Income Tax Scrutiny Notice 2026 — Types, How to Respond, Documents Required

Receiving an income tax scrutiny notice is stressful, but it is manageable if you respond correctly and on time. Here is the complete guide to income tax notices in 2026.

Types of Income Tax Notices

Section 143(1) — Intimation (Most Common)

This is an automated processing result, not a scrutiny notice. It indicates:

• No demand, no refund (return processed correctly)
• Refund due
• Tax demand (discrepancy found)

Response: Pay the demand or file a rectification. Not a serious notice.

Section 143(2) — Scrutiny Notice

This is a serious notice. A tax officer has selected your return for detailed examination.

Reasons for selection:

• High-value transactions not matching income
• Significant deductions claimed
• Large capital gains
• Mismatch between ITR and AIS
• Random selection (CASS — Computer Assisted Scrutiny Selection)

Time limit: Must be issued within 3 months from the end of the financial year in which the return was filed. For FY 2025-26 returns filed in July 2026, the notice must be issued by June 30, 2027.

Response: Respond within the specified time (usually 30 days) with documents.

Section 148 — Notice for Escaped Assessment

Issued when the tax officer believes income has escaped assessment (not reported in ITR).

Time limit: 3 years from the end of the assessment year (10 years for income above ₹50L).

Response: File a return in response to the notice within 3 months.

Section 131 — Summons

Issued to produce documents or appear before the tax officer.

Response: Appear on the specified date with the requested documents.

Section 156 — Demand Notice

Issued after assessment, demanding payment of tax, interest, or penalty.

Response: Pay within 30 days or file an appeal.

How to Respond to a Section 143(2) Scrutiny Notice

Step 1: Read the Notice Carefully

Understand:

• Which assessment year is under scrutiny
• What specific issues the officer wants to examine
• The deadline for response

Step 2: Gather Documents

Typical documents required:

• ITR filed and acknowledgement
• Form 16 / Form 26AS / AIS
• Bank statements for the year
• Investment proofs (80C, 80D, etc.)
• Capital gains statements
• Property documents (if applicable)
• Business accounts (if applicable)
• Rent receipts (if HRA claimed)

Step 3: Respond Online

1. Login to incometax.gov.in
2. Go to Pending Actions → e-Proceedings
3. Click on the notice
4. Submit your response with supporting documents

Step 4: Attend the Hearing (if required)

If the officer requires a personal hearing, attend with all documents. You can also authorise a CA or tax consultant to represent you.

Common Reasons for Scrutiny

High-Value Transactions

The IT department receives information about:

• Property purchases above ₹30L
• Cash deposits above ₹10L
• Credit card payments above ₹10L
• Mutual fund investments above ₹10L

If these are not explained in your ITR, you may receive a notice.

Mismatch Between ITR and AIS

If your ITR shows lower income than AIS, the department will ask for an explanation.

Large Deductions

Claiming unusually large deductions (80C, 80D, HRA) relative to income may trigger scrutiny.

Capital Gains Not Reported

AIS shows all capital gains from brokers and registrars. If you did not report them in your ITR, expect a notice.

How to Avoid Scrutiny

1. Report all income — AIS shows everything; do not omit any income
2. Reconcile AIS before filing — Ensure your ITR matches AIS
3. Keep documentation — Maintain proof for all deductions claimed
4. File on time — Late filers are more likely to be scrutinised
5. Explain high-value transactions — If you have large transactions, ensure they are explained in your ITR

Penalty for Non-Response

If you do not respond to a scrutiny notice:

• The officer makes an ex-parte assessment based on available information
• This typically results in a higher tax demand
• Penalty of 50-200% of tax evaded may be imposed

Always respond within the specified time, even if you need more time — request an extension.

Frequently Asked Questions

Is a 143(1) notice the same as scrutiny?

No. Section 143(1) is automated processing. Section 143(2) is scrutiny — a human officer examines your return.

How long does scrutiny take?

Typically 6-18 months from the date of notice. Complex cases may take longer.

Can I hire a CA to represent me in scrutiny?

Yes. You can authorise a CA or tax consultant to represent you before the tax officer using Form 2848.

What if I disagree with the scrutiny assessment?

File an appeal before the Commissioner of Income Tax (Appeals) within 30 days of the assessment order.

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