There are times when an individual receives a notice from the Income Tax Department about a tax liability that needs to be paid. There is usually dismay at receiving such a notice followed by fear. This situation can be tackled by looking at the nature of the notice.
Always reply
Any communication from the Income Tax Department should be addressed. Several people often tend to ignore such communication thinking this will end the matter but that does not happen. Unless the issue is tackled and a solution arrived at, it remains open in the records of the Income Tax Department. This will lead to interest and penalty piling up if there is any amount of tax demanded.
Wrong details
There are times when the notice is wrongly sent. This could be cases like a person not having high income but still sent a notice for high tax payment. If there is a mistake from the Income Tax Department then they should be informed about this and the records corrected.
Often there are some actions taken by the individual like high spends while their income tax return shows a lower income that triggers the notice. These should be replied to in detail explaining why this situation has occurred. It could also be that the Permanent Account Number (PAN) of the individual has been misused by someone else to open entities and conduct activities using it. This is a serious situation that has to be brought to the notice of the Income Tax Department.
Dispute of amount
The details that are filed in the Income Tax return might not be accepted by the tax department and some benefits might be disallowed. The other case is where additional income might be added to the individuals name and taxed. These also trigger a notice and higher demand of tax. If the changed amount and classification is acceptable then the individual should pay up the amount. If not then this should be disputed and the tax department should be informed accordingly.