Income Tax Notice Triggers: 15 Common Reasons the Department Sends a Notice

Most income tax notices are not random. The Income Tax Department matches what you report in your return against what banks, employers, registrars, mutual funds and other reporting entities report about you. When the two do not agree, or when a transaction looks out of line with your declared income, the system raises a notice or an intimation.

This guide lists the most common income tax notice triggers, the notice each one usually leads to, and what to do. It is written for individuals, finance teams and the CA firms that handle notices for many clients.

How the department finds a mismatch

Three data sources drive most notices:

• Form 168: TDS and TCS deducted against your PAN, advance tax and self-assessment tax paid.
• Annual Information Statement (AIS): a wider statement that adds interest, dividends, securities and mutual fund transactions, property purchases, foreign remittances and other high-value transactions reported by third parties.
• Statements of Financial Transactions (SFT): reports that banks, registrars, mutual funds and others file for transactions above set thresholds.

Your return is compared with these automatically. A gap between them is the single biggest income tax notice trigger.

15 common income tax notice triggers

What each type of notice means

Not every communication is a demand. The common types:

• Intimation after processing (Section 270(1); earlier 143(1)): your return has been processed. It may show no change, a refund, or a demand because of an adjustment.
• Defective return notice (Section 263(7); earlier 139(9)): the return has an error that makes it invalid until corrected, usually within 15 days.
• Notice for information (Section 268(1); earlier 142(1)): the assessing officer wants documents or a return.
• Scrutiny notice (Section 270(8); earlier 143(2)): the return has been picked for detailed assessment.
• Income escaping assessment (Sections 281 and 280; earlier 148A and 148): the department believes income for an earlier year was not assessed.
• Refund adjustment (Section 438; earlier 245): the department intends to adjust your refund against an outstanding demand.

The Income-tax Act, 2025 renumbers these provisions for proceedings under the new Act. Notices for earlier years may still refer to the old section numbers.

What to do when you receive a notice

• Check that it is genuine. Every notice carries a Document Identification Number (DIN). Use the "Authenticate notice/order issued by ITD" service on the e-filing portal.
• Note the response due date. It is printed in the notice. Missing it can lead to an order passed without your reply.
• Compare with AIS and Form 168. Most mismatches become clear once you see what was reported.
• Respond on the portal. Replies are filed under Pending Actions → e-Proceedings, or through the response option for outstanding demands.
• Keep a record. Save the notice, your reply, acknowledgement and supporting documents.

How to avoid the most common triggers

• Download AIS and Form 168 before filing, not after.
• Report all interest, dividends and capital gains, even small amounts.
• Follow up with deductors whose TDS is missing from Form 168 before you claim it.
• Keep proof for every deduction.
• Reconcile GST turnover with the ITR if you are a business.

When you handle notices for many PANs

For a CA firm or a company with many PANs and GSTINs, the hard part is not the reply but knowing a notice has arrived. NoticeCPC, Figment's tax notice management software, brings Income Tax, TDS, GST, Report Insight and ITAT notices into one list, gives each an owner and a due date, and sends a notice alert before it falls due. TDS credit mismatches, one of the biggest triggers, can be found early with Form 168 26AS reconciliation software (26ASCPC).