How to Handle Income Tax Notice for AIS / TIS Mismatch & High-Value Transactions

With the Income Tax Department's AI-powered automated scrutiny and data integration with banks, stock exchanges, and property registrars, hundreds of thousands of taxpayers across India are receiving SMS alerts, emails, and formal notices regarding AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) mismatches.

What Are AIS and TIS?

The Annual Information Statement (AIS) is a comprehensive digital ledger maintained by the Income Tax Department that tracks your financial footprint across the financial year. It consolidates:

• Savings and fixed deposit interest from all bank accounts
• Dividend income distributed by listed companies and mutual funds
• Purchase and sale transactions in listed shares and mutual funds
• Sale or purchase of immovable real estate property (sourced from Sub-Registrar offices)
• Credit card bill payments exceeding ₹1 Lakh in cash or ₹10 Lakhs aggregate across credit cards
• High-value cash deposits or withdrawals exceeding statutory limits
• Outward foreign remittances under the Liberalised Remittance Scheme (LRS)

The Taxpayer Information Summary (TIS) is a processed, aggregated summary of the AIS figures, categorized into income heads for easier calculation during ITR filing.

Why Do Mismatches and Income Tax Notices Occur?

An Income Tax Notice or e-verification communication typically gets triggered under the following common scenarios:

1. Unreported Interest Income: Many salaried taxpayers only report salary from Form 16 and omit savings account interest or term deposit interest reflected in the AIS.
2. Share Trading & Crypto Turnover: Active traders often fail to declare intraday turnover, F&O loss/gain, or capital gains from mutual fund switches.
3. Property Registration at Stamp Duty Value: Selling property below the circle rate (Section 50C) automatically flags an under-reporting alert.
4. Credit Card Expenses Disproportionate to Declared Income: An individual filing an ITR of ₹4 Lakhs with credit card payments of ₹12 Lakhs will face automated inquiry.
5. Duplicate or Erroneously Reported Transactions: Sometimes reporting entities (banks or brokers) submit duplicated SFT reports.

Common Notice Sections Issued by the Department

• Intimation under Section 143(1): Sent when there is a mathematical error or discrepancy between the tax computed in your ITR and the tax calculated by the Centralized Processing Centre (CPC).
• Defective Return Notice under Section 139(9): Issued when mandatory schedules (such as balance sheet details, audit report references, or gross receipts) are omitted. Must be rectified within 15 days.
• Notice under Section 142(1): Formal inquiry calling for books of accounts, invoices, bank statements, or proof of deductions before assessment.
• Notice under Section 133(6): Call for specific information or verification regarding a transaction without opening full assessment.
• Reassessment Notice under Section 148 / 148A: Serious notice issued when the Assessing Officer has reason to believe that taxable income has escaped assessment.

Step-by-Step: How to Submit a Legal Reply

1. Do Not Panic or Ignore: Ignoring a notice can lead to best-judgment assessment (Section 144) and penalties up to 200% under Section 270A.
2. Download Form 26AS, AIS, and TIS: Log in to the official Income Tax portal (incometax.gov.in), navigate to Services > Annual Information Statement (AIS), and download the detailed JSON or PDF ledger.
3. Submit Online Feedback on AIS: If a transaction is duplicated or belongs to another PAN, mark feedback directly on the AIS portal as "Information is not fully correct" or "Information relates to other PAN/Year".
4. File an Updated Return (ITR-U) if Income was Missed: Under Section 139(8A), you can file an updated ITR within 24 months from the end of the relevant assessment year by paying the applicable additional tax.
5. Draft a Formal Legal Response for Section 142(1) / 148: Clearly attach documentary trails—bank statements, purchase deeds, Demat capital gain statements, and CA-verified reconciliations.