DIN is likely to improve transparency and bring down the processing time of notices
DIN won’t be limited to new tax notices. It will also be issued to all the pending cases after they get computerized
The tax filing season is coming to a close in about ten days. In the next phase, the income tax department will verify your income tax return (ITR) based on the information it has and issue notices if it finds any anomalies. From this year, any notice that the department issues will have a computer-generated Document Identification Number (DIN). According to a recent circular by the Central Board of Direct Taxes (CBDT), income tax notices issued after 1 October will have DIN.
The move is yet another step that the income tax department has taken towards digitization. Among other things, introduction of DIN is likely to improve transparency, bring down the processing time and enhance accountability of the tax department towards taxpayers.
Notices with DIN
All communication from the tax department related to assessment, appeals and orders—statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, and approval and so on—will carry a DIN. “Some of the possible notices that an individual income tax assessee can receive are notice for delay in filing ITR, for TDS (tax deducted at source) claimed not matching with Form 26AS, for filing defective return, notices for assessment, notices for revision in completed assessments, reopening of assessments, summons, show cause for penalties, prosecutions and so on," said Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, a chartered accountancy firm.
DIN will also be issued to all the pending cases after they get computerized. “All pending assessment proceedings, where notices were issued manually, prior to issuance of the said circular, such cases to be identified and notices so sent to be uploaded on Income Tax Business Application (ITBA) by 31 October 2019," mentioned the CBDT circular. ITBA is the platform which electronically generates almost all the notices and orders of the income tax department.
While responding to notices from the tax department, taxpayers will also have to mention DIN in their replies.
Types of notices
Typically, the income tax department issue five types of notices—routine, scrutiny, show cause, prosecution or notice seeking details of income or assets outside India—for various reasons.
Routine notices generally do not require you to reply unless you have made some arithmetic error or provided wrong information in your ITR. These are often just an intimation stating that the return has been successfully processed.
Scrutiny notices, on the other hand, are issued by the department to obtain information related to particular high-value transactions or assets, which may not be in line with your ITR.
In cases where the tax department suspects concealment of income by the taxpayer, leading to shortfall in tax deposit, show-cause notice can be issued. Prosecution notice can be issued to a person if he or she does not file ITR, even after receiving a notice from the department to do so. Apart from that, the department may issue a notice asking for details of foreign assets and income if the same is not declared properly in ITR.
Replying to notices
Unless you have filed your ITR offline, the department mostly corresponds through online modes. Besides sending emails and SMSes, the department also uploads tax notices, if any, in your e-filing account. Once you receive a notice, go through it carefully and respond within the time frame mentioned.
For each tax notice, a particular response procedure has to be followed. Most of these responses can be filed online through your income tax account, unless the department has specifically asked you to appear personally.
If you fail to comply with the tax notices, you may end up paying a penalty or facing prosecution, depending on the case. The penalty can be as high as 300% of the dues and jail term can go up to seven years.
If you fail to respond to tax notices because of genuine reasons, you should request for an extension either by approaching the respective assessing officer or through the department’s online portal. However, if you find income tax notices complicated, get the help of a chartered accountant or other relevant experts.