How to Handle “Seek for Clarification” Emails from the Income-tax Department

Background: Why Are These Emails Being Sent?

In recent months, many assessees have again begun receiving automated emails from the Income-tax Department asking for clarifications on deductions, exemptions, or other claims made in their Income-tax Returns (ITR).

These communications, generally titled as “Seek for Clarification”, form part of a pre-processing verification exercise. The Department is attempting to catch possible errors or inconsistencies before completing the processing of the return, instead of relying later on:

  • Scrutiny assessment, or
  • Reassessment proceedings

Both of these formal proceedings are time-intensive for the Department and burdensome for the assessee. By running data checks and analytics at the pre-processing stage, the Department aims to:

  • Rectify obvious mismatches upfront
  • Reduce future disputes and appeals
  • Encourage accurate and voluntary compliance
  • Streamline administration and speed up refunds where everything is in order

This approach also aligns with the continuing policy nudge towards the new tax regime, where fewer deductions and exemptions are available, but the tax structure is intended to be simpler.

However, this system can be stressful for honest assessees as well. Although the legal principle is that an assessee is presumed to have complied unless proven otherwise, in practice, the burden of proof falls on the assessee to support every deduction and exemption claimed.

Even where the ITR is perfectly correct and fully supported by documents (like Form 16), the assessee may still receive an email indicating that:

“Processing of return is pending due to certain discrepancies. Please submit your response through the e-filing portal.”

Such communications are in the nature of preliminary verification, not full-fledged assessments. They are generally labelled as “Seek for Clarification” in the e-filing portal. A typical time limit of 30 days is given to submit the response online.

Important: These are not scrutiny notices. They are automated, system-based checks before processing the return under Section 143(1) of the Income Tax Act 1961.

Why a Timely Response is Critical

Ignoring these emails or delaying your response can directly affect the processing of your return and may lead to unnecessary tax demands. A prompt and properly reasoned reply is essential for several reasons:

1. Processing of Your Return is Put on Hold

Until the clarification is filed and acknowledged on the income-tax e-filing portal, your return will typically be placed in a “pending” status. This means:

  • No final intimation under Section 143(1)
  • No refund will be issued, even if you are otherwise eligible

2. Risk of Automated Adverse Adjustments

If you do not respond within the stipulated time frame, the system may:

  • Treat certain deductions or exemptions as unsupported, and
  • Make prima facie adjustments based on:
    • Form 26AS
    • Annual Information Statement (AIS)
    • Taxpayer Information Summary (TIS)
    • Other third-party data

This can result in:

  • Disallowance of deductions
  • Addition of income not properly reconciled
  • Higher taxable income being computed automatically

3. Opportunity to Reconcile Mismatches

The notice is intended to give you one clear chance to explain differences, correct mismatches, and support your claims, such as: