Got a tax notice for a sudden income spike? What it means what you must do

What is an Income Tax notice under Section 133(6)? How to respond if you get one? Experts outline what triggers the notice, how to deal with it, and how to stay off the radar?

If you receive a notice from the Income Tax Department under Section 133(6) of the Income-tax Act, 1961, don’t jump to conclusions. This provision allows tax officers to seek specific financial information or documents from any person, regardless of whether a formal assessment or investigation is ongoing.

 

According to Kunal Savani, partner at Cyril Amarchand Mangaldas, “Section 133(6) empowers tax authorities to call for information not only during ongoing assessment but even when no proceedings are pending.”

 

He added that such notices are commonly sent when there are high-value transactions, sudden income spikes, or large deductions that appear inconsistent with the income reported by the taxpayer.

 

 

What kind of documents are usually sought?

 

Ankit Jain, partner at Ved Jain and Associates, says that the notice may ask for documents such as:

 

• Bank statements 
• Purchase or sale agreements 
• GST returns 
• Invoices 
• Loan documents 
• Agreements with customers or vendors

 

He explained that even third parties, like banks or vendors, can receive such notices if they are linked to a taxpayer under scrutiny.

 

 

Steps to follow after receiving the notice

 

According to Jain, the taxpayer should follow a structured response:

 

 

Verify the notice: Ensure it has been issued by a valid income tax officer and carries a DIN (Document Identification Number).

 

Understand the requirement: Read the notice carefully to determine the scope and type of information requested.

 

Compile documents: Gather all relevant data and check it for accuracy.

 

Submit the response: The information should ideally be furnished via the Income Tax e-filing portal, Jain said. “For hard copy submissions, get an acknowledged copy,” he added.

 

Seek more time if needed: If documents can’t be provided within the deadline, Jain advised sending a formal request for extension.

 

Is it a sign of trouble?

 

Both experts clarified that a notice under this section does not imply wrongdoing. “It’s a routine tool for verification. No proceedings can be initiated solely on the basis of this notice,” said Jain.

 

How to avoid receiving one in the first place

 

To steer clear of such notices, Naveen Wadhwa, Vice President at Taxmann, recommended maintaining financial transparency. He advised avoiding large cash transactions, especially for property or jewellery, and ensuring accurate income reporting throughout the year.

 

“These notices are often triggered by mismatches or anomalies. If your disclosures are consistent with your financial activities, there’s little reason to worry,” Wadhwa said