Income Tax Scrutiny Notice Reply | How to Respond to Section 143(2) and 142(1) Notices

If you have received an income tax scrutiny notice, your reply must be filed online through the e-Proceedings portal at incometax.gov.in. The entire process is faceless. This guide covers exactly what to do, what to submit, and what the deadlines are for both the Section 143(2) notice that initiates scrutiny and the Section 142(1) questionnaire that follows.

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Key Takeaways

• Your income tax scrutiny notice reply is filed on the e-Proceedings portal → log in at incometax.gov.in → Pending Actions → e-Proceedings
• Section 143(2) initiates scrutiny; Section 142(1) is the questionnaire that arrives during scrutiny, both require separate responses
• Your notice will specify Limited Scrutiny or Complete Scrutiny, this determines exactly what you need to submit
• Documents required include bank statements, Form 26AS, AIS, TIS, Form 16, and proof of deductions or transactions flagged
• The Income Tax Act 2025 renumbers scrutiny provisions, Section 143(2) becomes Section 270(8) and Section 142(1) becomes Section 268(1), but all notices for AY 2026-27 and earlier still carry old section numbers
• Missing a deadline without requesting an adjournment can result in a best judgment assessment under Section 144, a demand based on the AO’s estimate, not your actual income

How to Reply to an Income Tax Scrutiny Notice : Step by Step on e-Proceedings

The step-by-step process below applies whether you have received a 143(2) notice, a 142(1) questionnaire, or both. Do these in sequence, do not skip straight to drafting a reply before completing Steps 1 to 3.

Step 1 : Download Your Income Tax Notice PDF from the Portal

Log in at incometax.gov.in using your PAN and password. Go to Pending Actions → e-Proceedings. You will see all notices issued to you listed here. Click View Notice against the relevant notice, then click the Notice/Letter PDF button to download it.

Read the notice fully before doing anything else. Check the Assessment Year, the section under which it is issued (143(2) or 142(1)), and the response deadline. Many taxpayers make costly errors by responding to the wrong assessment year or misreading what the notice is actually asking.

Also verify the Document Identification Number (DIN) on the notice against the department’s authentication tool on the portal. A notice without a valid DIN is not legally enforceable.

Step 2 : Identify Whether It Is a 143(2) Notice or a 142(1) Questionnaire

The notice will clearly state the section. This matters because the two notices require different responses.

A Section 143(2) notice is the formal communication that your return has been selected for scrutiny. It will state whether the scrutiny is Limited or Complete. At this stage, you typically need to confirm receipt and submit your computation of income.

A Section 142(1) questionnaire is the AO’s specific information request during the scrutiny process. It will list numbered points asking you to explain or document specific items — a cash deposit, a deduction claimed, a high-value transaction, a mismatch with AIS data. This is the notice that requires the most careful, point-by-point response.

In most scrutiny cases you will receive both — the 143(2) first, then one or more 142(1) questionnaires as the assessment progresses.

Step 3 : Reconcile Your AIS, TIS and Form 26AS Before Drafting Any Reply

Before writing a single word of your reply, pull your AIS (Annual Information Statement), TIS (Taxpayer Information Summary), and Form 26AS for the relevant Assessment Year from the portal. Compare each item the notice has flagged against what these documents show.

Most scrutiny notices arise from mismatches between what you declared in your ITR and what the department’s data sources show. Knowing exactly where the mismatch lies tells you what the AO is actually looking at and what your reply needs to address. A reply that does not directly address the flagged mismatch, even if technically accurate, will not satisfy the AO.

If you also receive a notice under Section 133(6) asking for information from a third party, your bank or broker, this is commonly issued alongside scrutiny proceedings. Our article on how to reply to a notice under Section 133(6) explains the separate compliance required.

Step 4 : Prepare Your Point-by-Point Reply with Labelled Annexures

Your reply must follow the numbering in the questionnaire exactly. If the notice has 6 points, your reply addresses Point 1, then Point 2, then Point 3, in that order. Each point needs:

• A direct written explanation in plain, factual language
• A reference to the supporting annexure attached
• No volunteering of additional information beyond what is asked

Label every document before uploading: Annexure-A_BankStatement_SBI_FY2324.pdf, Annexure-B_Form16_Employer.pdf. File size must be under 5MB per attachment. Use PDF, Excel, or CSV formats only.

For salaried employees, scrutiny most commonly focuses on TDS mismatches, multiple employers in one year, or unexplained interest income. For business income cases, the AO will typically want profit and loss, balance sheet, and bank reconciliation. Address specifically what is asked, do not submit everything hoping something covers it.

Step 5 : Submit Your Response on e-Proceedings and Save the Acknowledgement

Go to e-Proceedings → View Notice → Submit Response. Choose whether you are filing a Partial Response (if some points need more time) or a Full Response. Tick the declaration checkbox and submit.

After submission, download and save the acknowledgement immediately. This is your proof of compliance. If the AO later claims non-response, the acknowledgement with timestamp is your evidence.

If you need more time for specific points, use the Partial Response option and mention clearly which points will follow and by when. Never let a deadline expire without filing at least a partial response.

Section 143(2) Scrutiny Notice : What It Means and What Comes Next

A Section 143(2) notice means your return has been selected for detailed examination by the Income Tax Department. It does not mean you have done anything wrong. Cases are selected either through CASS (Computer Assisted Scrutiny Selection) based on risk parameters, or through manual selection where the AO has specific information about your transactions.

For AY 2025-26, the CBDT selected approximately 1.65 lakh cases for scrutiny, roughly three to four times the usual volume. The increase is driven by AIS-based data matching, which flags mismatches between bank-reported transactions and ITR disclosures automatically.

Limited Scrutiny vs Complete Scrutiny Income Tax : What the Difference Means for You

Your 143(2) notice will state which type applies. This is the single most important thing to check before preparing your response.

Limited Scrutiny means the AO has flagged one or two specific issues. You are only required to address those exact points. Do not submit documents about other aspects of your return, this can inadvertently open new issues. The AO is legally bound to stay within the flagged issues and cannot expand the scope without recording reasons and obtaining prior approval from the Principal CIT.

Complete Scrutiny means your entire return is under examination. Every income source, deduction, and significant transaction may be questioned. These cases are typically selected through CASS or where the department has received specific third-party information about the taxpayer.

Income Tax Scrutiny Notice Time Limit : Deadlines You Must Track

A 143(2) notice issued after the 3-month deadline is legally invalid. If you receive one that appears time-barred, verify the date carefully — this is a ground that can be raised at the outset of proceedings.

Income Tax Act 2025 : New Section Numbers for Scrutiny Notices

The Income Tax Act 2025 came into effect from 1 April 2026, renumbering the entire assessment and scrutiny framework. If you have been researching your notice online and seeing references to both old and new section numbers, here is what you need to know.

The most important practical point first: If you have received a notice today, it almost certainly carries the old section numbers from the Income Tax Act 1961, 142(1), 143(2), 144. All notices issued for Assessment Year 2026-27 and earlier continue to be governed by the Income Tax Act 1961, even though the new Act is now in force. The new section numbers will apply only to notices issued for AY 2027-28 onwards.

The process, the portal, the deadlines, and the way you respond remain unchanged under the new Act.

Old and New Section Numbers : Scrutiny and Assessment

If your notice references Section 270(8) or Section 268(1), it has been issued under the new Act and relates to AY 2027-28 or later. The reply process on the e-Proceedings portal is identical.

Section 142(1) Questionnaire During Scrutiny : How to Reply Online

Once scrutiny begins under Section 143(2), the Assessing Officer uses Section 142(1) to ask for specific information, documents, books of accounts, or explanations. This is the detailed inquiry stage. Most taxpayers find this the most demanding part of the process because the questions are specific, the deadlines are tight, and the reply becomes part of the permanent record.

Section 142(1) can also be issued independently, before scrutiny is formally initiated to non-filers directing them to file a return, or to taxpayers where the AO needs information before deciding whether to proceed to scrutiny at all.

Format of Reply to Income Tax Notice u/s 142(1) : What to Include

There is no prescribed government format for a 142(1) reply. What the AO expects is a structured, point-by-point written response that directly addresses each numbered query. A reply that works looks like this:

In response to Point No. 3: The cash deposit of ₹4,80,000 in SBI Account No. XXXX on 15 November 2023 represents accumulated household savings from prior months. A cash flow statement showing the source is attached as Annexure-C. Please also refer to Annexure-D for the bank passbook extract covering the relevant period.

Each point in your reply should:

• State the point number being addressed
• Give a direct, factual answer in one or two sentences
• Reference the attached annexure by name and number
• Not volunteer anything beyond what is asked

Keep the language neutral and factual throughout. The reply is a formal document, not a conversation.

Section 142(1) and Section 143(2) : How These Two Notices Work Together

The relationship between these two notices confuses many taxpayers. Here is the practical sequence in a scrutiny matter:

Stage 1 : You receive a Section 143(2) notice selecting your return for scrutiny. At this point, confirm receipt and file your computation of income.

Stage 2 : The AO issues a Section 142(1) questionnaire with specific numbered points to address. This is the substantive phase. Respond point-by-point with labelled documents.

Stage 3 :  The AO may issue one or more additional Section 142(1) questionnaires as follow-up, asking for further clarification or documents on the same or new points.

Stage 4 : After receiving all responses, the AO passes the final assessment order under Section 143(3), which either accepts your return as filed or makes additions and raises a demand.

Understanding this sequence matters because each 142(1) reply directly influences what the AO asks next. A well-drafted reply that explains the facts clearly, supported by clean documentation, reduces additional questionnaires and the likelihood of adverse additions.

Documents Required for Income Tax Scrutiny : Complete List

The documents you need depend on what your notice has flagged. This is the list most commonly required across scrutiny cases.

Always required regardless of the specific issue:

• ITR and computation of income for the relevant AY
• Form 26AS, AIS, and TIS for the relevant AY
• Bank statements for all accounts for the full financial year

For salaried income:

• Form 16 from all employers for the year
• Salary slips if there is a discrepancy in TDS figures
• Proof of deductions , 80C investments, 80D insurance premiums, HRA rent receipts and agreement, home loan interest certificate

For business or professional income:

• Audited profit and loss account and balance sheet
• Bank reconciliation statement
• GST returns for the relevant period if applicable
• Major expense bills and purchase invoices if questioned

For capital gains or property transactions:

• Sale deed and purchase deed
• Capital gains computation with indexed cost workings
• Form 26QB if TDS was deducted on property sale

For cash deposits or high-value transactions:

• Cash flow statement showing source of funds
• Bank passbook or statement for the relevant period
• Supporting documentation , prior withdrawals, business receipts, gift deeds, agricultural income records as applicable

Label every document before uploading. Annexure-A_BankStatement.pdf, Annexure-B_Form16.pdf. File names with clear labels help the AO locate your supporting evidence and create a professional impression that works in your favour.

What Happens If You Don’t Respond to an Income Tax Scrutiny Notice

Not responding is the most damaging thing you can do in a scrutiny matter. The AO does not need your cooperation to complete the assessment — they will proceed on the basis of available information alone, and your actual facts are never placed on record.

If you miss a response deadline without requesting an adjournment, the AO can issue a follow-up notice or proceed directly to assessment. Missing multiple deadlines signals non-cooperation, which gives the AO grounds to draw adverse inferences about the transactions in question.

A penalty of ₹10,000 per default can be levied under Section 271(1)(b) for failure to comply with a notice.

Best Judgment Assessment Under Section 144 : What it is?

If you fail to respond adequately or at all, the AO can pass a best judgment assessment under Section 144. This means the AO estimates your income based on whatever information they have bank credits, third-party reports, AIS data, without considering your actual facts or explanations.

These assessments are almost always far higher than actual liability. They are expensive and time-consuming to reverse. Reversing a Section 144 order requires filing an appeal before CIT(A), which adds months to the timeline and significant professional costs.

If you have already missed a deadline, do not ignore it further. File your response immediately, include a covering note requesting condonation of delay, and provide a genuine reason. Acting quickly is always better than waiting.

Why Scrutiny Replies Need a CA : Not a DIY Job

The most important thing to understand about scrutiny proceedings is this: once you submit a reply, it becomes part of the permanent record. An incorrect statement, an inadvertent admission, or a document that contradicts your return creates a problem that is very difficult to undo.

Scrutiny officers are trained to identify inconsistencies across replies, documents, and ITR data. A reply that makes a factual claim in Point 2 that is contradicted by the bank statement attached in Point 5 will result in an addition. These contradictions are easy to make when you are not reviewing the full picture of your return simultaneously.

This is especially true for cases involving capital gains, unexplained cash, Section 68 additions for unexplained credits, business income, or large deduction claims. In these matters, the reply needs to be not just factually accurate but strategically framed anticipating what the AO’s next question will be.

At Karnani & Co., Jaipur, every scrutiny matter is handled directly by a partner  not delegated to juniors or articled clerks. We have managed income tax scrutiny cases, 142(1) questionnaire responses, and matters that escalated through CIT(A) appeals and ITAT proceedings across Rajasthan and beyond. If you have received a scrutiny notice and want to discuss your situation before filing your first reply, contact us at karnanica.com/contact-us/.

Frequently Asked Questions : Income Tax Scrutiny Notice

Q1. How do I reply to an income tax scrutiny notice?

Log in to incometax.gov.in, go to Pending Actions → e-Proceedings, locate your notice under View Notices, and click Submit Response. Prepare a point-by-point reply addressing each numbered query in the notice, attach labelled supporting documents in PDF format under 5MB each, and save the acknowledgement after submission.

Q2. How long do you have to respond to an income tax notice?

The deadline is stated in the notice itself ,  typically 7 to 30 days from the date of issue. This applies to both 143(2) and 142(1) notices. If you need more time, file a Partial Response before the deadline and request an extension for the remaining points. Never let the deadline pass without any response at all.

Q3. What is the difference between a Section 143(2) and a Section 142(1) notice?

Section 143(2) is the notice that formally initiates scrutiny — selecting your return for detailed examination. Section 142(1) is the questionnaire issued during scrutiny asking for specific documents, information, or explanations. In most scrutiny cases you will receive both. The 143(2) comes first; the 142(1) questionnaires follow as the AO examines specific issues.

Q4. What is the format of a reply to an income tax notice u/s 142(1)?

There is no prescribed government format. Address each numbered point from the notice in sequence, give a direct factual answer, and reference the supporting document attached as a labelled annexure. Use neutral, professional language. Name your attachments clearly — Annexure-A_BankStatement.pdf — and keep each file under 5MB. Submit through the e-Proceedings section on the Income Tax Portal.

Q5. How serious is an income tax scrutiny notice?

Serious, but manageable with the right response. It does not mean you have committed fraud or will face a penalty — many cases are selected through automated risk parameters and resolve without any addition to income. What determines the outcome is how you respond. A factually accurate, well-documented, timely reply is the single most important factor.

Q6. Can I reply to an income tax scrutiny notice myself without a CA?

You can, but the risk is significant. Once you submit a reply, it becomes part of the record and is difficult to correct. An incorrect statement or a document that contradicts your return can result in additions to income. For straightforward cases with clean documentation, self-reply is possible. For anything involving capital gains, cash transactions, business income, or large deduction claims, professional handling is strongly recommended.

Q7. What happens if I don’t respond to an income tax notice within 30 days?

The AO can proceed to assessment without your input, pass a best judgment assessment under Section 144 based on available information, and raise a demand that will typically be far higher than your actual liability. A penalty of ₹10,000 under Section 271(1)(b) can also be imposed. If you have already missed a deadline, file your response immediately with a condonation request — do not wait further.

Q8. Can I ignore an income tax scrutiny notice?

No. Ignoring a scrutiny notice is one of the most expensive mistakes a taxpayer can make. The AO proceeds ex-parte — your facts are never considered. The resulting assessment is based on the department’s data alone. Reversing an ex-parte order requires a CIT(A) appeal, adding months and cost to resolve something a timely reply could have closed.

Q9. Can a limited scrutiny be converted into complete scrutiny?

Yes, but only with recorded reasons and prior written approval from the Principal Commissioner of Income Tax. The AO cannot convert a limited scrutiny into complete scrutiny on suspicion alone or because your reply raised a new question. If a conversion happens without proper authorisation, this is a ground worth examining with a CA.

Q10. How long does an income tax scrutiny assessment take?

The department has 12 months from the end of the relevant Assessment Year to pass the final order under Section 143(3). For AY 2024-25, this deadline is 31 March 2026. In practice, most cases involve two to four rounds of questionnaires before the final order is issued. Complex matters can run closer to the statutory deadline.

Q11. My notice references Section 270(8), is that the same as Section 143(2)?

Yes. Section 270(8) of the Income Tax Act 2025 is the equivalent of Section 143(2) of the Income Tax Act 1961. The new Act renumbered the entire assessment framework effective 1 April 2026. If your notice references Section 270(8), it relates to AY 2027-28 or a later year. All notices for AY 2026-27 and earlier carry the old section numbers under the 1961 Act. The reply process on the e-Proceedings portal is identical under both Acts.