Recently Income Tax Department has increasingly issued notices under Section 133(6) of the Income Tax Act, 1961. Historically, these notices were primarily used to cross-verify third-party information during scrutiny assessment proceedings. However, over the past year, leveraging this provision and the e-verification scheme, the department has significantly expanded its information gathering and clarification efforts from both filers & non-filers of income tax returns nationwide. Numerous non-residents abroad have also received these notices under Section 133(6).
Section 133(6) empowers tax department to issue notice to gather / inquire specific information or call for documents thereof.
Several reasons can prompt notices under Section 133(6), including mismatched information in filed returns, inquiries about specific transactions, high-value transactions, property-related dealings, and the need to verify the disclosure accuracy. Other triggers may include claiming incorrect deductions, incomplete ITR filings, and ongoing investigations. Even non- residents, who might not be required to file income tax returns in India, may receive such notices to cross-verify domestic or foreign income or transactions in NRO or NRE accounts.
The consequences for not responding to such notices include penalty under Section272A(2), of INR 500 per day.
To respond to notices under Section 133(6), taxpayers must use the Income Tax Login and navigate through the Compliance Portal where the notice is posted. Detailed submissions and supporting documents must be uploaded according to the provided instructions.
The tax authorities should implement a mechanism to notify taxpayers promptly about the closure status of raised queries, providing clarity on whether the matter has been resolved or remains active. Such a step would ensure accountability and facilitate smoother interactions between taxpayers and tax authorities.
