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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Hi Sreekanth,
Thanks for the useful information. Requesting a clarification.
I live in the US now. My parents received a letter from IT dept. saying that I hadn't filed returns for A.Y 2015-2016 (also citing card purchases above 2L and TDS data).
I logged into my e-filing account to find that I have filed for that year. Acknowledgement number is displayed. But the status is 'Return Uploaded' while the others are 'IT processed'. I might have forgotten to send the physical acknowledgement to IT office or the post might not have reached. I am not sure why it is not processed.
The letter asks me to reply electronically though 'Compliance' menu. But when I go to 'View and Submit Compliance', there is no compliance record.
How do I respond to this, considering that I'm abroad now?
(Moreover, I found out that there is a similar 'Return uploaded' status for A.Y 2008-09)
Please advise.
Dear Gokul,
You may request them to activate compliance link through e-Nivaran portal.
You may check ITR V status online, click here..
Thanks, Sreekanth. Will try this.
Today I have received the IT Notice to file the Return for the Year 2010-2011 . I have not filed the return from Year 2006 to till date as I am working in the Middle East From March 2006 to Till Date Continuously ( Max Break is 3 Months ).
Kindly Advice me .
Dear VILAS .. Did you have any taxable income from sources in India during 2010-11 period? Do you find any details in notice?
I have received the Income Taxt Dept Notice , It Says that Your Income Chargeable to Tax for the Assessment Year 2010-11 has escaped assessment within the meaning of Section 147 of Income Tax Act 1961 . Required to file the Return for the same year .
I have been working in Middle east from Year April 2006 till date without the Break more than 03 Months .I feel that I am not reqired to file the Return as an NRI .
Kindly Advice me What I have to do .
In Year 2010-11 My Net Income through the FD Interest was less than 1 Lakh .And Apart from asking to file the Return for 2010-11 The Notice from the Income Tax does not write anything in details.
Please advice me,
Dear VILAS,
You may either ask for more details regarding Notice through e-Nivaran portal
(or)
You may reply to the notice that 'Self & Income from transaction is below taxable limit'.
Sir My wife received the notice..CIB-407 from income text , None filling the ITR , we have purchase the car in my wife name she is house wife I have deposited 2 lakh thru check and rest of amount I have taken the loan from bank in my name kindly suggest while replying query which option i have to chose. my wife have the pan card but she has not file the income text return because she dont have the income.
Dear rajendra,
I believe that she may select 'Self & Investment/ expenditure is out of gifts/ loans from others' option and respond to the notice.
But, suggest you to consult a CA and take advice.
Thank you Sreekanth for the content of this blog. I wish to ask you about my problem regarding the notice from IT dept.
My wife has just yesterday (2.3.2017) received a notice for 'Non filing of Income Tax Return' for Fin. Yr. 2014-2015. In fact my wife is a house wife and has no income what-so-ever. My wife has a ICICI Direct demat account in her name which is linked to the ICICI bank joint account with me. I normally purchase share through this demat account. However, since the money transacted are mine, I used to show all taxable transactions in my income tax return (bank interests, dividends, short/long term profit/loss etc.). So, no returns were filed in my wife's name.
So, fact stands that since all tax responsibilities has been properly taken care of I presumed, there was no reason for my wife's income tax return to submitted.
Now since this notice has been served, please help me and advise me what shall I do now.
Dear BIDYUT,
But the investments are made in her name right? as the Demat account is solely in her name..
Kindly consult a CA and take help.
WHAT INFORMATION IT DEPARTMENT HAS OBTAINED UNDER CODE EXC-001: CASH TRANSACTION EXCEEDING 10 LACS IN A MONTH AND SENDING EMAIL TO NON FILERS.KINDLY LET US KNOW ALL ABOUNT EXC-001,FOR WHICH WE WILL REMAIN GRATEFULL TO YOU SIR.
Dear Paartho..you need to respond to the compliance notice by selecting appropriate option & remarks.
Hello Sir, I received Income Tax Notice as 2014 EXC-001 Cash Transactions exceeding Rs 10,00,000/ in a month
I am an NRI, might have withdrawn cash for the purpose of construction of my house,
how to I respond. what option should I select.
thanks for replying...
ms
Dear msm,
Suggest you to kindly consult a CA.
Hi Sir,
My mother is housewife and she received a letter saying Non-filing of income tax returns, she have invested around 10L in fd which is also earned by selling her property and spend some amount on my sister marriage
F.Y. 2014 AIR-001 Deposited cash of Rs. 10,00,000 or more in a saving bank
F.Y. 2014 EXC-001 Cash Transactions exceeding Rs 10,00,000/ in a month
She did not filed the ITR
Please help in giving reason and other details and guide me what can be done
Regards,
Hema
Dear Hemamalini,
Were there any capital gains on sale of property? Was it below taxable limit?
May be, advisable to consult a CA and reply to the notice.
Hi Srikanth Reddy,
Very good information about ITR.
My brother is studing MS in US.For studie purpose my father deposited 1000000 into his account.
He(brother) got notice from IT department.Please advise my how to respond in properly in oncome tax site.
FYI:My father is farmer.
Dear Hari,
Without going through complete details (in person), it is not advisable to suggest anything on this issue. Kindly contact a CA and take help.
Hi Sreekanth, I got a letter from IT dept and responded after reading this blog. Thank you. Im a widow and my father from Jaipur and brother who is settles in Hong Kong, purchased a flat for me in 2014. Hence i received a letter. But i have no income as such and im a housewife. What do you suggest? I have aready submitted the response that expenditure was from foreign money and gifts.
Dear Aisha,
Gifts is fine.
But I am skeptical about response as 'foreign money', as it is not earned by you???
Yes it was transferred to my account by my brother who lives in Hong Kong. I do have my bank statements as a proof.
Should i change that to gifts also? I just checked that we can repost the response.
Dear Aisha..I believe that Gift can be an apt response. If possible, do take advice from a CA.