Warning: Ignoring Income Tax Mismatch Notice May Result in a Tax Demand

By | November 25, 2025
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Warning: Ignoring Income Tax Mismatch Notice May Result in a Tax Demand

 

Issue: To inform taxpayers about the increased volume of system-generated intimations under Section 143(1)(a) of the Income Tax Act and to warn them of the serious financial and compliance consequences of failing to respond to these notices or correct the discrepancies.

Facts:

  • The Income Tax Department’s Central Processing Centre (CPC) utilizes automated mismatch detection processes.

  • These system-generated intimations (under Section 143(1)(a)) alert taxpayers to discrepancies found between their filed Income Tax Returns (ITR) and data reported in documents like the Annual Information Statement (AIS) or Form 26AS.

  • The deadline for filing a revised return for AY 2024-25 is December 31, 2025.

Decision:

Taxpayers who receive a mismatch intimation must respond by submitting clarifications or filing a revised return by the deadline, as non-response will be treated as acceptance of the department’s computed figures, inevitably resulting in a tax demand.

Key TakeDowns:

  • Consequence of Non-Response: If the taxpayer does not respond to the intimation, the department will treat the non-response as acceptance of the figures computed by the department. This acceptance will lead to a tax demand being raised against the taxpayer.

  • Financial Penalties: If a demand is raised, interest (under Sections 234B and 234C) on the outstanding amount will continue to accumulate. In cases involving significant amounts, the department may initiate recovery proceedings or adjust the unpaid dues against refunds in subsequent years.

  • Action Required (Reconciliation): Taxpayers should reconcile their TDS/TCS credits (Form 16/16A) with the AIS/Form 26AS. They must submit feedback on the AIS portal to flag mismatches, which prompts the department to contact the reporting entity (deductor/bank) for correction.

  • Filing Revised Returns: If a genuine error in the original return is identified, the taxpayer should file a voluntary revised return under Section 139(5) before the December 31 deadline.