Getting a notice from the Income Tax Department is one of the most stressful experiences for any taxpayer. Your phone buzzes, you see an email from the Income Tax Department, and suddenly your mind goes to the worst possible outcome. The truth is, most income tax notices in India are not about fraud or evasion. They are triggered by simple, avoidable mistakes made during ITR filing – mistakes that thousands of taxpayers in Ahmedabad make every single year.
In this guide, CA Pratik Bhatt from Rudra Consultancy walks you through the most common ITR filing mistakes that lead to tax notices, why they happen, and exactly what you need to do to fix them or avoid them altogether.
Why Does the Income Tax Department Send Notices?
Before diving into the mistakes, it helps to understand how the department spots them. The Income Tax Department’s systems automatically compare your filed return against data collected from multiple sources – your employer, banks, mutual fund houses, property registrars, and stock brokers. This data is available in your Annual Information Statement (AIS) and Form 26AS.
When what you report in your ITR does not match what the department already knows about your income, the system flags it. That flag often turns into a notice under Section 143(1), 139(9), 148, or 156, depending on the nature of the mismatch.
The good news is that if you know what triggers these flags, you can avoid them entirely.
Mistake 1: Not Reconciling Form 26AS and AIS Before Filing
This is the single biggest cause of tax notices in India, and it is completely avoidable.
Form 26AS and the Annual Information Statement (AIS) are the department’s version of your financial story for the year. They include every rupee of TDS deducted on your income, every significant transaction reported by banks and financial institutions, and every source of income linked to your PAN. The department compares these records against your filed return automatically.
If you report income or TDS figures that do not match what is already in Form 26AS or AIS, you will receive a notice under Section 143(1) asking you to explain the discrepancy. This happens even when the difference is a minor rounding error.
How to fix it: Before you file – or before you hand your documents to a CA – log in to the income tax portal, download your Form 26AS and AIS, and go through them carefully. Match every TDS credit shown there against your Form 16, bank statements, and investment records. If you notice an error in Form 26AS – for example, your employer has deposited TDS but it has not yet reflected – get it corrected before filing, not after.
Mistake 2: Choosing the Wrong ITR Form
Selecting the incorrect ITR form is more common than most people think, and it results in your return being treated as defective under Section 139(9). A defective return means you receive a notice asking you to re-file the correct form within 15 days, failing which your original filing is treated as invalid.
The most common version of this mistake is salaried individuals filing ITR-1 when they have sold shares, mutual funds, or property during the year. ITR-1 is only for salaried income up to ₹50 lakh with one house property. The moment you have capital gains – even a small mutual fund redemption – you need to file ITR-2 instead.
Similarly, a freelancer or consultant who maintains books of accounts should be on ITR-3, not ITR-4. Someone opting for presumptive taxation under Section 44AD or 44ADA uses ITR-4, but only if they meet the specific conditions for that scheme.
How to fix it: Map your income sources for the year before selecting your form. If you have even one source of income beyond salary and interest – a property sale, a mutual fund redemption, a second house – go through the form selection criteria carefully or ask a CA to confirm which form applies to you before filing.
Mistake 3: Not Reporting All Bank Accounts
Every bank account you hold – savings, current, or otherwise – must be disclosed in your ITR. This is not just about the account where you want your refund credited. All accounts where you held money during the financial year need to be listed.
Many taxpayers forget dormant accounts, old accounts they barely use, or a second savings account they opened years ago. The department’s system links all accounts to your PAN, so any account that is not disclosed in your return while it shows activity in your AIS is an automatic red flag.
How to fix it: Before filing, make a list of every bank account linked to your PAN. You can check this on the income tax portal under your profile. Report all of them in the ITR, even if they had zero transactions during the year. Designate one as the primary account for refund credit.
Mistake 4: Missing Interest Income – Savings, FD, and RD
This one catches a surprising number of people who consider themselves careful with their taxes. If you have a savings account, a fixed deposit, or a recurring deposit, the interest earned on these is taxable income. It must be declared under the heading “Income from Other Sources.”
Banks deduct TDS on FD interest above ₹40,000 per year (₹50,000 for senior citizens), but that TDS deduction appears in Form 26AS. If you do not report the corresponding interest income in your return while the TDS is sitting in Form 26AS, the department’s system immediately spots the mismatch.
Savings account interest is also taxable, even though no TDS is deducted on it. The AIS now tracks this from bank reports, so the department knows about it even if you do not report it.
How to fix it: Collect interest certificates from all your banks for the financial year. Add up the total interest income from savings accounts, FDs, and RDs, and report it under Income from Other Sources. You can then claim the deduction under Section 80TTA (up to ₹10,000 for savings interest for non-senior citizens) or Section 80TTB (up to ₹50,000 for senior citizens covering all interest).
Mistake 5: Not Reporting Capital Gains From Mutual Funds and Shares
This is one of the fastest-growing triggers for notices, particularly as more Ahmedabad investors participate in mutual funds and stock markets.
Every time you redeem units from a mutual fund – whether partially or fully – it counts as a capital gains transaction. Every sale of shares is a capital gains transaction. These are reported by brokers and registrars (like CAMS and Fintech) directly to the Income Tax Department, and they appear in your AIS.
Many taxpayers, especially those who switch between mutual fund schemes, are unaware that a switch is treated as a redemption followed by a fresh purchase. Each switch triggers capital gains. If you do not report these in your ITR, the department’s system flags the discrepancy against the data received from the fund houses.
How to fix it: Download your capital gains statement from your broker and from CAMS or KFintech for all mutual fund investments. Match these against your AIS. Report all transactions – short-term and long-term – in the capital gains schedule of your ITR, even if the amounts appear small.
Mistake 6: Not Verifying the Return After Submission
A surprising number of taxpayers file their return, receive the acknowledgement number, and assume the job is done. It is not. A filed return that is not verified within 30 days is treated as if it was never filed at all.
E-verification can be done instantly using Aadhaar OTP, net banking, or an Electronic Verification Code (EVC) through your bank. If you miss the 30-day window, you need to send a signed physical ITR-V to the CPC office in Bengaluru by ordinary or speed post.
An unverified return results in your filing being invalid, which means late filing penalties, loss of carry-forward benefits, and potentially a notice for non-filing if you had taxable income.
How to fix it: Complete e-verification immediately after submitting your return. Do not leave the portal before verifying – it takes less than two minutes using Aadhaar OTP. If you are working with a CA, confirm with them that verification has been completed and ask for the successful e-verification acknowledgement.
Mistake 7: Forgetting to Declare Rental Income
If you own property and receive rent, that income is taxable. It needs to be declared under the head “Income from House Property,” even if the rent amount is small or the property is jointly owned.
The issue is that rental agreements and TDS on rent (applicable when a tenant pays more than ₹50,000 per month) are now tracked by the department. If a tenant has deducted TDS on your rent and deposited it against your PAN, that shows up in Form 26AS. Not reporting the corresponding rental income while the TDS is sitting on record is an automatic mismatch.
How to fix it: Report all rental income in your ITR. You are allowed a standard deduction of 30% of the net annual value for repairs and maintenance, plus a deduction for municipal taxes paid and home loan interest if applicable. These deductions can significantly reduce the taxable component of your rental income.
Mistake 8: Claiming Deductions That Are Not Available Under Your Chosen Tax Regime
Since the new tax regime became the default option, this mistake has become increasingly common. Taxpayers choose the new regime – either intentionally or by default – and then proceed to claim deductions like Section 80C for LIC premiums, Section 80D for health insurance, or HRA exemption. Under the new regime, most of these deductions are not available.
When these incorrect deductions are flagged during automated processing, the department revises the tax demand upward and sends a notice under Section 143(1) with the additional amount payable.
How to fix it: Be clear about which regime you are filing under before claiming any deductions. Under the old regime, most deductions are available. Under the new regime, the main deductions still allowed include the standard deduction of ₹75,000 for salaried individuals, employer’s NPS contribution under Section 80CCD(2), and a few others. If you have significant investments and deductions, calculate your liability under both regimes and choose the one that results in lower tax.
Mistake 9: Missing the Deadline and Filing a Belated Return
Filing after the due date is not just about the late fee under Section 234F. It also carries other consequences that taxpayers often do not anticipate.
If you file after the deadline, you lose the right to choose the old tax regime. The new regime becomes mandatory, and if the old regime would have resulted in lower tax – which is often the case for people with home loans, LIC policies, and children’s education fees – you end up paying more tax than you should have. You also cannot carry forward losses from capital gains or business income to set off against future income, which can have a real financial impact over the next several years.
How to fix it: File before the due date – 31st July 2026 for most salaried individuals and 31st August 2026 for business and professional taxpayers (non-audit cases). Even if you are missing a few documents, a CA can often file an initial return based on available information and revise it later if needed. Filing a slightly imperfect return on time is almost always better than filing a perfect return late.
Mistake 10: Ignoring a Notice Once You Receive It
This is perhaps the most damaging mistake on this list. When taxpayers receive a notice and do not respond within the specified time, the situation escalates from a simple query to a potential best judgment assessment, additional demand, or penalty.
Most Section 143(1) notices are routine intimations – often just about minor mismatches or arithmetic differences – and can be resolved quickly with a proper response and supporting documents. Ignoring them or responding incorrectly can convert a minor issue into a significant compliance problem.
How to fix it: If you receive an income tax notice, read it carefully to understand which section it is under and what it is asking. Do not panic, but do not ignore it either. Respond within the time specified in the notice. If you are unsure what the notice means or how to respond, consult a Chartered Accountant immediately. Early professional intervention almost always leads to a faster and smoother resolution.
How Rudra Consultancy Can Help
Most of the mistakes covered in this guide share something in common – they are easy to avoid when your ITR is prepared and reviewed by a qualified Chartered Accountant who cross-checks your documents against Form 26AS and AIS before filing.
At Rudra Consultancy, every return goes through a structured review process. Our CA team reconciles your income with Form 26AS and AIS, confirms the correct ITR form for your situation, ensures all required income is reported, and checks that eligible deductions are claimed accurately under the applicable tax regime. We also assist with responding to income tax notices if they arise, from drafting the response to representing you throughout the compliance process.
If you are looking for professional Income Tax Return Filing Services in Ahmedabad that minimise the risk of notices and errors, our team at Rudra Consultancy is here to help. Based in Bodakdev, Ahmedabad, we work with salaried employees, business owners, freelancers, and NRIs across the city.
Frequently Asked Questions
What should I do immediately if I receive an income tax notice?
Read the notice carefully and note the section it is issued under and the response deadline. Collect the documents related to the query. Do not ignore it. If you are unsure how to respond, consult a Chartered Accountant as soon as possible – responding incorrectly or late can make the situation worse.
Can a notice be avoided if I have already filed my return with mistakes?
If you have already filed and noticed an error, you can file a revised return before 31st March 2027 for AY 2026-27. Filing a revised return with the correct information is often the best way to prevent a notice from being issued in the first place.
Is it possible to get a notice even if I paid all my taxes correctly?
Yes. Notices are often triggered by mismatches in reporting – not necessarily by unpaid taxes. Even if your tax liability is fully paid, failing to report income, choosing the wrong form, or not disclosing bank accounts can still result in a notice asking you to explain the discrepancy.
How long do I have to respond to a Section 143(1) notice?
The time limit is mentioned in the notice itself, but it is typically 15 to 30 days from the date of the notice. Always respond within this window. If you need more time, a request for extension can be submitted through the e-filing portal.
Does filing ITR with a CA guarantee I will not receive a notice?
No professional can guarantee that the department will never issue any communication. However, having a CA prepare your return significantly reduces the risk of the common errors that trigger notices, and ensures you have proper documentation and expert support if a notice does arrive.
Final Thoughts
Most income tax notices are preventable. By reconciling your income, choosing the correct ITR form, reporting all income sources, and verifying your return, you can significantly reduce the chances of receiving a notice. If your tax situation is complex, consulting a Chartered Accountant can help ensure accurate and stress-free filing.