Responding to a Tax Notice: The First 72 Hours

In the first 72 hours after receiving a tax notice, establish what it is and which provision it is issued under, calculate the response deadline from the date of service, preserve the underlying records, and identify who will handle it. Avoid the two errors hardest to undo: responding substantively before understanding the allegation, and missing the deadline.

Hour one to twenty-four: establish what you have

Identify the provision and the nature of the proceeding. An information request, a scrutiny notice, a show-cause, a demand and a reassessment notice have different consequences and different response requirements.

Establish the date of service. The deadline runs from service, not internal receipt. Portal-served notices are frequently discovered late, which is why portal monitoring should be a defined responsibility.

Identify the assessment period and amount. Note which Act governs — with the Income-tax Act, 2025 transition, an older assessment year is governed by the 1961 Act.

Calculate and diarise the deadline immediately, before any substantive work.

Decide who owns it — internal ownership plus external advisor, with a single point of accountability.

Hour twenty-four to seventy-two: preserve and assess

Preserve records. Assemble underlying documentation for the period and issue — agreements, invoices, board minutes, correspondence, working papers. Ensure nothing is deleted under routine retention policies once a notice is received.

Reconstruct the position taken. Establish what was done and why, and locate the contemporaneous documentation supporting it. Contemporaneous material is qualitatively different evidence from anything prepared now.

Assess exposure preliminarily. Tax, interest and potential penalty, and whether the issue recurs across other years — frequently the larger exposure, since a position challenged in one year is usually challenged in all open years.

Check jurisdiction and limitation. Proper officer, applicable limitation period, and where an extended period is invoked, whether it has been particularised.

Decide on extension. If the period is inadequate, request an extension in writing before the deadline.

The errors that are hard to undo

Missing the deadline, producing an ex parte order that must then be appealed.

Responding substantively before understanding the allegation. An early admission or inconsistent explanation is difficult to withdraw and will be relied on throughout.

Producing documents indiscriminately. Respond to what was asked. Volunteering unrelated material creates new lines of enquiry.

Inconsistency with positions taken elsewhere — in the return, GST filings, transfer pricing documentation, or financial statements. This is one of the most damaging things a response can reveal.

Creating documentation and presenting it as contemporaneous. This converts a technical dispute into a credibility problem and, at worst, a penalty exposure.

Failing to request a hearing where one is available.

[INSERT: an anonymised Solique example — a matter where early handling materially changed the outcome.]

Related reading

• reassessment — Reassessment Under the Income-tax Act 2025
• GST notices — How to Respond to a GST Notice: A Practical Checklist
• advisory or counsel — Tax Advisory vs Legal Counsel: Which a Dispute Needs