Retail / E-commerce
Income Tax
Successfully Resolved a ₹12 Lakh Income Tax Notice for a Small Business Owner
How WizBiz resolved a ₹12 lakh income tax notice for a Mumbai-based e-commerce seller, reducing the demand to zero and saving ₹1.8 lakh in penalties.
Income Tax Notice Resolution | Small Business Case Study | WizBiz
Income Tax, Tax Notice, 143(2), E-commerce, GST Reconciliation, Mumbai
WizBiz Team
Challenge
Priya Sharma runs a successful women's ethnic wear business on Flipkart and Amazon. In November 2024, she received a notice under Section 143(2) from the Income Tax Department questioning discrepancies in her reported turnover. The notice claimed her returns showed ₹85 lakh turnover, while GST data indicated ₹1.2 crore — a gap that triggered scrutiny. Priya was stressed and unsure how to respond. Her previous accountant had not filed GSTR-1 correctly, leading to mismatched data across GST and ITR filings.
Solution
Our tax experts analysed the notice, gathered all sales data from Amazon and Flipkart dashboards, reconciled bank statements, and prepared a detailed response. We discovered that ₹35 lakh in sales were from months where GST returns had been filed with errors. We prepared a comprehensive reply with supporting documents, including: (1) E-commerce portal sales reports; (2) Bank statement reconciliations; (3) Corrected GSTR-1 and GSTR-3B for affected months; (4) A professional representation explaining the discrepancies. We also filed an updated return under Section 139(5) to correct the errors before the assessment was completed.
RESULTS
The Income Tax Department accepted our submission and closed the notice without any addition to income. The total tax demand initially proposed was ₹12 lakh (including penalty and interest); after our representation, the final demand was reduced to zero. Priya also saved ₹1.8 lakh in potential penalty under Section 270A. Her GST and income tax records are now fully aligned going forward.
Key Metrics
Notice Amount: ₹12 Lakh
Final Demand: ₹0
Penalty Saved: ₹1.8 Lakh
Turnover Discrepancy Resolved: ₹35 Lakh
Time to Resolve: 45 Days
Testimonial
When I received that tax notice, I thought my business was in serious trouble. WizBiz handled everything professionally and kept me informed at every step. They resolved the issue completely, and I didn't have to pay a single rupee in penalty. I consider them my business partners now, not just my CA firm.
