Received an Income Tax Notice for Mismatch or High-Value Transactions? Here’s What to Do

In recent days, many taxpayers have received emails and messages from the Income Tax Department pointing out differences between their Income Tax Returns (ITR) and the information available in the Annual Information Statement (AIS). This has caused confusion and concern, with many assuming that these messages are formal income tax notices.

On December 18, the Income Tax Department clarified that these communications are not notices and do not start any legal proceedings. They are advisory messages, sent only to alert taxpayers about transaction details reported by third parties such as banks, financial institutions, mutual funds, and property registrars.

These messages are sent because the Income Tax Department now matches data received from banks and other reporting entities with what taxpayers report in their returns. If a significant mismatch is found, an advisory message is issued asking the taxpayer to review the AIS and correct the return only if there is an error.

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If the return is correct, no action is needed. If a mistake exists, it can be corrected by revising or filing a belated return, or by giving feedback through the Compliance Portal, with time available until December 31, 2025 for Assessment Year 2025–26.

Respond or Revise: Choosing the Right Action

If you received an intimation from the Income Tax Department, the safest approach is to file a revised return and also submit a detailed response. This shows full cooperation and leaves little room for doubt.

If the mismatch is due to a third-party error such as incorrect reporting by an employer or bank, or a timing difference, filing a revised return may not be necessary. In such cases, you can consider responding through the compliance portal with an explanation and supporting documents.

How to File a Revised Return: Detailed Step-by-Step Guide

Step 1: Confirm that the communication is a nudge intimation

Log in to the Income Tax e-Filing Portal

1. Visit the official Income Tax e-Filing portal.
2. Log in using. After logging in, ensure you are on the correct dashboard for the taxpayer whose return is being revised.

This is the starting point for both online revision and XML-based revision.

Step 2: Identify what triggered the nudge

Nudges are usually triggered by data mismatches, not by human review.

Download and review:

• AIS (Annual Information Statement)
• TIS (Taxpayer Information Summary)
• Form 26AS

Compare these with your filed return and identify:

• Missing income (interest, dividends, capital gains, foreign income)
• Incorrect classification of income
• High-value transactions not reflected in the return
• Undisclosed foreign assets or accounts

Document the exact mismatch before taking any action.

Step 3: Build a mismatch worksheet

Create a simple but comprehensive reconciliation worksheet, preferably in Excel or even a handwritten table, with the following columns:

Item	As Per AIS/TIS	As Per Form 26AS	As Per Your ITR	Difference	Reason	Action
Salary	[Amount]	[Amount]	[Amount]	[Difference]	[Reason for difference]	[Revise ITR / Provide explanation / Feedback in AIS]
Bank Interest
Capital Gains
Foreign Income
High-Value Deposit

This worksheet serves multiple purposes. First, it ensures that you have not overlooked any discrepancies. Second, it provides clarity on the exact nature and magnitude of each discrepancy. Third, it helps you decide whether to revise your ITR, provide an explanation via the compliance portal, or flag an error in AIS.

Step 4: Collect documents that will support your revised figures

Gather evidence for every line item you plan to correct. Typical documents include:

Salary

• Form 16 (Part A + Part B)
• Payslips (especially for variable pay, arrears, joining/relieving)

Bank interest / FD interest

• Interest certificate from bank
• Bank statements (full year)

Capital gains (shares/mutual funds)

• Broker contract notes
• Capital gains statement
• Demat statement
• Mutual fund account statement / CAS

Rent / House property

• Rent agreement
• Rent receipts / bank credits
• Property tax receipts
• Home loan interest certificate (if claiming)

Foreign assets/income

• Overseas bank statements / interest statements
• Foreign tax paid proof (if claiming relief)
• Investment account statements

Deductions

• 80C proofs (LIC, PF, ELSS, etc.)
• 80D health insurance receipts
• Donation receipts (80G), education loan interest (80E), etc.

Tip: If you cannot prove a deduction or exemption with documents, do not claim it in the revised return.

Step 5: Decide: “Revise return” vs “Only respond” vs “Both”

Use this rule of thumb:

• Revise the return if you missed income, misreported income, claimed wrong deductions, wrong ITR form, wrong schedules, or missed foreign disclosures.
• Only respond if AIS has incorrect entries, duplication, wrong PAN mapping, or timing mismatch and your return is correct.
• Do both if you are correcting real errors but also need to explain why some AIS items are incorrect or duplicated.

This is common, for example, one part needs revision, another part needs clarification.

Step 6: Start the revised return filing on the portal

1. On the portal, go to File Income Tax Return for the relevant Assessment Year.
2. Select Revised Return (Section 139(5)).
3. Enter original return details:

• Acknowledgement number of the original ITR
• Date of filing the original return

4. Continue to the ITR utility/online form.

Important: A revised return fully replaces the original return. Ensure you correct everything, not only the item mentioned in the notice.

Step 7: Correct income head-wise

Go through each relevant schedule carefully:

A. Salary

• Match taxable salary with Form 16
• Check exemptions (HRA/LTA) and ensure evidence exists

B. Income from Other Sources

• Add savings interest, FD interest, dividends
• Ensure totals match AIS broadly (minor rounding differences can occur)

C. Capital Gains

• Recompute gains using broker/MF statements
• Confirm correct holding period classification (STCG/LTCG)
• Ensure STT-paid equity rules are applied correctly where relevant

D. House Property

• Confirm rent received, municipal taxes, interest deduction
• Ensure co-ownership split is correct if applicable

E. Business/Professional Income

• Check gross receipts, expense claims, and turnover reporting
• Ensure GST/TDS data does not contradict receipts

F. Exempt income and disclosures

• Exempt income schedule (if any)
• Foreign asset schedule / foreign income schedule, if applicable
• Schedule FA / TR where relevant (if you have foreign assets/income)

Step 8: Recalculate tax, interest, and ensure payment if required

Once corrections are done:

1. Recompute tax liability in the return.
2. If additional tax becomes payable, pay it immediately through:

• Challan ITNS 280 (Self-assessment tax)

3. Enter challan details (BSR code, date, serial number, amount) in the return.

Tip: A revised return should not be filed with unpaid self-assessment tax if tax becomes payable after correction. Unpaid tax can keep the case open and invite further notices.

Step 9: Validate against AIS again before submission

Before you submit:

• Compare your revised totals with AIS/TIS one more time.
• If AIS contains incorrect information, use the AIS feedback option (where available) and mark:
• Information is duplicate
• Information relates to another PAN
• Information is incorrect
• Information is not fully correct (and provide corrected value)

This strengthens your position if the case goes into deeper review.

Step 10: Submit and e-Verify the revised return

1. Submit the revised ITR.
2. Complete e-Verification (Aadhaar OTP, net banking, DSC, etc.).
3. Download and save:

• ITR-V acknowledgement
• Computation summary
• Tax payment challan copy (if paid)

No e-verification means the revised return is not treated as valid.

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