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The Income Tax Department has started sending scrutiny notices to taxpayers for the financial year 2021-22. These notices are being sent to around 1000 taxpayers through the faceless system. Most of the notices are for cases where the taxpayer has claimed a refund of deducted tax. Last year, the department had emailed people to recheck and confirm their refund claims. Now, the high refund cases have been selected for scrutiny.

Some taxpayers will undergo partial scrutiny, while others will undergo detailed scrutiny. The selection of cases this year has been done completely through a digital method. It is important for all income tax return filers to ensure that they have not missed any notices in their emails. Failure to respond to the notice on time may result in a penalty of up to Rs 10,000. In such cases, the tax demand can be issued by rejecting the refund through the faceless system itself.

In addition to refund cases, the department has also sent notices in other situations. These include cases where taxpayers have shown tax-free income such as income from agriculture or have sought exemptions under various sections. Cases with discrepancies between GST and turnover shown in returns are also under scrutiny. The department has also considered the Sub-Registrar's reports on high-value transactions like the purchase or sale of large land or property, and higher investments in mutual funds in proportion to income, among other factors, for selecting cases for scrutiny. If someone has shown less income compared to the previous year, their case is also flagged by the department.

Questions on refunds, exemptions, mutual funds and land deals

  • List itemApart from refunds, there are many such cases in which notices have been sent by the department.

  • List itemMainly those who have shown tax-free income in the returns such as income from agriculture or have sought exemption under various sections, those cases have also been taken under scrutiny.

  • List itemCases where there is a discrepancy between the GST and the turnover shown in the returns have also been taken up for scrutiny.
  • List itemSub-Registrar’s reporting on high value transactions such as purchase or sale of large land or property, higher investment in mutual funds etc. in proportion to income etc. have also formed the basis of selected cases for scrutiny.
  • List itemIf someone has shown less income as compared to the previous year, then such cases are also red flagged by the department.
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