An Income Tax Return is mandatorily required to be filed if the Total Income is more than the minimum amount which is exempted from the levy of tax. In other words, it is compulsory to file an Income Tax Return in case tax is payable on your income.

Although ITR is not required to be filed when there is no tax payable, you may still receive a notice for non filing of ITR even if you were not required to file your ITR. This article focuses on such cases wherein you may receive a notice for non-filing of ITR.

Compliance Income Tax Return filing Notice

This notice is sent to people by the Income Tax Dept if they think that the person has some taxable income but the ITR has not been filed for such income. The Income Tax Dept collects information through various sources and then based on their own analysis send notices to people who have carried out specified transactions.

If you have received this notice you should not panic. However, you should also not ignore this notice.

You are only required to reply to the govt the reason why you didn’t file your ITR. You can reply to such a notice by following these steps:-

  1. Login to your account on the website incometaxindiaefiling.gov.in
  2. Click on the “Compliance” Tab and then click “View and Submit Compliance”
  3. If you have not filed your ITR – select the reason for the same i.e. Return under Preparation/ Business has been closed/ no taxable income/ others.
  4. If you have already filed your ITR but still received this notice – mentioned the ITR filing acknowledgement number.
  5. You may also be required to submit a compliance form which relates to the transactions which you have undertaken in the financial year for which the notice has been issued.

Related Information Summary

After furnishing the above mentioned details, the taxpayer would also be required to submit the details of 3rd party information. This information is collected by the Income Tax Dept through various sources and then taxpayer would be required to submit details of the source of income for such transactions. The taxpayer is required to choose one of the following options:-

  1. Self Investment/ Expenditure is out of exempt Income
  2. Self Investment/ Expenditure is out of accumulated savings
  3. Self Investment/ Expenditure is out of Gifts/ Loan from Others
  4. Self Investment/ Expenditure is out of Foreign Income
  5. Self Income from Transaction is exempt
  6. Self Income from Transaction is below taxable limit
  7. Self Income from Transaction relates to different assessment year
  8. Self not known
  9. Other PAN – This is to be selected if the 3rd party information relates to another taxpayer. In such cases, the PAN of the taxpayer is to be mandatorily provided.
  10. Not known – This option is to be selected if the taxpayer has no information about such transaction.
  11. I need more information – This option is to be selected if the taxpayer knows about the 3rd party information but needs more information to submit response.

How does the Income Tax Dept get this 3rd Party Information

The Income Tax Department collects information from various sources regarding the various transactions undertaken by a person. The govt has records of all the transactions undertaken by a person where the PAN has been submitted.

Such records are collected by the govt through various sources and then monitored by the Centralised Processing Cell – Compliance Management (CPC-CM) through various computerised tools.

It is not necessary that a notice would be issued in all the circumstances below. However, if the notice is issued – it could be because of any or more type of transactions mentioned below:-

  1. Statement of Financial Transaction or Reportable Account (Annual Information Report)

The govt collects a lot of data from this report which is required to be furnished by the person with whom the transaction has been undertaken. In other words, the other person with whom you have transacted will report to the Govt about such a transaction.

S. No.Nature & Value of TransactionTransaction to be reported to Govt by:-
1.a. Payment made in Cash for purchase of Bank Drafts or Pay Order or Bankers Cheque of an amount aggregating to Rs. 10 Lakhs or more in a Financial Year.
b. Payments made in Cash aggregating to Rs. 10 Lakhs or more during the financial year for purchase of pre-paid instruments issued by RBI.
c. Cash Deposits or Cash Withdrawls (incl. through Bearer’s Cheque) aggregating to Rs. 50 Lakhs or more in a financial year, in or from one or more current accounts of the person		A banking Company or a Co-operative Bank.
2.Cash Deposits aggregating to Rs. 10 Lakhs or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.1. A Banking Company or a Co-operative bank.

2. Post Master General.

3.One or more fixed deposits (other than a fixed deposit made through renewal of another fixed deposit) of a person aggregating to Rs. 10 Lakhs or more in a financial year of a person.1. A banking Company or a Co-operative Bank.

2. Post Master General

3. Nidhi Company

4.Non Banking Financial Company.

4.Payments made by any person of an amount aggregating to:-

i. 1 Lakh or more in cash; or

ii. Rs. 10 Lakhs or more by any other mode,

against bills raised in respect of 1 or more Credit Cards issued to a person in a financial year.

A Banking Company or a Co-operative Bank or any other company or institution issuing Credit Card.
5.Receipt from any person of an amount aggregating to Rs. 10 Lakhs or more in a financial year for acquiring bonds or debentures issued by the Company or Institution (other than the amount received on account of renewal of the bond or debenture issued by that Company).A Company or Institution issuing Bonds or Debentures.
6.Receipt from any person of an amount aggregating to Rs. 10 Lakhs or more in a financial year for acquiring shares (including share application money) issued by the Company.A Company issuing Shares.
7.Buy back of shares from any person (other than shares bought in the open market) for an amount aggregating to Rs. 10 Lakhs or more in a financial year.A Company listed on a recognised stock exchange purchasing its own securities under Section 68 of the Companies Act, 2013.
8.Receipt from any person of an amount aggregating to Rs. 10 Lakhs or more in a financial year for acquiring one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).A trustee of a mutual fund or such other person managing the affairs of the Mutual Fund.
9.Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through the issuance of travellers cheque or draft or any other instrument of an amount aggregating to Rs. 10 Lakhs or more during a financial year.Authorised person under the Foreign Exchange Management Act, 1999.
10.Purchase or Sale by any person of Immovable Property for an amount of Rs. 10 Lakhs or more or valued by the Stamp Valuation Authority referred to in Section 50C of the Act at Rs. 30 Lakhs or more.Inspector-General or Registrar or Sub-Registrar appointed under the Registration Act, 1908.
11.Receipt of Cash Payment exceeding Rs. 2 Lakhs for sale, by any person, of goods or services of any nature.Any person who is liable to tax audit under Section 44AB of the Income Tax Act.
12.Cash deposits during the year of more than:-

  1. Rs. 12.5 Lakhs or more in one or more current account of a person; or
  2. Rs. 2.5 Lakhs or more in one or more accounts (other than a current account) of a person
1. A Banking Company or a Co-operative Bank to which the Banking Regulations Act, 1949 applies.

2. Post Master General of the Post Office.

  1. Central Information Branch

Central Information Branch (CIB) is the nodal office in the finance department to gather all documents pertaining to transactions in relation to which permanent account number (PAN) or general index register number are given during sale and purchase of property and monetary deposits.

It reports the following transactions:-

  1. CIB 94: Sale of Motor Vehicle
  2. CIB 151: Transfer of Immovable Property
  3. CIB 154: Transfer of Capital Assets where the value declared for the purpose of Stamp Duty is more than Sale Value.
  4. CIB 157: Purchase of Immovable Property valued at Rs. 5 Lakhs or more.
  5. CIB 183: Time Deposit of Rs. 1,00,000
  6. CIB 185: Purchase of Bank Draft of Rs. 50,000 in Cash.
  7. CIB 321: Share Transactions more than Rs. 20,000.
  8. CIB 403: Investment in Fixed Deposit/ Time Deposit exceeding Rs. 2,00,000.
  9. CIB 410: Cash Deposits aggregating to Rs. 20,000 in a day.
  10. CIB 502: Contract of Rs. 10 Lakhs or more in a Commodities exchange.
  11. CIB 514: Interest paid by a Co-operative Credit Society.
  12. CIB: Payment in connection with foreign travel amount exceeding Rs. 1 Lakh at a time.
  13. Payment to hotel and restaurant exceeding Rs. 1 Lakh at a time.
  1. TDS Return
    1. TDS 94A: TDS Return – Interest other than Interest than Security (Section 194A)
    2. TDS 94B: TDS Return – Salary to Employees (Section 192)
  1. Service Tax/ GST/ VAT Return
  1. Stock Broker
    1. STT 01: Purchase of Equity Shares in a recognised stock exchange
    2. STT 02: Sale of Equity Shares (settled by actual delivery or transfer) in a recognised stock exchange.
    3. STT 03: Sale of Equity Shares (settled by otherwise than by actual delivery or transfer) in a recognised stock exchange.
    4. STT 04: Sale of options (derivatives) in a recognised stock exchange
    5. STT 05: Sale of futures(derivatives) in a recognised stock exchange