Income Tax Notices

Notice under Section 142(1) of the Income-tax Act - Inquiry Notice before Assessment of Tax

Income tax notice is sent by the ITD department because of various reasons like non-filing of returns, discrepancies in tax returns, incomplete information, underreported income, tax evasion suspicions, reassessment, statute of limitations, and more. Inquiry notice u/s 142(1) is sent to taxpayers when a return is not filed or additional information is required by the ITD regarding the disclosures you made.

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Updated on: 27 Mar, 2024 05:04 PM

What is Notice under Section 142(1) of the Income Tax Act?

Section 142(1) of the Income Tax Act, 1961 grants authority to the Income Tax authorities to issue notice seeking additional clarifications or further details regarding a filed return. In cases where a return has not been filed, the provision empowers the authorities to request the necessary information to be furnished in a prescribed manner.

When is 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.

Notice to File Income Tax Return:

If the taxpayer fails to file their income tax return within the specified period or before the end of the relevant assessment year, they may receive a notice under Section 142(1) prompting them to file their return. It serves as a reminder and legal requirement to fulfill their tax obligations.

Request for Specific Accounts and Documents:

Upon receipt of the filed income tax return, the Assessing Officer (AO) may request the taxpayer to furnish specific accounts and documents pertinent to the assessment. This could include providing evidence supporting claimed deductions, invoices for expenses declared under various income sources such as business income, etc.

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 according to the Assessing Officer's best judgment based on 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.

Have you received a tax notice under section 142(1)? Don’t panic. Tax2win tax experts can assist you in resolving these notices and responding to them timely and accurately.

Sample email of the Notice under Section 142(1)

Sample email of the Notice under Section 142(1)

How to reply to Notice Section 142(1) of the Income Tax Act?

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.

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.
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 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.