Categories: Tax Planning

How to reply to Non-Filing of Income Tax Return Notice?

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)

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 :

  1. How Income Tax Dept tracks the High Value Financial Transactions?
  2. Income Tax Dept’s latest Helpline Numbers
  3. 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)

This post was last modified on July 11, 2023 11:16 am

Sreekanth Reddy

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 14 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. The information provided, therefore, should not be viewed as financial, legal, accounting, tax or investment advice."

View Comments

  • Hi Sir, I have received email today that " As per our records, it is observed that you have not filed your Income Tax Return for Assessment Year 2015-16. Please submit your online response as under". But I have filed in returns and I can see the ITR filed also in the website. Do I just ignore this email?

    • Hi Sreekanth,Me too received same above message. I verified my ITR and also the year for which i received notice is not present in my compliance section. Please suggest the solution.

      • Dear Satish/Melwin/Sudheer,
        I have also received the compliance notice from NMS (Non-filers Monitoring System). And I do not see any compliance notice generated online.
        Mostly, this can be due to a technical glitch from the IT dept side. Let's wait for some more days to get more clarity or info.

          • Dear Friends,
            Today i have received an email from the IT dept as below;

            Dear Taxpayer,

            If you have already filed return for the Assessment Year 2015-16 (Income earned during the Financial Year 2014-15), kindly ignore the earlier mail on this issue.

            Regards,
            e-filing Team for Compliance Management Cell
            Income Tax Department

            So, if you have filed ITR and the same has been processed, you can ignore the Compliance related email (if any) that you might have received couple of days back.

  • Hello Sir,
    My mother is a housewife and she does not have any source of income. In 2006, she opened an FD account of around 1 lac using all her household savings and gifts received which she accumulated from many years.She never filed IT returns as FD interest was very less and below taxable income. On visiting ITR site today, she noticed that in “Pending Actions” Compliance Check link is showing.
    She has not received any email or SMS on registered id regarding the Compliance Notice.
    Response was asked for Non Filing of ITR for Assessment year 2014-15.
    In Related Information Summary:
    Information was asked for
    i)TDS-92A for FY 2013-14
    ii)CIB-403 for FY 2013-14 for time deposit exceeding Rs.200000 with a banking company
    When we checked Form26AS, the interest earned in 2013-14 is very less than taxable income. When we checked bank statements, we found that the FD opened in 2006 has crossed amount of 2 lac including interest earned in all these years.
    Could you please let me know on how to proceed. Which option should i select:
    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
    Also, in 'Filing of income tax return' tab, can i select ÍTR has not been filed and Reason as No taxable income since income is less than taxable income.

    We will be very thankful to you for your guidance. Appreciate your prompt response.

    Thanks,
    Shekar

    • Dear Shekar,
      This option can be selected : Self & Investment/ expenditure is out of accumulated savings
      On 'Filing of Income Tax Return’ tab you can select ' ITR not filed' & 'no taxable income' (assuming her total income during that Financial year is below basic exemption limit).

      • Hi Sreekanth,

        Very useful information thanks.

        My dad has invested FD in the name of my married sister and the interest amount is about Rs.17K. She has income from salary as a scholl teaher and some share transactions, not of High value and either within taxable limit or LTCG. The total of all incomes does not exceed taxable limit and we have file form 15-G with the banks and they have not deducted TDS. We have received a notice for non filing for A Y 15-16 and since the income was below taxable limit we did not file the ITR. Now, in response to notice we would like to file the return even though below limits. Hope this case would not be much to worry about. Source of FD income could be treated as gift from Dad. Please suggest. Also, within what time limit do we need to reply to this?

        Thanks
        Khyati V.

        • Dear KHYATI,
          You have an option to file belated return with NIL tax liability, mention that ' ITR filing is under process ' in response to Compliance notice .
          Else, you can mention that 'Self & Investment/ expenditure is out of gifts/ loans from others' & 'No taxable income' as options.

      • Thank you sir for the help. In Filing of Income Tax Return tab, do we need to provide any details in the Remarks section?

        Thanks,
        Shekar

  • Hi Sir...I filed Income Tax for AY 2015-16. However, I still received a Notice. Logged in to income Tax site and it is showing as ITR-V Processed for AY 2015-16.

    Tell me what should I do in this case ?

    • Dear Krishna,
      I have filed my ITR for AY 2015-16. But, I have also received the compliance notice from NMS (Non-filers Monitoring System). And I do not see any compliance notice generated online.
      Mostly, this can be due to a technical glitch from the IT dept side. Let's wait for some more days to get more clarity or info.

  • HELLO SIR, I've received a Notice of AY 2014-15. It can't be filed now as the filing period for AY 2014-15 is over.My Tax has been ddeducted acoordingly as per Form No 16. In Compliance>Related Information, it shows TDS- 192A>TDS Return - Salary to Employee (192A). What do I select as option in RELATED INFORMATION

    • Dear Akshay..I believe that you can file ITR based on the notice you have received. Kindly consult a CA.

  • Hello sir
    My uncle have income from salary and pension during the AY 13-14 .and he pay tax by challan but ITR not filed. he received a notice for non filing . and his some TDS deducted u/s 194A .so now tell me what can i make reply .

    • Dear SANDEEP ..If TDS has been deducted and ITR has not been filed, suggest him to file the ITR now. Kindly take help of a CA.

  • Hi Shrikanth,

    I have received a notice for non filing of ITR for FY- 12-13. I have chosen option Return under preparation. Do I need to file returns for that FY now? Also my employer has deducted TDS, what response is to be given for information code TDS-192A?

    Thanks.

    • Dear Naresh ..If that is the option that you would like to opt for then you have to file the ITR w.r.t the notice issued.
      Among the available options - Self & not-known is apt. Kindly take help of a CA to respond to the notice and for filing the ITR for FY 2012-13.

  • Hi Sreekanth,

    Hope you are doing well !!

    My father is a senior citizen and retired long back. On the FY12-13 he made one investment(around 1,00,000/-) from his saving but not filled IT return. Now he got a IT notice indicating “Non-filing of Income Tax Return” and refers to a “Time Deposit Rs 1,00,000/- and more" during 2012-13 Financial year.

    I have doubts which of the below Option should be used as part of submitting compliance :-
    1. Self – Investment/expenditure is out of exempt income,
    2. Self – Investment/expenditure is out of accumulated savings,
    3. Self – Income from transaction is exempt,
    4. Self – Income from transaction is below taxable income,

    Request your kind advise so that I can reply Income Tax department. Your input is highly appreciated.

  • Dear Mr Sreekanth,
    My father superannuated from his job at the age of 61 on 31 August 2010 (FY 2010-11 AY 2011-12).
    He was employed with Tata Steel LTD.

    On visting ITR site for downloading ITR for FY 2015-16 yesterday he noticed that in his "Pending Actions" Compliance Check link is showing.
    Kindly Note that he hasnot recieved any email or SMS on his registered id regarding the Compliance Notice.

    In that link we saw below information is being requested by IT dept for below sections:

    E-Sahyog: This section is blank and it says no records avaliable.

    Filling of Income Tax Return:
    Response was asked for Non Filling of ITR for Assesment year 2011-12 and 2012-13

    In Related Information Summary:
    Information was asked for
    i)TDS-92A for FY 2009-10
    ii)TDS-92A for FY 2010-1
    iii)CIB-403 for FY 2010-11 for time deposit exceeding Rs 200000 with a banking company

    My father didnot filled the return for AY 2011-2012 as TDS of RS 9001 was deducted from his employer that year and he thought there is no need for filling ITR if company deducts TDS.

    For AY 2012-2013 he didnot filled ITR as he didnot have any tax liability after taking into account all his incomes and permissible deductions.

    Also after his retirement in FY 2010 he made term deposit of entire amount he recived from hi PF and Gratuity with State Bank of India.

    Kindly go through the above case history and kindly suggest what should we reply for the above mentioned points of the Compliance Notice.

    We will be very thankful to you for your guidance.

    Regards
    Arindam

    • Dear Arindam,
      That's strange! Geenrally the IT dept sends notices or intimate through emails regarding non-compliance issues.
      I could see that they are asking for info related to transactions done in FY 2009-10 too (AY 2010-11).
      It is advisable to consult a CA, so that he/she can go through all the available documents/bank statements and advise you aptly.

  • Dear Mr Sreekanth,
    My Father received a IT notice indicating “Non-filing of Income Tax Return” and refers to a “Time Deposit exceeding Rs 2,00,000 during 2013-14 Financial year. The source for the Income is my brother is used to transfer the money from USA and my father has some savings. He is a farmer ...
    I have doubts which of the below Option should be used as part of submitting compliance :-
    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,
    Request your kind advise so that I can reply Income Tax department. Your input is highly appreciated.

    • Dear Balakrishna,
      You may consider the option 'investment is out of gifts'. Also, the transfer is done through online mode, so you have the proofs for it.

  • i am a gavarment em. i recived a non filling of income tax return ay 2013-2014 Tds deducted for fy 2012-2013 by the gaverment employer s0

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Tags: Defective Return ITRIncome Tax Refund StatusIncome Tax ReturnIncome Tax Returns FilingITR filing for a Deceased AssesseeNon Filing of ITRNon-Filing of Income Tax Return NoticeOutstanding Income tax demand
July 11, 2023

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