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

Taxation in India

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

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.

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.

 

  

FAQ on Section 142(1) – Inquiry Notice before Assessment of Tax

When can notice under section 142(1) be issued?

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.

Who can serve notice under section 142 for making any inquiry before the assessment?

AO, i.e., the assessing officer can serve the notice under section 142(1)

What do I do when I receive a 142(1) notice from the income tax department?

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.

What can I expect after submitting my ITR under section 142(1)?

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.

How to respond to Income Tax Notice u/s 142(1)?

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.
Qualified Munim has expertise in responding to Income Tax Department. Contact us to seek help from our experts to avoid legal consequences.

What is the time limit for issuing section 142(1) notice?

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.

What is the penalty for 142(1) notice?

  • 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.

Can I get the wrong notice from the income tax department?

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.

 

Disclaimer: This tax consultancy article is for educational purposes only. It does not constitute personalized tax advice. For specific tax situations, consult a qualified tax professional or contact Qualified Munim Team at qualifiedmunim@gmail.com or +91-74199-00446. Visit www.qualifiedmunim.com. We are not liable for any actions taken based on this information.

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