Income Tax Notices

Section 142(1) - Inquiry Notice before Assessment of Tax

Income tax notice u/s 142(1) is sent to people to understand the reason why you have not filed the return, or if you have filed, then you need to explain or furnish additional details.

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  7. Income Tax Notice under Section 142(1): Know Your Rights
Updated on: 17 Aug, 2023 02:31 PM

Contents

What is section 142(1) of the Income-tax Act?

Section 142(1) of the Income-tax act 1961 empowers Income-tax authorities to issue a notice for more clarification or for further details about where a return has been filed or if the return has not been filed, then to furnish the required information in a prescribed manner.

When is the Notice under section 142(1) issued?

Notice u/s 142(1) can be issued in both cases, where you file your income tax return u/s 139 (1) and also in the case you do not file your income tax return u/s 139 (1) and time specified to file a such return has been expired. However, Assessing Officer shall only require the production of accounts or information relating to a period of three years before the previous year.

Purpose of Notice

Notice u/s 142(1) is issued by the Income Tax Department for:

  1. Filing of Income Tax Return:
    If you’ve not filed your return within the specified period or before the end of the relevant assessment year, you might receive Notice u/s 142(1) asking you to file your return.
  2. Producing specific accounts and documents:
    After you’ve filed your income tax return, your Assessing Officer (AO) may ask you to produce such specific accounts and documents as required by him by way of Notice u/s 142(1). For example, you might be required to produce your purchase books, sales books, or proofs of any deductions availed by you, etc.
  3. Any other information, notes, or workings as desired by the AO:
    The assessing officer may require you to furnish in writing and in the prescribed manner the information, notes, or workings on specific points as required by him, which may or may not form part of books of accounts. For example, A statement of your assets and liabilities.

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Penalty for Non-Compliance of Section 142(1) Tax Notice:

If you don’t comply with Notice u/s 142(1), then:

  • A penalty of Rs 10,000 can be imposed on you u/s 271(1) (b).
  • Your case can fall under “Best Judgement Assessment” u/s 144, where the assessment will be carried out as per the best judgment of the Assessing Officer on the basis of all the relevant material he gathered.
  • You can be prosecuted u/s 276D for up to 1 year with or without a fine.
  • A warrant may also be issued u/s 132 for conducting a search.

Sample email of the Notice under Section 142(1)

Sample email of the Notice under Section 142(1)

How to submit a response to the notice U/S 142(1)?

To respond to a notice under Section 142(1) of the Income Tax Act, you can use the online ‘e-Proceedings’ facility on the Income Tax portal. Here are the steps to follow:

  • Log in to the Income Tax E-filing portal
  • Click on the “Pending Actions” Tab and then select “E-proceedings.”
  • Select the ‘View Notices’ option.
  • ‘Submit Response’ to go to a new page.
  • Now click on the ‘Select Response type for Notice.’
  • Choose either ‘Partial Response’ or Full Response’ to submit your response.

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Frequently Asked Questions

Notice under section 142(1) is issued when the assessee still needs to file or where the return is filed for producing required documents asked by the A.O.
AO, i.e., the assessing officer can serve the notice under section 142(1)
When notice is received for filing the return, an assessee should file his return within the time period provided in the notice, and if documents and details are asked to produce and then provide the same to A.O. within the specified period.
After filing of ITR under section 142(1), there are chances of notice under section 143(2) for scrutiny assessment if any information is sought by A.O. from the documents and information submitted by you. Otherwise, if the return is filed as per the section, no further action will be taken.
Notice under Section 142(1) can be responded to electronically only with the help of 'e-Proceedings' in the assessee's registered 'e-Filing' accounts.
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There is no maximum limits to issue the notice u/s 142(1). This notice can be issued even after the end of the particular assessment year.
  • A penalty of Rs 10,000 can be imposed on you u/s 271(1) (b).
  • A warrant may also be issued u/s 132 for conducting a search.
Normally, it is impossible to receive a wrong notice from ITD, but it may happen that PAN mentioned needs to be corrected in the notice; in that case, you may get a notice from the income tax department.
A notice under section 142(1) is issued by the Assessing Officer to conduct a preliminary investigation into the mismatch between the income tax return filed by the assessee and the information available to the AO. It is a way of asking for more details from the assessee before making the final assessment by the AO.
An Income Tax Assessment Order is a notice sent by the Assessing Officer to the assessee. It shows the calculation of the total income that the assessee earned in the previous year. It is based on the assessment of the income tax return filed by the assessee.
The assessment year is the year (from April 1 to March 31) in which you pay tax on the income you earned in the previous financial year. You have to file your income tax return for the income you received in the financial year in the corresponding assessment year. The assessment year comes right after the financial year.
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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

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