After filing an Income Tax return in India, there are several common reasons why an assessee (taxpayer) may receive a query letter from an Income Tax officer. These query letters are issued to seek clarification or additional information regarding the details provided in the tax return. Here are some of the common reasons for receiving a query letter:
Discrepancies in Income- common reason to get a Query Letter from Income Tax Department:
If there are discrepancies in the reported income, such as mismatched income from different sources, unexplained or high-value transactions, or undisclosed income, the Income Tax officer may issue a query letter to seek clarification and supporting documents for the reported income. Do ensure to match your Return of Income with Form26AS, AIS and TIS statements available to Income Tax Portal once you log in.
Claiming Incorrect Tax Deductions/Exemptions inIncome Tax Return:
If the taxpayer has claimed excessive deductions, exemptions, or allowances, or if there are errors in reporting tax-saving investments or expenses, the Income Tax officer may raise queries to verify the correctness of the claims made.
Non-disclosure of Assets/Liabilities:
If the taxpayer fails to disclose certain assets, such as properties, bank accounts, investments, or liabilities like loans or outstanding debts, the Income Tax officer may send a query letter to investigate the non-disclosure and seek relevant information.
Discrepancies in TDS (Tax Deducted at Source):
If there are discrepancies in the TDS claimed by the taxpayer in their return and the TDS information available with the Income Tax Department, a query letter may be issued to reconcile the differences and provide the necessary evidence.
Inconsistencies in Claiming Credit of Tax Payments made:
If the taxpayer has not paid the entire tax liability or if there are discrepancies in the reported tax payments, the Income Tax officer may send a query letter to ascertain the reasons for the inconsistencies and request clarification or proof of payment.
Unusual High Transactions compared to Reported Income:
If the taxpayer has engaged in high-value or suspicious transactions, such as significant cash deposits, large loans or advances, or substantial investments, the Income Tax officer may issue a query letter to investigate the source and nature of these transactions.
Non-filing of Returns:
If the taxpayer has not filed their income tax returns for a particular assessment year or multiple years, the Income Tax Department may send a query letter asking for the reasons behind the non-compliance and requesting the filing of the pending returns.
Random Scrutiny:
In some cases, the Income Tax Department selects returns for scrutiny through a computer-assisted random selection process. The taxpayer may receive a query letter as part of routine assessment and verification procedures, even if there are no apparent discrepancies in the return.
It is important to note that receiving a query letter does not necessarily imply wrongdoing on the part of the taxpayer. It is a standard procedure followed by the Income Tax Department to ensure accurate reporting of income and adherence to tax laws. The taxpayer is expected to respond to the query letter within the specified timeframe, providing the necessary information and supporting documents to address the concerns raised by the Income Tax officer.
In case you have received any query letter, feel free to contact us for any help you may need.
