Research & Articles

Responding to Income Tax Notices in India: What the Section on the Notice Decides Before You Reply

A Practical Guide for Individuals, Companies, Foreign Businesses and Non-Residents

Authored by R & D Law Chambers LLP | Practice led by Ravish Bhatt, Dual-qualified lawyer (India and England & Wales) | Bar Council of Gujarat, Enrolment G/504/2008 | SRA (non-practising) Registration No. 492 477 | ADIT, Chartered Institute of Taxation, London

Published: 20 August 2026 | Last reviewed: 20 August 2026

This guide is written against the Income-tax Act, 2025 (Act No. 30 of 2025), in force from 1 April 2026, which replaced the Income-tax Act, 1961. Section numbers are given in the 2025 Act, with the familiar 1961 Act number in brackets on first mention, because taxpayers and search engines still use the old numbers. Proceedings for a tax year beginning before 1 April 2026 continue under the 1961 Act (section 536(2)(c)). This note states Indian law only.

An income tax notice is not an accusation. But the provision it is issued under silently fixes three things you cannot change later: the time you have to reply, who carries the burden, and what your silence converts into. So the first task on any notice is never to draft a reply. It is to identify the section, the tax year and the Act. On 1 April 2026 the Income-tax Act, 2025 renumbered every one of these provisions.

Index of Topics

What an Income Tax Notice Is, and Why the Section Matters
The Notices You Will Actually Receive: a 2025 Act Map
Verify the Notice Before You Reply
Inquiry and Scrutiny Notices: How to Respond
Summons and Calls for Information
Defective Return, Rectification and Demand
When a Notice Signals Real Exposure
Deadlines, Remedies and Appeals

1. What an Income Tax Notice Is, and Why the Section Matters

An income tax notice is a formal communication from the Income Tax Department requiring you to provide information, explain a transaction, correct a defect or take part in an assessment. It is always issued under a specific section. That section, not the tone of the letter, tells you the deadline, the burden and the cost of a wrong reply.

Most people read the letter and miss the section. That is the wrong way round. A request for information under section 268 (formerly section 142(1)) is answered very differently from a scrutiny notice under section 270 (formerly section 143(2) and 143(3)), which is different again from a reassessment show-cause under section 281 (formerly section 148A). The department now communicates almost entirely through the e-Proceedings facility on the income tax portal, with email and SMS alerts pointing to it. Every genuine notice carries a Document Identification Number; by CBDT instruction a communication without a valid Document Identification Number is to be treated as though it were never issued. Read the section first, then the tax year, then the deadline, and only then decide how to respond.

2. The Notices You Will Actually Receive: a 2025 Act Map

Most notices fall into a handful of categories: processing intimations, inquiry notices, scrutiny notices, calls for information, summons, defective-return notices, demand notices and reassessment notices. Each has its own section, its own clock and its own stakes. The table maps them from the 1961 Act to the 2025 Act.

Notice	1961 Act	2025 Act	What it asks	Reply window
Processing intimation	143(1)	270(1)	Confirms or proposes an arithmetical adjustment to your return	30 days to the adjustment
Inquiry before assessment	142(1)	268	File a return, or produce accounts and documents	As specified in the notice
Scrutiny assessment	143(2)/143(3)	270	Return selected for detailed examination	As specified; order follows
Best judgment assessment	144	271	Assessment made without your input	Follows non-compliance
Call for information	133(6)	253	Information about you or a third party	As specified
Summons	131	246	Attend, give evidence on oath, produce books	As specified in the summons
Defective return	139(9)	263	Cure a defect, or the return is invalid	Short cure period
Notice of demand	156	289	Pay tax, interest or penalty due	30 days from service
Reassessment show-cause	148A	281	Show cause why the year should not be reopened	7 to 30 days
Reassessment notice	148	280	File a return for a reopened year	As specified

Two rows carry disproportionate weight. A processing intimation under section 270(1) is not an assessment: it is arithmetic, and if you do not respond to a proposed adjustment within thirty days it simply stands. A reassessment show-cause under section 281 is the opposite. The reply filed there, before any notice under section 280 is ever issued, is usually the single most important document in the whole dispute. Those two are dealt with in the firm’s separate reassessment guide. The rest are covered below.

3. Verify the Notice Before You Reply

Before drafting a word, confirm four things: that the notice is genuine and carries a valid Document Identification Number; which section it is issued under; which tax year it concerns; and which Act applies. A notice for a year beginning before 1 April 2026 is governed by the 1961 Act; a later year, by the 2025 Act.

Authenticate the notice through the portal’s dedicated utility and match the Document Identification Number. Identify the issuing authority, whether a jurisdictional Assessing Officer or a faceless unit, because that affects how and where you respond. Diarise the deadline the moment you read it. If a professional will reply for you, add them as an authorised representative on the portal. And do not reply from the email alert alone: log in to e-Proceedings and open the notice with its enclosures, because the material the department relies on, for instance the information behind a query, is frequently visible only inside the portal and not in the email.

4. Inquiry and Scrutiny Notices: How to Respond

An inquiry notice under section 268 seeks information or documents relevant to an assessment. A scrutiny notice under section 270 means the return has been selected for detailed examination. Both call for a complete, accurate and documented reply, structured to the notice. Non-compliance risks a best-judgment assessment under section 271, plus penalty and prosecution exposure.

The method is the same for both. Answer every question, in the order asked. Support each material assertion with evidence rather than assertion. Do not guess; an unsupported figure invites more questions. Keep the reply structured to the numbering of the notice, so the officer can see at a glance what has been answered. Under faceless assessment, now section 273 (formerly section 144B), all of this is filed on the portal and there is no in-person meeting unless a video hearing is allowed.

The cost of ignoring or under-answering is concrete. The officer may complete a best-judgment assessment under section 271 on whatever material is available, which almost always yields a higher figure, and penalty and prosecution can follow. One point is worth holding on to: a rejected explanation is not, by itself, concealment. Penalty requires misreporting or concealment, not merely a claim the officer disagrees with. An error and a violation are not the same thing, and that distinction is often where a penalty is defended.

5. Summons and Calls for Information

Section 246 gives tax authorities the powers of a civil court to summon a person, examine them on oath and compel production of documents. Section 253 lets them call for information about you or a third party. These powers are real, but not unlimited: the demand must be specific and relevant to a proceeding under the Act.

A summons under section 246 (formerly section 131) is an order, not a request. Attend on the date, or seek an adjournment in writing with reasons. Answer truthfully, because statements are recorded on oath and are used later in assessment and appeal, and you may attend through an authorised representative. But the power has boundaries. A notice or summons must state its purpose, demand specified documents and rest on a reason connected to a proceeding under the Act; sweeping, fishing inquiries are not permitted. Where the information demanded is genuinely irrelevant, or the demand is vague, the reply should say so, and if the authority will not withdraw or narrow it, the notice can be challenged by writ.

6. Defective Return, Rectification and Demand

Three housekeeping notices carry hard deadlines. A defective-return notice under section 263 must be cured within the short period allowed, or the return is treated as invalid. Rectification under section 287 corrects an apparent error. A notice of demand under section 289 is payable within thirty days of service.

Defective return, section 263 (formerly section 139(9)): cure the defect within the period specified. An uncured defective return can be treated as invalid, which in practice can mean the return is treated as never filed, with knock-on consequences for losses and refunds. Rectification, section 287 (formerly section 154): where a demand or order rests on a mistake apparent from the record, apply for rectification rather than, or alongside, an appeal. Notice of demand, section 289 (formerly section 156): pay within thirty days, or seek rectification, appeal or payment in instalments; ignoring it makes you an assessee in default and invites recovery. Note one trap: an intimation under section 270 that determines a sum payable is itself deemed a notice of demand under section 289(2), so the thirty-day clock can be running even where no separate demand letter arrives.

7. When a Notice Signals Real Exposure

Some notices are routine. Others are the visible edge of a much larger exposure: reassessment of a past year, foreign income, a permanent establishment question, a transfer pricing adjustment or a withholding default. Where a notice touches any of these, the stakes and the drafting change, and advice should be taken before replying.

A reassessment show-cause under section 281 (formerly section 148A) is not an information request. It is the opening of a reopening, and the reply to it usually decides the matter; it is dealt with in the firm’s separate reassessment guide. For a foreign company or non-resident, an apparently routine call for information can be the first step in a permanent establishment or profit-attribution inquiry, or a question over whether a payment was characterised correctly for withholding. These are not answered with a document upload. They are answered with a legal position, and the position taken in the first reply tends to govern everything that follows.

8. Deadlines, Remedies and Appeals

Every notice runs a clock, and the clocks are unforgiving. If an assessment or order goes against you, the first appeal lies to the Commissioner (Appeals) or Joint Commissioner (Appeals) under section 356, and a second appeal to the Income Tax Appellate Tribunal under section 362. Filing an appeal does not, by itself, stay recovery.

The first appeal under section 356 (Form 99, formerly Form 35) is generally filed within thirty days of service of the order. The second appeal to the Income Tax Appellate Tribunal is under section 362 (Form 115). Substantial questions of law go on to the High Court and then the Supreme Court. On recovery, a widely held belief is worth correcting: filing an appeal does not automatically stop recovery, and the CBDT’s twenty per cent benchmark for a stay pending first appeal is not an absolute precondition. That figure governs only the Assessing Officer’s limited power. The Commissioner (Appeals) is not bound by it and may grant a stay, without any deposit, on a strong prima facie case, irreparable injury or other relevant factors.

Frequently Asked Questions

Does receiving an income tax notice mean I have done something wrong?

No. Many notices simply ask for information, seek confirmation or propose an arithmetical adjustment. A notice is a step in the department’s process, not a finding of default. What matters is the section it is issued under and what it asks. Some notices, such as a reassessment show-cause, do signal a serious inquiry, but even those are an opportunity to respond before any adverse order is made.

How do I check whether a notice is genuine?

Log in to the income tax portal, use the authenticate-notice utility, and match the Document Identification Number printed on the notice. By CBDT instruction, a communication without a valid Document Identification Number is treated as though never issued. Open the notice inside the e-Proceedings facility rather than relying on the email alert, because the information relied on is often attached only on the portal.

What happens if I ignore an income tax notice?

Ignoring a notice does not make it go away and usually worsens the position. For an inquiry or scrutiny notice, the officer can complete a best-judgment assessment under section 271 on the material available, which typically produces a higher figure, followed by penalty and possible prosecution. For a notice of demand, non-payment within thirty days makes you an assessee in default and invites recovery action.

Which Act applies to my notice, the 1961 Act or the 2025 Act?

It depends on the tax year, not the date of the notice. The Income-tax Act, 2025 applies to Tax Year 2026-27 and later. For a year beginning before 1 April 2026, proceedings are carried out under the repealed 1961 Act, preserved by section 536(2)(c) of the 2025 Act. So a notice issued in 2026 for an earlier year is still governed by the old Act.

Can a foreign company or non-resident receive an Indian income tax notice?

Yes. A non-resident with Indian-source income, a permanent establishment question, a withholding issue, or a transaction deriving value from Indian assets can receive an inquiry, a call for information or a reassessment notice. For a foreign recipient these often turn on a legal position, such as whether a permanent establishment exists or how a payment is characterised, and the first reply should be built around that position.

Can I get a stay on a tax demand while I appeal?

Filing an appeal does not automatically stay recovery; a stay must be applied for. The CBDT’s twenty per cent figure is widely treated as a fixed precondition, but it binds only the Assessing Officer’s limited power. The Commissioner (Appeals) is not restricted by that figure and can grant a stay, without any deposit, on a strong prima facie case, irreparable injury or other relevant factors.

How R & D Law Chambers Works on These Matters

R & D Law Chambers acts for individuals, Indian companies, foreign businesses and non-residents in responding to income tax notices, from the first information request through to assessment, appeal and writ. The practice is led by a dual-qualified lawyer (India and England and Wales) who holds the Advanced Diploma in International Taxation, which matters where a notice carries a cross-border dimension.

The firm’s approach starts where most replies do not: by reading the section, the tax year and the Act before drafting, and by treating the first reply as the document that will govern the rest of the matter. That discipline is what separates a notice closed on reply from one that hardens into an assessment and years of appeal.

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This article is general information on Indian law as at 20 August 2026 and is not legal advice. It does not create a lawyer-client relationship. Section references are to the Income-tax Act, 2025 unless otherwise stated. Specific advice should be taken on any particular notice or assessment before acting.