An income tax notice is rarely the catastrophe people imagine, but it is almost never harmless either. Most notices that reach a Kolkata taxpayer are routine — a mismatch between the return filed and the Annual Information Statement, a TDS credit that did not reconcile, a high-value cash deposit, a property purchase that the department's systems flagged. A smaller number are serious: a reassessment proposal, a demand order, or a penalty show-cause that can multiply the tax already in dispute. The difference between the two outcomes is usually not the facts. It is whether somebody read the notice properly, understood which provision it was issued under, and replied within the window with documents that actually answer the query raised.
This guide sets out how the notice regime works after the legislative overhaul of 2025–26, what a reply should contain, the deadlines that matter, and where the matter is heard in Kolkata. It is written for taxpayers and small business owners, so the emphasis is on practical sequence rather than on the finer points of assessment law.
A changed statute, familiar notices
From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961 as the operative charging and assessment statute. The new Act consolidates and renumbers the old provisions, and the department has been issuing notices under the new numbering for current-year proceedings. Two practical consequences follow. First, a notice received today may cite either the 1961 Act (for older assessment years, where proceedings continue under the repealed statute by force of the savings provisions) or the 2025 Act (for current years). Second, the section numbers you find in older articles and in most online commentary — 143(2), 148, 156, 245 — belong to the 1961 Act and will not always match what is printed on your notice.
Do not assume a notice is invalid because the number looks unfamiliar. Read the description of the proceeding, the assessment year, the DIN (document identification number) and the response deadline. A notice without a valid DIN is generally treated as non-est, but that is a point to be taken in the reply, not a reason to ignore the notice.
The notices taxpayers actually receive
- Scrutiny notice — the return has been selected for limited or complete scrutiny; the notice identifies the specific issues and asks for evidence.
- Reassessment notice — the department believes income has escaped assessment; since the 2021 amendments this requires information with the notice, and the taxpayer has an opportunity to object to the reasons recorded.
- Demand notice — a computed demand of tax, interest or penalty following an order, with a 30-day payment window.
- Set-off intimation — an assessed demand has been adjusted against a refund due to you.
- Penalty show-cause — under-reporting or misreporting of income, or a specific penalty provision such as failure to respond to a statutory notice.
- Information-seeking letters — issued by the assessment unit or by the e-verification scheme, often the mildest form and the easiest to close quickly if answered fully.
The procedure, step by step
- Log the notice formally. Download the full notice and any annexure from the e-filing portal, note the DIN, the assessment year, the issuing unit, and the response date. Save a copy outside the portal — portal histories are sometimes incomplete after a migration.
- Classify the proceeding. Is this an enquiry, a proposed adjustment, a reassessment, or a recovery? The answer determines whether you reply, object, appeal, or apply for a stay.
- Reconstruct the record. Pull the ITR, computation, audited accounts if any, Form 26AS and AIS/TIS, bank statements for the flagged period, and the ledger entries behind each disputed figure.
- Draft a point-wise reply. Take each query in the order the notice raises it. Quote the query, state the explanation, reference the enclosure by number. Do not write a general narrative that answers only the easiest point.
- File through the correct channel. Most assessments today run faceless through the National Faceless Assessment Centre, so the reply goes on the portal against the specific notice, in the format the notice prescribes. Physical filing is the exception, not the rule.
- Seek a personal hearing where the facts are contested. If the notice offers a video hearing, take it. A documented hearing request preserves your argument that natural justice was denied if an adverse order follows without one.
- Diarise the order and the appeal window. A demand order is appealable to the Commissioner (Appeals) within the statutory period, generally 30 days from service, with a possible condonation application for delay.
- Protect against recovery while the appeal runs. An appeal does not automatically stay recovery. Consider an application for stay of demand, and check whether the tax is required to be paid before the appeal is entertained.
Documents that decide most cases
- ITR acknowledgement (ITR-V) and the computation of income for the year in question.
- Form 26AS, AIS and TIS for the relevant year, reconciled line by line.
- Bank statements for all accounts, including accounts closed during the year.
- TDS and TCS certificates supporting every credit claimed.
- Sale or purchase deeds, with stamp duty and registration receipts, for property transactions.
- Loan sanction letters, repayment schedules and interest certificates where interest is claimed.
- Books of account, trial balance, ledger extracts and vouchers for business receipts and expenses.
- Gift deeds, donor confirmations and bank trails where gifts or loans are explained.
- Correspondence already exchanged with the department on the same issue.
Timelines and cost expectations
| Stage | Typical window | What happens if missed |
|---|---|---|
| Reply to scrutiny or information notice | 7–30 days, as printed | Best-judgment or ex-parte assessment |
| Objection to reasons for reassessment | Usually 7–30 days from notice | Objection treated as waived |
| Payment of demand | 30 days from service | Interest, penalty, recovery proceedings |
| Appeal to Commissioner (Appeals) | 30 days from service of order | Limitation bar; condonation needed |
| Further appeal to ITAT | 60 days from CIT(A) order | Limitation bar; separate condonation |
Professional fees vary with the complexity of the assessment, the number of issues and whether a hearing is attended; a straightforward mismatch reply and a multi-year reassessment are not comparable engagements. Most chambers, including ours, quote after seeing the notice and the return rather than on a standard rate card.
Where replies usually go wrong
- Answering the wrong question. A notice about a ₹9 lakh cash deposit is not answered by explaining your total income; it is answered by tracing the source of that deposit.
- Filing without enclosures. Assertions unsupported by documents are treated as unproven, and the assessment unit is entitled to draw an adverse inference.
- Missing the portal deadline while negotiating. Requests for adjournment must be made on the portal before the date, in the prescribed manner.
- Ignoring a small demand. Unpaid demands attract interest and can be adjusted against future refunds without further notice.
- Treating a faceless notice as a formality. Faceless units decide on the record; if the record is thin, the order will be adverse and the first real hearing will be in appeal.
Kolkata-specific forum detail
For individual and small-business assessees in Kolkata, the assessment itself is ordinarily conducted by the National Faceless Assessment Centre, so there is no counter to visit and no officer to meet. The jurisdictional Assessing Officer matters mainly for older proceedings, for penalty and for rectification. Appeals from orders in Kolkata fall to the Commissioner (Appeals) having jurisdiction over the assessee's PAN jurisdiction, and the e-appeal is filed through the portal; hearings are typically video hearings. Second appeals lie before the Income Tax Appellate Tribunal, Kolkata benches, which sit in the city and hear a very large volume of West Bengal matters. Where a question of law is involved, further challenge lies before the Calcutta High Court under its writ and reference jurisdiction.
When to bring in a lawyer rather than a return preparer
A mismatch reply is often handled by the accountant who filed the return. Bring in counsel when the notice proposes reassessment, alleges misreporting or concealment, involves a search or survey, threatens prosecution, or when the amount at stake justifies a documented appeal record. The earlier that happens, the cheaper it usually is: a reply drafted before the assessment order closes the file, whereas an appeal after an ex-parte order costs more and recovers less.