
I tried to clarify this via the compliance portal, however it says no compliance records are created for you.
Kindly help as to what I can do regarding this.
Best regards,
Aarti
Dear Aarti,
You may kindly reply by post as given in the notice letter.
You may take help of a CA..
Hi Mr. Reddy,
Thank you for descriptive post, it very well explains the reason for getting the compliance notice. But I have a doubt as the compliance portal has changed. Here is my husbands case –
We are non-resident Indians and my husband received notice for FY-2016-2017 and FY-2017-2018.
His account did have a FD, TDS was deducted at source(bank) but income/interest earned was less than 2.5 lakhs so he does not need to file taxes.
What option we need to select on e-verification tab?
First is – ITR has been filed / ITR has not been filed.
If we select ITR has not been filed, second option under reason is – Under preparation /Not liable to file return of income.
So my question is does he need to file taxes for FY-2016-2017? or he can select “Not liable to file return of income”.
FY-2017-2018, he filed.
Thank you again!
Dear Nidhi,
Based on the provided info, I believe that he can select “Not liable to file return of income” option.
But, suggest you to kindly consult a CA as well (for an in-person verification of the documents).
Related articles:
* Do I need to file my Income Tax Return?
* What is Double Taxation Avoidance Agreement (DTAA)? | Is Income earned outside India Taxable?
Thank you Mr. Reddy,
Can your financial services assist us in this? How do I get in touch?
BTW, I have a become a fan of your blog and read so many articles. You are doing a good job!
Dear Nidhi,
I used to offer one to one Fin planning service, but recently stopped providing it.
Glad to know that you find my blog posts informative.
Kindly read :
*My List of popular Fee-only Financial Planners (Part-1) | Based on my interactions & observations
* My List of popular Fee-only Financial Planners in India (Part-2) | Based on my interactions & observations
Hi, what is the time duration taken by IT Dept. to close an e-verification.
Dear Rishabh,
Are you referring to ITR processing?
It depends on the type of ITR form as well.. and there is no defined Turn-around Time for this.
This time my ITR (3) has been processed in this month, was filed in Jul 2019.
Hi Sreekanth, thanks for your reply. I was asking for e-verification enquiry which was raised by ITD for non-filing of ITR. I have given the response on 1st Feb 2019 & wanted to know in how much time the ITD closes the verification.
Dear Rishabh,
Did you file your ITR (belated return) in response to the non-filing notice? and e-verified it…
If so, you may have to wait for sometime till they process it..
Thanks Sreekanth. My experience was that I did not see e-sahyog but used your website for hints on how to proceed. For whatever reason the e verification response sheet I got showed 2 large ticket transactions that I did not even make. After panic calls to TRACES I put in a complaint. Even TRACES had no idea what I was talking about. But your website helped me. Digital input was supposed to simplify things Sreekanth but I found it so complex. And their bot is not helpful and says she cannot understand me. Thanks to you I managed to help myself.
Dear Srikant, I am a senior citizen (64 yrs) and pensioner. Today I have received SMS from IT Dept. asking reasons for non submission of IT return for FY 2017-18. My yearly pension is around 3.80 lacs and I have invested around 1.00 in tax saving 5 year bank deposits during Mar 18. As I felt there is no tax liability, ITR has not been submitted. It is likely that some of my time deposits with bank are matured during this period & bank might have credited this to my savings a/c before reinvesting them in time deposits. Except this, I do not have any high value transactions. All these deposits are credited and again debited to my savings a/c for reinvestment. I donot know whether this has been the base for SMS from IT dept.
I am staying in a small town in AP. where CAs or ITPs are not available for getting clarification. I sincerely request you to guide me in this matter at the earliest, as I have to respond within 21 days.
Thanking you, RANGACHARY.
Dear Rangachary ji,
Suggest you to file your ITR before 31 March 2019 eventhough your tax liability is NIL.
You may take help of online Tax filing websites.
Related articles :
* Do I need to file my Income Tax Return?
* How many Previous Years’ Income Tax Returns can be filed after Due date?
Dear Shrikant its really very useful website , thanks for helping and providing guideline to people.
I have one query , Under AIR ,CIB and TDS my mother received notice for assesment year 2014-15. actaully they have group of ladies of middle class and poor families and they run mahila bachat gat , So my mother and other lady they have account in co operative bank and they did all the transactions of that group using that joint saving account , they always paid money to all group members by cheque however they deposited initial amount every month by cash. So please guide in such case how to answer that notice , we have bank statements and bachat gat register where all past entries and signature of all members.
Thanks in adavance for your guidence
Regards
Sandeep
Dear Sandeep,
Thank you for your appreciation!
Suggest you to consult a CA in this regard. He/she will guide you in replying to the notice to the IT Dept, with necessary documentary evidences.
Thanks Sreekant ji.
Halo Sir
I’ve received a notice from IT department for NON FILING OF IT RETURN FOR THE FY 2014-15, AY 2015-16. I am 30 years old. I received 10 lacs as gift from my father via NEFT/RTGS/Cheque in my account. He is a retired person and a pensioner. The money is a part of his savings/pension. The money I received was converted in a FD in the year mentioned above and in that year, the total amount of interest, which I earned equalled to about 2,83,000/. And, in that year, my 80C savings is equal to 42000/- which makes my net taxable income below the threshhold limit of 2,50,000/-, and thus I did not file my return.
The FD is in the joint name and I am the FIRST HOLDER.
Now, I received the notice. Can I file the IT return now or shud I simply reply on e-filing portal as discussed by you above. Can I/Should I apply for CONDONATION OF DELAY ?
Please guide me and suggest me the most appropriate solution.
Your prompt reply will be highly appreciated.
Dear Neeraj,
As you have received a Gift from your father that too through a non-cash mode, I believe that you can just reply to the compliance notice indicating ‘Self & Investment/ expenditure is out of exempt income’ by providing the necessary details in Remarks.
Suggest you to kindly consult a CA as well.
Related article : Got a Gift? Find out, if it is Taxable or Tax-free?
Dear Sreekanth,
My father invested part of his pension money which he received when he retired as a FD in the year 2014 October month. The amount was around 12 lakhs. That money is not a taxable income in his hands(to my understanding), also the gift given to wife is an exempt income only the interest earned on it is taxable. Now my mother received an email from IT department asking to file return for AY15-16 before march 31st which I missed. Kindly suggest a remedy
Dear Varun,
Kindly note that the interest income on FDs is a taxable income. (or) his total income is below basic exemption limit??
Yes, gift given to spouse is a tax-free transaction, however any income earned by the receiver of gift is clubbed to the income of giver of the gift.
Kindly read : Got a Gift? Find out, if it is Taxable or Tax-free?
Your mother can reply to the notice as – Self & Investment/ expenditure is out of gifts/ loans from others
Suggest you to kindly consult a CA and then reply to the notice.
Many thanks for the prompt reply
I have received notice for my mother who sell house for 45 lk and then distribut money to 4 sons within 19 days. Is she eligible for income tax.. how much would be panality
Dear Rishi,
We need to calculate the capital gains on the Sale transaction and accordingly she may have to pay taxes (if any).
Kindly read : How to calculate Capital gains on sale of property?
The distribution of proceeds to her sons can be considered as Gifts and are tax-exempt.
Kindly read : Gifts & Income tax implications..
Hi,
I got a letter from Income Tax under a subject ‘Non Filing of Income Tax Returns for the Assessment Year 2015-2016’ and I should respond through Compliance in efiling site. I just checked the ITR filing status for the year they mentioned. It says ‘Return Uploaded'(But not ITR-V processed, Is it because the hard copy of ITR copy did not reach them?) and I could see the date of filing and an acknowledgement number as well. I tried to see how to submit a compliance in IncomeTaxefiling site(If required), under Compliance Menu. It says ‘No Compliance record relating to filing of return is pending in your case’.It would be very helpful if you help me resolve this issue. Please respond as soon as possible.
Thanks and Regards,
Manikandan K
Dear Manikandan,
Looks like, if you just send the signed physical copy of the relevant ITR-V to bangalore address by post will suffice.
You may also submit your grievance through e-Nivaran portal, the IT dept will guide you on this..
Sir ji mere father ne 2014 me house sell karke plot liya tha .unki 2014 me death ho gayi.ab unke naam CIB 403 or CIB 410 Ka notice aaya h.unhone kabhi return nahi bhari.ab return bhari Ka Sakti h ya nahi.please reply soon
Dear Keval,
Kindly consult a Chartered Accountant.
Read : How to file Income tax return of a Deceased person?
Greeting of the day,
Thanks for the information provided. I got the notice for TDS-194A description TDS return-other interest.
as I’m retired Army personnel. What reason should I put while filling compliance. As Fixed Deposit were in the name of my wife (the letter I got was referred to my wife only). which option is more appropriate.
Self & Investment/ expenditure is out of exempt income
Self & Investment/ expenditure is out of accumulated savings
Self & Investment/ expenditure is out of gifts/ loans from others
Self & Investment/ expenditure is out of foreign income
Self & Income from transaction is exempt
Self & Income from transaction is below taxable limit
Self & Income from transaction relate to different Assessment Year
Self & Not Known
Thanks for your early anticipation.
regards
Dear Abhishek Ji,
Without having full details, its tough to advice on this matter.
Suggest you to kindly consult a CA in person and take advice.
Sir,
I did not filed my Return of FY 2014-15 & the income was taxable. now i have received the notice for non filing of IT Return & i am ready to pay the tax & penalty. please tell me what respond i should submit online & how to pay my tax .
The due date for filing of IT Return is over for FY 2014-15. can i file my return any other way or how to closed this issue.
Dear SAURABH ..Based on the notice, you can file ITR for FY 214-15 now. Suggest you to consult a CA and file your tax return at the earliest.