A growing number of taxpayers are receiving some form of communication from the Income Tax Department after filing their return, ranging from a routine intimation to a more serious reassessment notice. This is not necessarily a sign of wrongdoing. With banks, employers, mutual fund houses, registrars, and other institutions now reporting transaction-level data directly to the department through the Annual Information Statement (AIS) and Form 26AS, even small, unintentional gaps between what a taxpayer reports and what the department already knows are picked up automatically. At Gulati & Associates, we review a significant number of these notices for clients in Gurgaon and across Delhi NCR every season, and the overwhelming majority trace back to a handful of recurring, avoidable mistakes. This article explains what those mistakes are, which sections of the Income Tax Act govern the notices that follow, and how to reduce the chances of receiving one this filing season.
Why Notices Have Become More Common
Until a few years ago, the department largely relied on the figures a taxpayer chose to report, with mismatches surfacing only during occasional scrutiny. That has changed substantially. Automated systems like AIS and Form 26AS now flag discrepancies instantly, increasing the chance of scrutiny under sections such as 143(1) or 147, and this digital cross-checking has only become more rigorous in recent assessment cycles. Industry commentary has repeatedly pointed to mismatches between the ITR and AIS or Form 26AS as among the most common triggers for notices in recent years, and that pattern continues into the current filing season. This means the safest assumption for any taxpayer is that the department already has most of the relevant financial data before the return is even filed, and the return is essentially being checked against that data rather than taken at face value.
Mistake 1: Filing the Wrong ITR Form
One of the most frequent and entirely preventable errors is using an ITR form that does not match the taxpayer’s actual income profile. Many taxpayers select ITR-1 despite having capital gains, multiple properties, foreign assets, or business income, and since ITR-1 is restricted to specific income categories, filing under the wrong form results in a defective return notice under Section 139(9). This is particularly common among salaried professionals in Gurgaon who pick up capital market activity, ESOPs, or a second property during the year but continue filing the same simple form they used in previous years without checking whether their profile has changed. The form should be selected based on the actual sources of income in the relevant year, not on what was filed last year or what seems simplest.
Mistake 2: TDS Claimed Without Reporting the Corresponding Income
A particularly common defect arises when tax has been deducted at source on some income, and the taxpayer claims credit for that TDS without including the underlying income in the return. This typically happens with interest income from term deposits, where tax has been deducted by the bank, and both the interest income and the tax deducted need to be reported in the return together. Claiming the credit while omitting the income creates an inconsistency that the system catches immediately, since the TDS entry on Form 26AS or AIS has no matching income entry in the return. A similar pattern is seen with freelancers and professionals receiving payments under Section 194J, where a client’s TDS deduction appears on the AIS but the corresponding professional receipt is left out of the return, often simply because the taxpayer forgot one client’s payments rather than from any intent to conceal income.
Mistake 3: Mismatch Between TDS Claimed and TDS Reflected in Form 26AS or AIS
The reverse situation is equally common: a return claims a certain amount of TDS credit, but a different figure shows up in Form 26AS or AIS. This can happen because the tax paid does not match the challan details available with the department, or because TDS or TCS claimed in the return does not fully reflect in Form 26AS or AIS due to delayed reporting by the deductor. If the tax deducted at source shown in the return does not match Form 26AS or AIS, the system may calculate extra tax payable, resulting in a demand notice rather than the refund the taxpayer expected. Employers and banks occasionally update their TDS returns later than expected, which means a figure that looks correct at the time of filing can fall out of sync with the department’s records a few weeks later. This is one of the strongest reasons to file slightly later in the season rather than on the very first day forms are enabled, since third-party data tends to stabilise as the season progresses.
Mistake 4: Unreported Interest, Dividend, or Other Passive Income
Interest from savings accounts, fixed deposits, recurring deposits, and dividend income from shares and mutual funds are all reported to the department by banks and registrars, and routinely appear in AIS even when the amount is modest. Unreported FD interest, recurring deposit income, or earnings from digital platforms often surface in AIS and contradict the filed return, particularly where a taxpayer has accounts across multiple banks and simply forgets one or two while compiling figures. Many taxpayers mistakenly assume that small amounts of interest, or interest on which TDS has already been deducted, need not be separately reported. Both assumptions are incorrect: all interest income must be declared under “income from other sources” regardless of the amount, and TDS being deducted does not exempt the income from disclosure: it is simply a credit against the final tax liability.
Mistake 5: Claiming Deductions Not Supported by Records
Deductions under sections such as 80C, 80D, 80G, and others are frequently claimed at or near the maximum permissible limit without the taxpayer holding adequate supporting documentation. Incorrect deductions claimed, where the amount exceeds eligible limits or is not supported by records, is a recognised trigger for adjustment under Section 143(1). This is especially relevant for taxpayers who switch jobs mid-year and rely on memory rather than actual receipts and certificates when estimating their eligible deduction, or those who claim a round, convenient figure rather than the amount actually invested or spent. Keeping premium receipts, investment proofs, and donation receipts on file for at least the period during which the return can be reopened is a simple safeguard that costs little but prevents considerable difficulty later.
Mistake 6: Arithmetical and Tax Rate Errors
Simple calculation mistakes remain surprisingly common, particularly among taxpayers who prepare their own returns manually or copy figures across multiple schedules without a final cross-check. Arithmetical errors in total income, deductions, or tax payable, and tax calculated using the wrong slab or rate under the selected regime, are both well-documented triggers for an intimation under Section 143(1). With two parallel tax regimes now in operation, each carrying different slab rates and different eligibility for deductions, the risk of applying the wrong rate structure to the chosen regime, or carrying forward a deduction that is not permitted under the new regime, has increased rather than decreased in recent years. A careful final review of the computation sheet against the regime actually selected is worth the few extra minutes it takes.
Mistake 7: Not Verifying the Return After Filing
A return that has been filed but not verified is treated by the department as though it was never filed at all. A return not verified, where the taxpayer files but does not e-verify or send the signed ITR-V within the allowed time, is one of the recognised reasons a return is treated as defective. This is an easy step to overlook, particularly when filing close to the deadline under time pressure, or when relying on a tax preparer to complete the process without confirming that the final verification step was actually carried out. Verification through Aadhaar OTP or net banking takes only a minute and should be treated as a non-negotiable final step of the filing process, not an optional formality.
Understanding the Notices That Follow These Mistakes
It helps to know what each notice actually means, since the appropriate response differs depending on which section it is issued under.
A notice under Section 143(1) is an intimation generated automatically once the Centralised Processing Centre finishes processing a return, and is not a scrutiny or an accusation. It is generally issued shortly after the due date for filing or soon after submission of a return found to be incomplete or inconsistent, and most commonly results from the kind of mismatches and calculation errors described above. The time limit for issuing an intimation under Section 143(1) is within nine months from the end of the financial year in which the return is filed, so a return filed in one year can still receive an intimation well into the following year, and checking the portal periodically rather than assuming the matter is closed once the return is filed is a sensible habit.
A notice under Section 139(9) is a defective return notice, issued when the return itself contains an identifiable gap, such as a missing schedule, an unreported income item with matching TDS, or use of the wrong ITR form. Common causes include an incomplete ITR, TDS mismatch, unreported income, or incorrect details, and taxpayers typically have fifteen days to respond to the notice once it is received. A notice under this section means the filed return has a fixable flaw rather than an accusation of wrongdoing, and the printed deadline on the notice, commonly fifteen days from service, should always govern rather than any assumption about a standard period. The notice can be responded to by either agreeing and filing a corrected return that removes the defect, or disagreeing and submitting an explanation where the taxpayer believes the return was correct as filed.
A notice under Section 148 is materially more serious than either of the above, since it relates to reassessment. A notice under Section 148 is issued when the Assessing Officer believes that income has escaped assessment, and this is a serious notice that must never be ignored. This category of notice typically arises where information surfacing after the original assessment, whether from banking data, statements of financial transactions, or AIS, suggests a substantial understatement of income, and professional representation is strongly advisable rather than optional once such a notice is received.
What to Do If You Receive a Notice
The instinctive reaction to any tax notice is often anxiety, but the appropriate first step is simply to read it carefully rather than react immediately. The notice will specify the section under which it has been issued, the assessment year it relates to, the precise nature of the defect or adjustment, and the deadline by which a response is required. The recommended approach is to log into the income tax portal, open Pending Actions or e-Proceedings, download the full notice, and note the assessment year and the original return’s acknowledgement number before reading the exact deadline printed on the notice, since assuming a standard response period rather than checking the actual date is a common and avoidable error. The next step is to reconcile the specific figures mentioned in the notice against AIS and Form 26AS, since most defects trace back to a figure that was already on record with the department but absent from the return as filed. Where the notice is genuinely the result of an error, such as a missed income item or an incorrect deduction, correcting it through a revised or corrected return, followed promptly by verification, generally resolves the matter without further escalation. Where the underlying issue involves mismatched income, books of account, audit requirements, or a substantial amount, having a chartered accountant review the response before it is submitted is advisable, since the way a defect is explained or corrected can itself affect the resulting tax computation.
Why Professional Review Before Filing Is Worth Considering
Most of the mistakes outlined above are not the result of carelessness so much as the sheer increase in cross-referenced data the department now has access to, combined with the genuine complexity of having multiple income sources, two parallel tax regimes, and increasingly granular reporting requirements within the ITR forms themselves. A pre-filing reconciliation against AIS and Form 26AS, a second check on the ITR form selected against the taxpayer’s actual income profile for the year, and a final review of the tax regime and slab rates applied, together address the large majority of notices before they are ever issued. For taxpayers in Gurgaon and across Delhi NCR managing salary income alongside capital gains, rental income, or business receipts, this kind of review is generally far less time-consuming and far less costly than responding to a notice after the fact.
Frequently Asked Questions
1. Does receiving an income tax notice mean I have done something wrong? Not necessarily. Notices under Section 143(1) are routine, automated intimations generated after every return is processed, and the large majority result from minor mismatches or calculation differences rather than deliberate misreporting. A Section 139(9) defective return notice similarly acts as a mechanism to correct fixable errors rather than as a penalty. Section 148 reassessment notices are more serious and should be treated with greater urgency.
2. What is the most common reason taxpayers get a notice in India? A mismatch between the income or TDS reported in the ITR and the figures available in Form 26AS or the Annual Information Statement is consistently the most common trigger, covering interest income, dividend income, capital gains, and TDS credits that do not align with departmental records.
3. How many days do I get to respond to a defective return notice under Section 139(9)? The notice will state the exact deadline, commonly fifteen days from the date of service, and this printed date should always be relied upon rather than any general assumption about the response window.
4. Will choosing the wrong tax regime by mistake lead to a notice? It can. Applying deductions that are not permitted under the regime actually selected, or using the slab rates of one regime while having opted for the other, is a recognised cause of adjustment under Section 143(1). Reviewing the final computation against the regime selected before submitting the return is an important final check.
5. Should I handle a tax notice myself or consult a CA? Straightforward notices involving a missing schedule or an unverified return can often be resolved directly through the portal. Where the notice involves an income or TDS mismatch of any significant amount, business income, audit requirements, or a Section 148 reassessment, professional review before responding is strongly advisable, since an incorrectly drafted response can itself affect the final tax outcome.
