Diagnostic Directory • Income Tax & GST SCN Resolution

Statutory Notice & SCN Resolution Directory

A diagnostic defense manual for corporate promoters, finance heads, and HNIs in Delhi NCR receiving statutory notices from the Income Tax Department, GST Anti-Evasion, or MCA. Verify response deadlines, identify jurisdictional DIN defects, and execute structured legal replies.

Income Tax • § 148A(b) 7 to 30 Days Window

Section 149 Limitation: 3 to 5 Years

Section 148A(b) Reassessment Show Cause Notice

Issued where the Assessing Officer possesses information suggesting income has escaped assessment (property purchase, cash deposits, or AIS mismatches). Requires a comprehensive legal reply before an order under Section 148A(d) can be passed.

Critical Procedural Defect Checklist:

Is notice issued without mandatory Section 151 sanction from PCCIT?
Does escaped income fall below the ₹50 Lakh monetary threshold for beyond 3 years?
Was underlying inquiry material withheld from the assessee?

Recommended Action Protocol:

File detailed objection supported by audited financials and bank statements. If jurisdictional defect exists, explore Article 226 High Court writ remedies.

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Income Tax • § 143(1) 30 Days for Rectification

CPC Bengaluru Automated Processing

Section 143(1) Intimation & Tax Demand Order

Automated electronic processing intimation indicating tax demand or reduced refund resulting from TDS mismatches between Form 26AS/AIS and ITR Schedule TDS, or disallowance of Chapter VI-A deductions.

Common Causes of Mismatch:

Deductor deposited TDS with incorrect TAN or unfiled Form 24Q/26Q.
Section 234A/B/C late filing interest automatically added.
Section 80CCD(2) employer NPS erroneously disallowed by CPC rules.

Resolution Protocol:

File online Rectification Application under Section 154 on the e-filing portal, or an updated return (ITR-U) if omitted income needs regularization.

Income Tax • § 142(1) Strict 15 Days

Pre-Assessment Scrutiny Questionnaire

Section 142(1) Preliminary Inquiry Notice

Mandates production of books of accounts, detailed bank statement narrations, and documentary verification of unsecured loans, high-value purchases, or capital additions under faceless scrutiny.

Consequences of Default:

Failure to respond triggers Best Judgment Assessment under Section 144, statutory monetary penalty under Section 271(1)(b), and potential prosecution under Section 276D.

Compliance Standard:

Prepare itemized paper-book reconciling ledger extracts, third-party confirmations, and IT acknowledgments to submit electronically before due date.

GST • Form DRC-01 30 Days Statutory Window

Sections 73 (Non-Fraud) & 74 (Fraud)

GST DRC-01 Formal Show Cause Notice (SCN)

Issued by State/Central GST or Anti-Evasion alleging unpaid tax, incorrect Input Tax Credit (ITC) utilization, or GSTR-2B vs GSTR-3B variance. Proposes tax demand along with interest u/s 50 and penalties.

Defense Architecture:

Verify Section 16(2) conditions: invoice possession, receipt of goods, and supplier tax filing.
Check whether mandatory pre-SCN consultation (Form DRC-01A) was issued.
Differentiate Section 73 (3-year limit) vs Section 74 (5-year limit for willful suppression).

Adjudication Process:

File formal reply in Form GST DRC-06 with supporting reconciliations. If order is adverse, file appeal in Form APL-01 within 3 months.

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GST • Form ASMT-10 30 Days to Reply

Section 61 Return Scrutiny

Form ASMT-10 Scrutiny Notice of Discrepancies

Automated notice issued under Section 61 identifying variances between outward supplies in GSTR-1 and tax paid in GSTR-3B, or differences with generated e-Way Bills and e-Invoices.

Key Steps to Resolve:

Reconcile month-by-month turnover and credit notes. If discrepancy is acceptable, submit explanation in Form ASMT-11; if tax is due, pay via DRC-03.

Critical Precaution:

Ignoring ASMT-10 causes immediate escalation to audit under Section 65, special inspection under Section 67, or issuance of DRC-01 SCN.

Income Tax • § 271AAC Peak Penal Risk

10% Penalty on Section 115BBE Additions

Section 271AAC Penalty Notice on Unexplained Income

Proposed penalty on unexplained cash credits (§ 68), unexplained investments (§ 69), or unexplained money (§ 69A). Accompanies draconian 78% peak tax assessments under Section 115BBE.

Defense Strategy:

Substantiate the identity, creditworthiness, and genuine commercial nature of transactions using audited balance sheets and direct bank trails to prevent 115BBE invocation.

Appellate Remedy:

Statutory appeal before the Commissioner of Income Tax (Appeals) and stay of demand under Section 220(6).

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Our senior practice partners evaluate notice validity, detect jurisdictional defects under Section 151 / DIN standards, and draft point-by-point technical replies with UDIN authentication.

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