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 transferd the money through western union in 2010-2013 from uk ,on my returm from uk my father given the amount Rs.750000/- approx as Rd to my name . This year, I received notice for more than 10 lacs deposit in saving account. What option I should choose from the following for information code AIR-001 & My present income is About Rs 150000 per year:
Options: 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 income,
Self – Income from transaction relate to different AY,
Self – Not known,
Other PAN,
Not Known,
Dear SUSHIL,
Self – Investment/expenditure is out of foreign income , can be the right choice.
But, kindly consult a CA and take advice.
Hi Mr. Sreekanth
Today I got a a letter from IT Dept for filing Compliance on CODE EXC001. So farI'm not a tax payer and not submitting ITR. During 2014-15 might have done the transaction related to the construction of my new house. So please let me know what option t be made in Compliance Report.
Dear Sreekumar,
Without having complete details, not advisable to suggest you anything on this. Kindly consult a CA in person and take advice.
Thanks for such an informative article. Request you to please answer my query :
I am selfemployed . I received 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:
2014-15 AIR-001 Deposited Cash of Rs. 10,00,000 or more in a Saving Bank Account
Could you please advise what should be done here?
Can I reply for point by choosing the option “Need More Information”?
Thanks in advance for your assistance!
Dear Raja,
You are the right person to provide details on Rs 10 Lakh deposit, so kindly select the option which is applicable as per your profile.
Hi Sreekanth,
My father got a non filling of ITR from compliance cell with below information on third party tab
CIB-403: Investment in Fixed Deposit/Time Deposit exceeding Rs. 2,00,000/- for FY 2014-15.
Back ground :
My father and my brother ( who works in US ) has a joint account in India and my father is primary holder and had taken a FD exceeding 2,00,000 from the money sent by my brother which are tax paid at source in US ( salaried employee). And my fathers income is below tax exemption limit so he didnt not file ITR.
iam planning to put below response..
1. Filing on ITR tab:
Response : ITR has not been filed
Reason : No Taxable income
Remarks : this is a joint account between me and my son who is a salaried employee in US and for the transactions happened in this account the tax has been paid at source with US tax number XXXX.
2. Related information summary tab
information relates to : Self & Investment/ expenditure is out of foreign income
please suggest if my response is ok or any changes required to be done .
quick reply would be appreciated, thanks in advance.
Dear Sravan,
1st point is fine.
2nd point : Related info tab:
It is not your father's foreign income, am I right? So, this may lead to some other conclusion..
Hey, I've directly credited my AdSense income in my mother and father accounts to reduce tax. Can I file itr of my mother with Itr 2 form showing income from other sources or should I opt for presumptive tax scheme for professionals .. Please help.
Dear Raghav,
It is your income, so you need to declare it as yours in your ITR.
However you may gift your income to your parents.
My father deposited 200000 money in cooperative society on my name and i got income department msg of information code CIB514,CIB 516.How to reply this please guide
Dear Reshu,
Are you a tax Assessee? Do you file ITR?
Probably you can select,'Self & Investment/ expenditure is out of gifts/ loans from others' option.
Thanks for replying,
My one question is that while filing compliance report i have not come related information tab and chose self for CIB 403 point but in response sheet it is showing self -not know should i resubmit or wait as it is my saving accumalted. I think this is why my case is not closed. Kindly guide me.
Dear Alka,
Without looking into the compliance notice, not advisable to comment on specific action items.
Suggest you to kindly use e-Nivaran help desk portal and check about the status of your Notice and the reason for not closing it by the IT dept.
Hi Sreekanth,
Thanks for such an informative article. Request you to please answer my query :
I am unemployed but have done investments in my name from my father's money and income generated from investment is below taxable limit. I received 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 2013-14 AIR-001 Deposited Cash of Rs. 10,00,000 or more in a Saving Bank Account
2 2013-14 TDS-194A TDS Return - Other Interest (Section 194A )
3 2014-15 AIR-003 Paid Rs. 2,00,000 or more for Purchase of Units of Mutual Fund
4 2014-15 CIB-183 Time deposit of Rs. 1,00,000/- and more
5 2014-15 EXC-001 Cash transactions exceeding Rs. 10,00,000/- in a month
6 2014-15 TDS-194A TDS Return - Other Interest (Section 194A )
I checked the transactions being done from my side but didn't come across any transaction related to Point 5. above with EXC -001.
Could you please advise what should be done here?
Can I reply for point 5. by choosing the option "Need More Information"?
Thanks in advance for your assistance!
Dear Chandan,
Advisable to consult a Chartered Accountant and take help to reply to this notice.
Query: I belongs to ST community form Assam (beyond 6th schedule area) and working in a PSU in Arunachal Pradesh and Exempt Tax U/s 10(26) . I received non-filing of Income Tax Return Notice for the Year 2015-16. Early myself was posted in ASSAM (beyond 6th schedule area) and paid tax as well as Return. How do I response in this case?
Neither I have paid tax nor filed Return as I am exempt from Exempt Tax U/s 10(26) of income tax Act 1961. Please
Dear Dheren,
If you have paid tax dues and also filed your income tax return for AY 2015-16, you may ignore the notice. Else, kindly take help of a Chartered Accountant.
Dear Dheren,
In such a case, You can select 'Self & Investment/ expenditure is out of exempt income' option.
Suggest you to consult a CA and get the notice checked.
Dear Sreekant Reddy,
I have received email for not filing of income tax return for A.Y.14-15 but i have filed the return and got the refund also. After that i received another email if filed kindly ignore the same.
I have also filed my compliance report on 25/03/2014 for A.Y.10-11 & 11-12 as my income was below taxable limit and submitted. Now in compliance view and submit option i can see only submitted the case is not closed what to do should i resubmit the same kindly help me. Transcation mentioned is TDS-92A for FY 2010-11
ii)CIB-403 for FY 2009-10 for time deposit exceeding Rs.200000 with a banking company
Please suggest me should i resubmit or not.
Dear Alka,
If you have already submitted your response to the compliance notice and if you believe that your response is correct, kindly wait and let the IT dept respond to it.
In my case too, I believe after 1.5 years they had closed the notice.
Thanks for replying,
My one question is that while filing compliance report i have not come related information tab and chose self for CIB 403 point but in response sheet it is showing self -not know should i resubmit or wait. I think this is why my case is not closed. Kindly guide me.