Income Tax Notice u/s 142(1): Inquiry, Response, and Penalty under Section 142(1) of Income Tax Act

What is 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 notices seeking additional clarifications or further details regarding a filed return.

This provision applies regardless of whether the taxpayer has filed their income tax return under Section 139(1) or has failed to file it altogether.

Who can Issue an Income Tax Notice u/s 142(1)?

A notice under Section 142(1) can be issued whether or not you have filed your income tax return under Section 139(1).

If you haven't filed your return within the time limit specified in Section 139(1), the Assessing Officer can issue a notice requiring you to file the return within the time given in the notice.

This notice can also be issued after the end of the relevant Assessment Year.

Even if you are not required to file a return under any provision of the Income Tax Act, 1961, you must still respond to a notice under Section 142(1)(i) by filing a return.

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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.

If the assessee has not filed the return within the prescribed time frame, the assessing officer can issue a notice asking the assessee to furnish the ITR within the time specified in the notice. This notice can also be issued after the end of the relevant Assessment Year.

If a notice under Section 142(1)(i) is issued to someone who is not required to file a return under any provision of the Income Tax Act, 1961, they are still obligated to file a return in response to the notice.

It can also be issued in cases where the Income Tax Department needs additional information in cases where tax return has been filed or in cases where it has not been filed.

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.

Purpose of Notice under Section 142(1)

The primary objective of issuing a notice under Section 142(1) of the Income Tax Act includes:

• This applies to the taxpayer's own income as well as the income of another individual for whom the taxpayer is legally responsible, such as in cases involving legal guardians or deceased individuals.
• Providing necessary accounts and documents to facilitate the tax assessment process.
• Furnishing written information on various matters, including a detailed statement of the taxpayer's assets and liabilities as of a specific date.

Penalty for Not Responding to Section 142(1) Tax Notice

Failing to respond to a notice issued under Section 142(1) can lead to a series of escalating actions by the Income Tax Department. Here’s how the process typically unfolds, along with what triggers each step and how you can avoid further complications.

1. Penalty under Section 271(1)(b)

What triggers it:
If you do not respond to the notice within the specified time or fail to submit the requested information or documents, the Assessing Officer (AO) may levy a penalty.

Consequence:

• A penalty of ₹10,000 for non-compliance under Section 271(1)(b).

How to avoid escalation:

• Submit the required details within the deadline mentioned in the notice.
• If you need more time, respond through the portal and seek an extension with valid reasons.

2. Best Judgment Assessment under Section 144

What triggers it:
If you continue to ignore the notice or provide incomplete/incorrect information, the AO may proceed with assessment on their own.

Consequence:

• Your income is assessed under Section 144 (Best Judgment Assessment) based on available information, which may result in higher tax demand.

How to avoid escalation:

• Cooperate with the AO by providing accurate information and supporting documents.
• File a proper response even if you disagree, along with explanations.

3. Prosecution under Section 276D

What triggers it:
Persistent non-compliance with the notice or repeated failure to provide information despite reminders.

Consequence:

• Prosecution under Section 276D, which may lead to imprisonment of up to 1 year, with or without a fine.

How to avoid escalation:

• Ensure timely compliance once a notice is received.
• Seek professional help to draft and submit a correct response.

4. Search and Seizure under Section 132

What triggers it:
If the tax authorities suspect concealment of income or deliberate non-cooperation, they may initiate strict action.

Consequence:

• Issuance of a search warrant under Section 132, allowing the department to conduct search and seizure operations.

How to avoid escalation:

• Respond honestly and transparently to all notices.
• Regularise pending filings and disclosures at the earliest stage.

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Sample of a Notice under Section 142(1) of the ITA

Steps to Submit Online Response to 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.

E-Assessment Scheme, 2019

The CBDT has notified that the e-assessment scheme, 2019, will be termed as the Faceless Assessment Scheme 2019. Under this scheme, all the income tax assessments must be conducted in a faceless manner.

How to File a Response under Section 142(1)?

A response to the notice under section 142(1) can be furnished electronically, via the e-proceedings utility in the registered e-filing accounts of the assessee. Here are the steps to file a response -

• Log in to the income tax portal www.incometax.gov.in
• Navigate to the ‘Pending Actions’ tab and select ‘E-Proceedings’
• Click on ‘View Notices’ and click on ‘Submit Response’.
• Select Response type for Notice
• Choose between ‘Partial Response’ and ‘Full Response’

Note: The attachments to be submitted can be in PDF/ Excel/Comma Separated Values (CSV) formats.

• Click on ‘Continue’, check the ‘Declaration and Submit’ box.
• You will receive a response, ‘Submitted Successfully’.
• You can download the acknowledgement of the response.

What Exactly Can the AO Ask Under Section 142(1)?

When you receive a notice under Section 142(1) of the Income Tax Act, the Assessing Officer (AO) is essentially asking for additional details or documentation to verify your tax return or to complete the assessment process. The law empowers the AO to seek three main types of information before finalising the assessment:

1. File or Re-File Your Income Tax Return (u/s 142(1)(i))

The AO can ask you to submit your income tax return if you haven’t filed one, or if the return is not on record for the year in question. In such cases, you must file the return within the time specified in the notice. This ensures the department has a proper return to assess.

Example:

If you missed filing your ITR for FY 2023-24 (AY 2024-25), the notice may simply require you to file your return so that the assessment process can proceed.

2. Produce Accounts or Documents (u/s 142(1)(ii))

The AO can ask you to provide specific books of accounts, financial records, or supporting documents relevant to your income or deductions. This helps the tax department verify figures declared in your return.

Example:

If you claimed business expenses or deductions, the AO may ask for invoices, bank statements, invoices for expenses, ledgers, or audit reports that support those claims.

3. Provide Additional Information, Notes, or Statements (u/s 142(1)(iii))

Under this provision, the AO can request any other information or explanations that assist in understanding your return or financial position. This may include written statements or summaries that are not part of your regular books of account.

Example:

The AO might ask for a statement of assets and liabilities as of a specific date, clarifications on unusual transactions, or breakdowns of income components.

How It Works in Practice

• Return Filing Ask: If you haven’t filed an ITR, the notice will require you to do so within a set deadline.
• Accounts/Documents Demand: You might be asked to submit supporting evidence like invoices, books of accounts, and bank statements.
• Information or Explanations: The AO may seek clarifications or written statements, such as your asset details or reasoning behind a deduction.

Responding accurately and on time helps you avoid penalties and unnecessary escalation of the assessment proceedings.

If you have received an income tax notice, make sure you respond to it within the given time frame, or else you might attract heavy penalties and legal consequences. And if you are not sure or need assistance with resolving your notices, connect with our experts, who can not only help you respond to notices accurately but also help you gather the relevant documents and avoid further delays and penalties. Connect with experts now!

Income Tax Act 2025 Section Mapping

The following table shows how the sections mentioned in this guide correspond to the Income Tax Act 2025.