10 ITR Mistakes That Invite Income Tax Notices (and How to Avoid Them)

Graphic for 10 ITR Mistakes That Invite Income Tax Notices (and How to Avoid Them), Arpan Bohra & Co., Chartered Accountants

By CA Arpan Bohra (FCA, CS), Arpan Bohra & Co., Chartered Accountants, Hyderabad. Position of law as at 20 October 2026.

Most income tax notices start with an avoidable error.

A salaried taxpayer files the return from Form 16 alone and later receives an intimation under section 143(1) proposing additional tax because interest income and a share sale reported in the Annual Information Statement (AIS) were missed. The error took ten minutes to make and several weeks to resolve. Most notices follow a small group of repeated mistakes.

Quick answer

The most common causes of income tax notices are a mismatch with AIS, Form 26AS or TDS data, the wrong ITR form, undisclosed capital gains or foreign assets, deductions claimed without proof, an unverified return (it must be verified within 30 days of e-filing) and wrong refund bank details. A belated or revised return for FY 2025-26 can generally be filed until 31 December 2026 (verify the current due dates). This article applies to returns for FY 2025-26 under the Income-tax Act, 1961.

Contents

  1. The ten mistakes
  2. Worked example
  3. Which notice means what
  4. Pre-filing checklist
  5. FAQs

The ten mistakes

# Mistake Why it matters Fix
1 Ignoring AIS and Form 26AS Mismatch triggers an intimation or notice Reconcile income and TDS before filing
2 Wrong ITR form The return can be treated as defective under section 139(9) Choose the form by income type and residency
3 Not reporting capital gains Share and mutual fund sales appear in AIS Report every sale, and use the correct holding period and rates
4 Not reporting foreign assets and income Schedule FA is mandatory for residents; the Black Money Act carries penalty (verify the current amount) Disclose all overseas accounts, shares and ESOPs
5 Claiming deductions without proof HRA, 80C and 80D claims are verified on scrutiny Keep rent receipts, premium receipts and PAN of the landlord where required
6 Not verifying the return An unverified return is treated as not filed E-verify within 30 days of filing
7 Wrong bank account for refund Refund fails or is delayed Pre-validate the account on the portal
8 Under-reporting exempt income Exempt income must be disclosed in the schedule Report interest on PPF, dividends and agricultural income correctly
9 Missing the filing date Late fee under section 234F and loss of carry-forward of certain losses File on time; losses need a return filed by the due date
10 Ignoring a notice or e-mail Ex parte orders and penalties follow Respond on the portal within the time stated
Four cards listing the main ITR errors: AIS mismatch, wrong form, foreign assets and unverified return
The first four errors to check before filing.

Worked example

Illustration, assumed figures

A taxpayer earns a salary of ₹14 lakh and sells shares with short-term gain of ₹2 lakh, and earns bank interest of ₹40,000. Form 16 shows only the salary. AIS reports all three.

  1. If the return omits the gain and interest, taxable income is understated by ₹2,40,000.
  2. Section 143(1) processing may add the amount and demand tax with interest; if the omission is found later, section 270A penalty can apply at 50% of the tax on under-reported income (verify the rate and conditions).
  3. If the return reported all items and the taxpayer verified the return, the intimation would show no demand.

Which notice means what

Notice or communication Meaning Typical response
Section 143(1) intimation Result of automated processing; may propose an adjustment Accept, or file a rectification request, or disagree on the portal within 30 days
Section 139(9) defect notice Return is defective Correct within the period given (15 days, extendable)
Section 142(1) notice Inquiry before assessment Reply with documents by the date given
Section 143(2) notice Scrutiny selected Appoint a representative and reply to the questionnaire
Section 148 and 148A Reopening for escaped income Respond to the 148A(b) notice; challenge limitation and jurisdiction where available

Pre-filing checklist

  1. Download AIS, TIS and Form 26AS and compare with books.
  2. List all bank accounts, including inactive accounts.
  3. Collect capital gains statements from every broker and fund house.
  4. Check Schedule FA and the ESOP and foreign share position.
  5. Match deductions with documents.
  6. Choose the right regime (new or old) and the right form.
  7. Verify the return and keep the acknowledgement.
Verify before relying: the current due dates for FY 2025-26, the 30-day verification period, the section 270A and 234F amounts, Black Money Act penalty amounts and the time limit and additional tax for an updated return.

Frequently asked questions

What is the time limit to verify an ITR?
Within 30 days of e-filing, as per the current rules. An unverified return is treated as invalid.
Can I file a belated return for FY 2025-26?
Yes, generally up to 31 December 2026 with late fee under section 234F, subject to the current due-date notifications.
What if AIS shows income I never earned?
Give feedback on the AIS portal, marking the entry as incorrect with the reason, and report only the correct income.
What happens if I forget a foreign bank account?
Disclosure in Schedule FA is mandatory for residents, and non-disclosure can attract penalty under the Black Money Act. Verify the current provisions and consider a revised or updated return.
Can I correct a return after filing?
Yes. A revised return is allowed within the time limit, and an updated return under section 139(8A) is also possible, with additional tax (verify the current time limit and rates).
Does this apply to returns under the 2025 Act?
The Income-tax Act, 2025 applies from tax year 2026-27. Returns for FY 2025-26 are under the 1961 Act.

Contact particulars
Arpan Bohra & Co., Chartered Accountants, Himayat Nagar, Hyderabad.
This article is shared for general professional education. Readers may write to the firm for information about its practice areas.

office@arpanbohra.co.inCall 9010558981WhatsApp 9010558981www.arpanbohra.co.in

General educational information as at 20 October 2026. It is not legal or tax advice and does not create a professional relationship. Provisions, rates and thresholds change; verify the current law and notifications before acting. References to the 57th GST Council (8 October 2026) are to recommendations that need amendments or notifications before they have legal effect.