Receiving a Notice 120(3) from the Income Tax Department can be concerning. This notice indicates that your income tax return for a specific year is incomplete and potentially invalid. This article explains the reasons behind such notices and how to address them effectively.
What is Notice 120(3)?
This notice arises during a desk audit of your income tax return. It informs you that your return is deficient due to certain missing information or documentation, making it invalid as per Income Tax Ordinance, 2001 and related rules.
In this specific case:
- Your return lacks signed financial statements, which is mandatory for its validity.
- The notice gives you an opportunity to rectify the issue by providing signed audited accounts within a specified deadline.
Consequences of Non-Compliance:
- If you fail to submit the required documents by the due date, your return will be declared invalid, leading to:
- Penalty: You may be charged a penalty under Section 182(1) of the Income Tax Ordinance.
- Further Complications: Invalid returns can create additional hurdles during future tax assessments and claims.
What to Do:
- Respond promptly: Ensure you submit the signed audited accounts before the deadline mentioned in the notice.
- Seek professional help: If you have any doubts about the required documents or the process, consult a tax advisor for guidance.
- Maintain records: Keep copies of all submitted documents and communication with the tax department for future reference.
- Taking prompt action and addressing the deficiencies highlighted in the Notice 120(3) helps avoid unnecessary penalties and complications.
- Maintaining accurate records and complying with tax regulations is crucial for a smooth tax filing experience.