How to Respond to an Income Tax Notice for Wrong Deductions and Repay Excess Refund Under Section 133(6)

Steps to Correct the Return and Repay the Excess Refund:

1.Respond to the Income Tax Notice:

• Log in to the Income Tax e-Filing Portal.
• Go to Pending Actions → e-Proceedings → Locate the notice.
• Submit a response, admitting the mistake and stating that a revised return is being
• filed with the correct deductions.

2.File a Revised Return (if applicable):

• If the original return was filed under Section 139(5) (before the due date), a Revised Return can be filed.
• Use ITR-U (Updated Return) under Section 139(8A) if the mistake is noticed later.
• Report the correct deductions and recompute the tax liability.

3. File an Updated Return (ITR-U) 

• Log in to the Income Tax e-Filing Portal.
• Navigate to e-File → Income Tax Return → File Income Tax Return.
• Select ITR-U (Updated Return) under Section 139(8A).
• Provide the correct deductions and recompute the tax liability.
• Pay additional tax (25% of the additional tax liability if updating within 12 months, 50% if after 12 months but before 24 months).
• File the return and note the Acknowledgment Number.

4. Repay the Excess Refund with Interest

• Compute the excess refund amount received.
• Pay using Challan 280 under "Self-Assessment Tax" and mention the relevant Assessment Year.
• If the refund was issued, interest under Section 234D (at 0.5% per month from the date of refund to repayment) must be paid.

Steps to Respond to Notice under Section 133(6)

1. Log in and Access the Notice

• Visit the Income Tax e-Filing Portal.
• Go to Pending Actions → e-Proceedings → Notices.
• Download the notice and check the required details/documents.

2. Draft a Proper Response

• If deductions were wrongly claimed, clearly admit the mistake.
• Explain that your client is ready to repay the excess refund received.
• Mention that a revised return is not possible but an Updated Return (ITR-U) is being filed to correct the mistake.
  
  
• Attach supporting documents, including:
• • ITR-U Acknowledgment (if already filed).
  • Tax Payment Challan (Challan 280) for the excess refund amount + interest under Section 234D.

3. Pay Back the Excess Refund with Interest (if applicable)

• Use Challan 280 → Select "Self-Assessment Tax" and enter the amount under "Tax" and "Interest".
• Interest under Section 234D (0.5% per month from the date of refund to repayment) applies if the refund was received earlier.

4. Submit the Response Online

• Navigate to e-Proceedings → Submit Response to Notice 133(6).
• Upload the reply letter along with proof of payment.
• Submit the response before the due date mentioned in the notice.

Draft Response Format for Notice u/s 133(6)

Subject: Response to Notice under Section 133(6) – [PAN] – [Assessment Year]

Respected Assessing Officer,

I am in receipt of the notice issued under Section 133(6) regarding the deductions claimed in my Income Tax Return for AY [Year]. Upon reviewing my records, I acknowledge that the deductions were inadvertently claimed due to an oversight.

To rectify this, I have taken the following actions:

I have filed an Updated Return (ITR-U) under Section 139(8A) with the correct details. A copy of the acknowledgment is attached.
I have repaid the excess refund amount received along with applicable interest under Section 234D. The tax payment challan is attached for your reference.
I sincerely apologize for the inadvertent error and request your kind consideration in processing the matter accordingly.

Attachments:

1. Copy of Notice u/s 133(6)
2. ITR-U Acknowledgment
3. Tax Payment Challan

Please let me know if any further details are required.

Sincerely,
[Client’s Name]
[Client’s PAN]
[Client’s Contact Details]