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;
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)
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;
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.
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(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post published post date : 16-April-2016)
This post was last modified on July 11, 2023 11:16 am
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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.
Sir, IT Department asking to me for non filing income tax. our client did not receive any notice for non filing income tax notice and her gross total income is below the applicable basic exemption limit so what should i reply to IT Department.
Sir.
I have received notice from income tax department for non filing of income tax return for Ay 15-16.Now under which section i should file my return .
Dear Sam .. It can be Belated Return- u/s 139(4). But I believe one can not file ITR for FY 2014-15 now.
Kindly take advice from CA and respond to the notice at the earliest.
Sam you could file ITR before 31st march 2017 for F.Y.2014-15. now you can't file. visit to IT Department for Suggest what to do.
Hi, I had not not filed my ITR return for AY 15-16 and received letter from IT dept. I am being asked to reply on compliance module in e-file portal. I have taxable income on which tax was deducted but there is no tax liability. I tried uploading my return now but i am getting the message - "due date for filing is over".
How do I reply to them? Can I select & submit the option - "return not filed"?
Dear Jyoti,
You may reply by selecting the option - ' No taxable income' under ' Filing of ITR' (as mentioned in the above article).
Dear Sreekanth,
I also have received the same notice from AO of IT regarding the ITR of 15-16.
I have paid the taxes promptly for the aforementioned year.
What should I do now..?? responding it like "no taxable income" may violate the term of tax payment.
Dear Shrikant ..You may submit your grievance asking for more details on this notice via e-Nivaran portal.
Else, you may consult a CA and take advice in person, as without going through the docs it is not advisable to suggest anything on this matter.
Hi
Sreekanth i have a doubt recently i registered in efiling website to know my pan details . after that i came to know that only the persons who earns the money needs to register in the website . now, will ITD treat me as a person with tax liabilities and sends a notice? plz let me know if you can.
Dear Srinivas..Kindly do not worry.
Read: Do I need to file ITR?
Hi Srikanth,
Thanks for such an informative article.
Request you to please answer my query:
In 2014 Jan I have sold a plot Rs 9.79 L and deposited in bank as FD in different bank, Total amount of LTG and FD interest is below taxable income So I did not file Return for that year in this situation I got a notice from Income Tax Department about non-filing of returns. When I checked under the compliance section in Income tax website, they have asked for below information:
1.2014-15- CIB-403 Time Deposit exceeding Rs. 2, 00,000 Banking Company.
2.2014-15-TDS-194A TDS Return-Other interest (section 194A)
And I also checked in Form 26AS is Provided BY TRACES for the FY 2015-16 is also got TDS entry, these income also below taxable income (Presently I am jobless past 4 yrs, and running my family with these interest and my wife salary) in these situation how to avoid get same notice again from IT dept for the year of FY 2015-16.
Could you please advise me what should be done here?
Thanks in advance for your assistance!
Dear Gopi,
Based on the inputs given here, you may select option 'Self & Income from transaction is below taxable limit'.
You may also consult a CA and respond to the notice.