The notice is not the assessment — but ignoring it makes it one
Every year, a large number of Kolkata taxpayers open the e-filing portal and find a communication they do not understand: a one-line intimation under Section 143(1) adjusting a refund, a questionnaire under Section 142(1) asking for twelve documents, a show-cause notice proposing a variation of income, or a notice under Section 148 saying the department proposes to reopen an assessment closed years ago. The instinct is either to ignore it because "the CA will handle it" or to send a hurried reply with whatever documents are at hand. Both are expensive. The first produces a best-judgment assessment; the second produces an assessment based on the documents you sent, which is often worse than one based on the documents you had.
First, identify the notice correctly
Notices look alike on the portal, but they are not interchangeable, and the response to each is different. Read four things before anything else: the section under which the notice is issued, the assessment year it relates to, the date of issue and the date by which a response is required, and the Document Identification Number. A communication without a valid DIN is, subject to the limited exceptions in the CBDT's instructions, treated as invalid, and that point is worth taking at the outset rather than at the end.
The notices you are most likely to receive
| Notice | What it means | Usual response window | Risk if unanswered |
|---|---|---|---|
| Intimation under Section 143(1) | Automated processing of the return: arithmetic adjustment, mismatch with AIS or TDS, or a refund determination | 30 days for a rectification or response, though the adjustment itself is immediate | Demand confirmed and adjustable against refunds |
| Defective return, Section 139(9) | The return is treated as invalid — a missing schedule, an unmatched tax credit, a balance sheet that does not tally | 15 days, extendable on a request made before expiry | Return treated as never filed; loss of carry-forward and possible penalty |
| Questionnaire under Section 142(1) | The Assessing Officer wants information, books or explanation before completing the assessment | As stated, commonly 7 to 21 days; extensions are granted on a written request | Best-judgment assessment under Section 144 |
| Scrutiny notice under Section 143(2) | The return has been selected for scrutiny; in most cases the proceedings are faceless under Section 144B | The notice itself sets the first compliance date | Ex parte assessment and loss of the chance to explain |
| Show-cause before variation | A draft proposal to add income, disallow a deduction or treat a transaction as unexplained | Usually 7 to 30 days, as specified | Addition confirmed without your explanation on record |
| Section 148 reassessment | The department says income has escaped assessment and proposes to reopen a completed assessment | The notice specifies the period; a preliminary objection should be filed within it | Reassessment framed, often on the original grounds plus additions |
| Demand under Section 156 | A formal notice of demand following an order | 30 days to pay or to file an appeal | Interest, penalty proceedings and recovery measures |
How a reply should be built
- Download the entire case file from the portal. Notices, prior replies, the assessment order if any, the AIS and TIS statements, Form 26AS, and the return as filed. A reply that contradicts an earlier submission is worse than no reply.
- Reconcile the numbers before writing a word. Most scrutiny cases are about a mismatch between the return, the AIS and the books. Reconcile each item in a working sheet, identify which differences are genuine and which are reporting errors by the deductor or the bank.
- Decide the legal position on each issue. For every proposed addition, there are usually three possible answers: the income is correctly disclosed, the income belongs to a different year, or the income belongs to a different person. Each requires a different set of documents and a different statutory argument.
- File a structured reply on the portal. A covering letter identifying the notice and the DIN, a para-wise reply mirroring the questionnaire, an index of annexures, and the annexures themselves. Keep the reply within the word limit the portal imposes by splitting submissions where necessary, and upload the substantive material as PDFs.
- Request a personal or video hearing where the facts need explaining. Faceless assessment permits a hearing on request, and it is often granted where the reply raises a factual dispute that documents alone cannot settle. Attend it. A hearing that is skipped is recorded as such.
- Respond to the show-cause before the variation. This is the last effective stage. Once the final order is passed, the only remedies are appeal and rectification, both slower and narrower.
- Preserve everything. Keep the acknowledgement of each submission, the portal receipt number and a dated copy of what was uploaded. Disputes about whether a document was filed are decided on these records.
Documents to keep ready
- The return of income as filed, with the computation and all schedules.
- Audited financial statements, tax audit report and, where applicable, the transfer pricing study.
- Books of account, ledgers and the trial balance for the year.
- Bank statements for all accounts, including those not disclosed earlier.
- Form 26AS, AIS and TIS downloaded for the relevant year.
- Evidence for each deduction claimed — rent receipts, interest certificates, donation receipts, capital gains workings.
- Sale deeds, valuation reports and cost of acquisition records for property transactions.
- Loan agreements and EMI schedules where interest or principal is in issue.
- GST returns and e-way bills, which the department routinely cross-checks against turnover.
- Details of related-party and cash transactions above the prescribed thresholds.
- Correspondence with the department, including acknowledgements of earlier replies.
Deadlines, penalties and what a delay really costs
Penalties attach to the outcome, not to the notice. Under-reporting of income attracts a penalty of 50 per cent of the tax on the under-reported income; misreporting, which includes misrepresentation or suppression of facts and the claim of a deduction supported by false evidence, attracts 200 per cent. A claim of expenditure supported by a false invoice can attract a separate penalty under the provision dealing with fake invoices. Interest under Sections 234A, 234B and 234C runs independently of any penalty, and it starts from the due date of filing, not from the date of the notice.
Where the department and the taxpayer usually part company
Cash deposits during demonetisation years and afterwards remain a standing item, and the explanation has to be documentary, not oral. Bogus purchase allegations usually turn on whether the supplier filed returns and whether the goods moved; e-way bills, transport records and stock registers decide it. Capital gains on property are commonly disputed on stamp-duty valuation, on the cost of improvement, and on whether the transfer took place in the year claimed. In scrutiny of professionals and small traders, the department often estimates income by applying a ratio to turnover; the effective answer is a comparative analysis across years and an explanation of why the ratio does not apply.
Kolkata-specific practice
Assessments for Kolkata assesses are largely conducted through the faceless assessment units, so the officer hearing the case may sit in another city and the entire exchange happens on the portal. That makes the quality of the written submission decisive; there is no corridor conversation and no opportunity to hand over a document at the counter. Where the case is not faceless — international taxation, certain search matters, and cases assigned to specific charges — the proceedings are before the Assessing Officer of the relevant Kolkata charge.
Appeals against assessment orders lie first to the Commissioner (Appeals), whose Kolkata benches hear matters through the faceless appeal mechanism, and then to the Income Tax Appellate Tribunal, which has benches at Kolkata. Where the order is without jurisdiction — a notice issued by an officer with no authority, a reassessment without the required application of mind, a violation of the mandatory procedure — a writ petition before the Calcutta High Court is available and is often the faster remedy. The High Court will not, however, entertain a writ where an effective alternative remedy by way of appeal exists and the dispute is essentially factual.
I received a notice for a year my accountant filed. Can I reply myself?
You can, and the portal allows it, but a reply filed without the working papers behind the return is likely to create inconsistencies. Obtain the computation, the audit report and the ledger from the accountant first. If the accountant is unavailable, the reply should be limited to what the documents support and should ask for time to produce the rest.
What happens if I do not respond at all?
The Assessing Officer proceeds ex parte and frames a best-judgment assessment, typically adding the entire amount in question. The order then carries demand and interest, and penalty proceedings are initiated separately. Setting aside an ex parte order requires an appeal or a writ, both of which are more expensive than the reply would have been.
Can a faceless assessment be challenged for not giving a hearing?
Yes, where a hearing was requested and not granted, or where a show-cause notice proposing a variation was not issued before the addition was made. Natural justice is a recognised ground, and tribunals and High Courts have set aside orders on it, though the matter is usually remanded rather than decided in the assessee's favour.
How long does an appeal to the Commissioner (Appeals) take?
Ordinarily a year or more from filing, and longer where the matter is remanded. The appeal must be filed within 30 days of service of the order, with the prescribed fee, and a delay can be condoned on a sufficient application. Filing the appeal does not automatically stay the demand; a stay application has to be made and is usually considered together with the appeal.
A notice answered carefully at the first stage is almost always cheaper than an appeal won at the second. Advocate Panchanand Shaw, at 14 Hare Street, Kolkata 700001, opposite Bankshall Court, advises taxpayers and small businesses on replies, assessment proceedings and writ challenges before the Calcutta High Court, and can review a notice and the underlying records before the reply deadline passes.