Who this is for: Individuals, proprietors, partners, company directors/CFOs—anyone who has received (or might receive) an Income‑tax scrutiny notice in India and wants clear, specific, do‑this‑next guidance.

MSA (Mukunda Shiva & Associates) prepared this practical guide to help you understand what your notice means, what the timelines are, what documents to gather, how to respond on the portal, and how to protect your position.

First, identify exactly what you received

Open the PDF/email and check three things right away:

  1. Section mentioned:
    • 143(2) – notice of scrutiny (regular assessment). It means the department will examine your return beyond the automated 143(1) intimation.
    • 142(1) – enquiry before assessment asking for specific information/documents or to file a return if not filed. Often accompanies 143(2).
    • Others you might see (not “scrutiny” per se): 139(9) (defective return), 148A/148 (reassessment), 156 (demand), 245 (adjustment). We reference them below where relevant.
  2. DIN (Document Identification Number): Every valid departmental communication must carry a DIN. If no DIN is printed/quoted (and no authorised exception applies), it is treated as invalid—you can verify that on the portal via Authenticate Notice/Order.
  3. Due date to respond: The date in your notice controls. Capture it in your calendar today.

Key timelines you should know

  • Deadline to issue a 143(2) scrutiny notice: The department must serve it before the end of 3 months from the end of the financial year in which you filed your return.
    Example: If you filed your ITR on July 31, 2025 (FY 2025‑26), the last date to serve 143(2) is June 30, 2026.
  • Time limit to complete scrutiny assessment (143(3)) is broadly 12 months from the end of the relevant assessment year (exceptions exist).
    Example: For AY 2024‑25, the normal outer limit is March 31, 2026.

Why this matters: If you’re close to a statutory time bar, align your response strategy and adjournment requests accordingly.

Limited scrutiny vs. complete scrutiny (know your scope)

Your 143(2) notice usually states whether it’s Limited Scrutiny (specific flagged issues) or Complete Scrutiny (full). In Limited Scrutiny, officers are bound to the issues mentioned; they cannot expand unless they record reasons and take prior approval from the Principal CIT/CIT. Courts have quashed assessments where this protocol wasn’t followed.

What you should do:

  • Read the “reasons/issues” listed.
  • Build your submission only around those issues (unless the case is formally converted to complete scrutiny).

Why you were picked: common, specific triggers

Selection happens either through CASS (risk‑based algorithm) or compulsory parameters issued each year (e.g., high‑risk mismatches, search/survey, specific information). Typical triggers include: AIS/SFT mismatches (credit card spends, securities/mutual fund transactions, cash deposits/withdrawals, property deals), unusually low profit ratios, large capital gains/loss claims, foreign assets/income, related‑party/TP flags, and GST‑ITR inconsistencies. See the official SFT list and AIS/TIS guides for what is reported and matched.

Exactly how to respond on the income‑tax portal (e‑Proceedings)

  1. Log in → Pending Actions → e‑Proceedings → open your notice → Submit Response. You can give a Full or Partial response and seek adjournment if needed. You may also request Video Conferencing when enabled for the notice.
  2. File uploads: Max 10 attachments per submission; 5 MB per file; total 50 MB if zipped. Add a clear written reply (up to ~4,000 chars) and a labeled document index. If you exceed limits, split and use Partial responses.
  3. Acknowledgements: Keep the Transaction ID/Acknowledgment and download View Response proof after submitting.
  4. Need more time? Use Seek/View Adjournment in the same screen with reasons (e.g., third‑party confirmations awaited).
  5. Want a hearing? Under the faceless framework, personal hearing is via Video Conferencing—available on request as per Section 144B and related guidance.

Pro‑tip: Before replying, use Authenticate Notice/Order (pre‑login tool) to confirm your DIN and document details.

What to send: a precise document blueprint (tailor to your issue)

Always start with a one‑page cover note and a paginated index. Then attach evidence by issue, not by “bulk dump”.

If the issue is income mismatch vs AIS/TIS/26AS

  • AIS/TIS download + highlights; 26AS; your reconciliation (e.g., duplicate SFT lines, wrong PAN tagging, timing differences).
  • Broker contract notes, AMC statements, bank statements for the period.
  • A short reconciliation table that ties each AIS line item to your books/return.

If the issue is large cash deposits/withdrawals

  • Bank statements with highlighted entries; cash book; source trail (e.g., withdrawals‑to‑deposits mapping, business cash register).
  • If property sale/bank loan is the source, attach sale deed/loan sanction & disbursal proofs. (SFT tracks such transactions.)

If the issue is capital gains or losses

  • Demat/portfolio statements; contract notes; corporate action proofs; working of FIFO; 112A/111A tax workings; bank credit proof of sale proceeds.
  • For property: registry, stamp duty valuation, cost‑improvement proofs, 50C/55A considerations.

If the issue is business margins or expenses

  • Trial balance; GSTR‑1/3B vs books vs ITR reconciliation; major expense ledgers (advertising, subcontracting, freight, travel); TDS compliance (26Q/24Q/TRACES).
  • Stock movement and valuation policy; related‑party transactions summary.

If the issue is foreign assets/income

  • Schedule FA, foreign bank/broker statements; tax residency, DTAA relief worksheet; foreign tax credit (FTC) docs.

Keep it lean: Only attach what proves the point raised. One issue → one evidence pack → one short explanation.

Smart workflow you can copy (checklist)

T‑0: Today

  • Verify DIN and due date; download notice → create a case folder; read if it says Limited or Complete scrutiny.

T+1 day

  • Pull AIS/TIS/26AS, bank/demat/GST data; make a variance tracker.

T+2–4 days

  • Draft issue‑wise replies + annexures; cross‑refer every number to your proof.

Before the portal due date

  • Upload Partial responses if the pack is large; if third‑party evidence is pending, seek adjournment explaining the dependency.

After submission

  • Save Acknowledgment and “View Response” PDFs; note follow‑up queries that may come under 142(1).

If the portal asks for “more” than the listed issues in a Limited Scrutiny

You can respond respectfully that your case is under Limited Scrutiny and provide what’s relevant to the specified issues. If the officer wants to expand, it requires recorded reasons and prior approval for conversion to Complete Scrutiny. Track this in writing on the portal.

Three things many taxpayers miss

  1. File‑size limits matter: Single file ≤5 MB, up to 10 attachments, zipped total ≤50 MB. Plan your annexures accordingly.
  2. You can request Video Conferencing for clarification or oral submissions in faceless proceedings; ask through the e‑Proceedings screen (when enabled).
  3. Updated Return (ITR‑U) (open for 48 months with additional tax) can be filed to voluntarily correct errors or omissions in a return, but only before any scrutiny or reassessment notice is issued. Once a notice under section 143(2)/142(1)/148A is served, the option to file ITR-U is no longer available. Many taxpayers miss this window by waiting too long.

What happens if you ignore a scrutiny notice?

Non‑response can lead to best‑judgment assessment and downstream demand/penalties. If you disagree with a final order, you generally have 30 days to file Form 35 appeal to the CIT(A)/NFAC—filed online through the portal. Filing an appeal does not automatically stay recovery; separately pursue stay under the law.

Micro‑Templates

1) Cover note (attach as Page 1)

Subject: Response to Notice u/s 143(2) dated <dd/mm/yyyy> – PAN <ABCDE1234F> – AY <20xx-xx> (Limited Scrutiny: <issues>)

We acknowledge receipt of the above notice (DIN: <DIN>). The response is organized issue‑wise with a paginated index. All figures reconcile to the ITR and audited financials (where applicable).

Issue A: <e.g., AIS mismatch – securities>
• Summary of position (3–5 lines)
• Reconciliation table reference: Annexure A1 (pages 3–5)
• Supporting: Broker statements (A2), Bank credits (A3), Working (A4)

Issue B: <e.g., Cash deposit>
• Summary of position...
• Trail and cash book references...

We request that the proceedings be confined to the issues listed for Limited Scrutiny. If any further clarification is required, we are available and can join via Video Conferencing.

Sincerely,
<Your Name/Designation>

2) Document index

  • A1. AIS/TIS extract & highlights
  • A2. 26AS and TDS reconciliation
  • B1. Bank statements (pgs 1–120; relevant entries highlighted)
  • C1. GSTR‑1/3B vs. books vs. ITR tie‑out
  • D1. Ledger extracts (advertising, freight, subcontracting)
  • E1. Demat statements & contract notes (capital gains)

Frequently asked questions

Q. My 143(2) came months after filing. Is it “in time”?
Check the rule: served before the end of 3 months from the end of the FY in which you filed your return (example provided above). If outside, speak to your advisor on remedy.

Q. How do I verify a notice’s authenticity quickly?
Use the Authenticate Notice/Order tool on the portal; if no DIN, the communication is non‑est (invalid).

Q. The notice mentions “Limited Scrutiny” but asks for unrelated details.
Politely respond within scope and record that expansion needs formal conversion with approval; request the approval note if the scope is expanded.

Q. Can I ask for more time?
Yes—use Seek Adjournment with reasons in e‑Proceedings.

Q. If I disagree with the final order, what’s my window?
30 days to e‑file Form 35 before the CIT(A)/NFAC; fees apply as per rules.

Your situation → next steps

Salaried with AIS mismatch (interest, dividends, MF):
Pull AIS/TIS → mark duplicates/wrong PAN tagging → reconcile to bank/passbook → brief note + proofs → file on portal.

Trader/Investor with equity/FO/crypto activity:
Get broker P&L & contract notes → reconcile FIFO/LTCG/STCG → justify loss set‑offs (carry‑forward schedules) → bank linkage.

MSME/proprietor flagged for cash or margins:
Cash book trail → cash deposit source mapping → GST‑books‑ITR tie‑out → top expense ledgers + purchase proofs → debtor/creditor ageing.

Property sale flagged:
Registry, consideration flow, stamp valuation, cost/improvement proofs; 54/54F investments timeline and evidence.

Foreign income/assets query:
Schedule FA, overseas statements, tax paid proof, FTC computation; residency position and DTAA working.

How We can Help you

1. Scoping & Onboarding (Day 0–2, subject to notice due date)

Purpose: Lock the scope, verify authenticity, and build a workable plan before anyone uploads a single file.

What we do

  • Conflict & independence check (as per ICAI ethics) before accepting the engagement.
  • Notice validation: verify DIN, section(s) invoked, and time‑bar position; confirm Limited vs Complete Scrutiny scope.
  • Issue Matrix: convert every query/para in the notice into an issue row with: statute reference, data needed, owner, and due date.
  • Authorization setup: formal engagement letter; add/confirm Authorized Representative on the income‑tax portal (where applicable); define a single point of contact (SPOC) on both sides.
  • Data room: create secure folders with naming conventions and a document index template (see §3 below).

Your inputs

  • Copy of the notice (PDF), ITR & computation, AIS/TIS & Form 26AS, audited/unaudited financials, GST returns (if any), bank/demat statements (as relevant), and prior correspondence—only for the years/issues in scope.

Deliverables you receive

  • Scoping Memo (2–3 pages)
  • Issue Matrix (Excel/Sheets)
  • Document Request List (DRL) with priorities and a calendarized plan

2) Evidence Mapping & Reconciliation (Day 2–7, rolling)

Purpose: Turn raw documents into issue‑wise proof sets the officer can follow in minutes.

What we do

  • Source downloads & tie‑outs: AIS/TIS vs 26AS vs return; bank/demat extracts; GST‑books‑ITR tie; property papers; loan trails; ledgers for flagged expenses.
  • Reconciliation tables (one per issue) that show:
    What the notice says → what your records show → variance (if any) → explanation → page reference.
  • Third‑party confirmations (if genuinely needed): format drafts; list dependencies (broker, bank, vendor, buyer); track acknowledgments.
  • Sampling (when ledgers run long): define materiality and sample selection so testing is efficient yet defensible.
  • Consistency checks across schedules (capital gains vs demat; turnover vs GST; TDS vs 26AS).

Your inputs

  • Quick clarifications on transactions that lack obvious paper trails (e.g., a one‑off cash deposit linked to a property advance).

Deliverables you receive

  • Evidence Map (one‑page visual index)
  • Reconciliation Packs (A‑series for AIS, B‑series for bank/cash, C‑series for GST, etc.)
  • Variance Tracker (shows every mismatch and its resolution status)

3) Portal‑Ready Submission (Before the due date; staged if needed)

Purpose: File a clean, self‑contained response that respects portal limits and keeps the discussion within scope.

What we do

  • Covering Letter with DIN, section(s), scope (Limited/Complete), and an issue‑wise summary.
  • Document Index with global page numbering (e.g., A1‑A12 for AIS; B1‑B40 for bank; C1‑C25 for GST).
  • Issue‑wise notes: facts, reconciliation snapshot, and precise annexure references—no “document dumps.”
  • Compression & splitting plan for portal caps (e.g., ≤5 MB per file, ≤10 files; zip sets if required) and Partial submissions when evidence is still en‑route.
  • Adjournment requests (only when justified) with reasons tied to third‑party dependencies.
  • Second‑partner review for quality control; UDIN on any CA certificates/reports where applicable.
  • Filing proofs: save Transaction IDs and View Response PDFs; maintain a Response Register.

Deliverables you receive

  • Submission Pack v1 (PDF set),
  • Adjournment draft (if used),
  • Filing Proof Bundle (acknowledgments & timestamps)

4) Hearing Preparation (Video Conferencing, if granted) & Representation

Purpose: Keep the interaction focused, respectful, and confined to the issues.

What we do

  • VC request (where available) and slot coordination on the portal.
  • Hearing Brief:
    • 5‑minute opener (facts & scope)
    • 3–5 key talking points per issue
    • One‑page ‘numbers at a glance’ table
  • Case‑law/board‑instruction folder (only where necessary and relevant to the issue).
  • Dry‑run with you for Q&A; decide what not to volunteer (stay within Limited Scrutiny unless formally expanded).
  • Post‑hearing note: recap of queries asked, documents promised, and next steps with micro‑deadlines.

Deliverables you receive

  • Hearing Brief (PDF)
  • Case‑law/Instruction Index (if used)
  • Post‑Hearing Action List

What We May Need From You (checklist)

  • ☐ One SPOC (Single Point of Contact.) for quick answers and document sign‑offs
  • ☐ Clear scans (searchable PDFs) of only in‑scope documents
  • ☐ Bank/demat statements covering the exact period in question
  • ☐ Ledger extracts for flagged expense heads (with narration)
  • ☐ Prompt confirmation on facts we draft into your replies
  • ☐ Authorization for portal submissions/VC request (as applicable)

What We Do Not Do (boundaries)

  • ✘ Create or back‑date documents that don’t exist
  • ✘ Offer “assured outcomes” or influence outside legal process
  • ✘ Expand scope without your written consent
  • ✘ Share your data beyond the engagement or legal requirements

Typical Working Timeline (illustrative only)

  • Day 0–2: Scoping, DIN check, Issue Matrix, DRL
  • Day 2–7: Evidence Map, Reconciliations, Third‑party requests
  • Day 7–10: Draft replies & annexures → internal QC → Portal filing
  • As scheduled: VC hearing prep & appearance (if granted)
  • Post‑order: Review → rectification (if any) → appeal scaffold (if advised)

Actual pacing always follows the department’s due date and the volume/availability of records.

Note: This is general guidance. Facts differ by taxpayer and year; interpretations depend on records and law in force.

Engagements are executed consistent with ICAI Code of Ethics, applicable standards/guidance, and the Income‑tax e‑proceedings framework.

We work strictly within the scope of your notice and documentary evidence you provide.

Helpful official references

Want us to review your notice?

Share only the section, date, and issues listed (no sensitive documents over chat/email). We can outline a case‑specific document plan and a portal submission sequence that fits your timeline and risk profile.

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