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

Income tax notices can be issued for a variety of reasons, such as failure to file returns, inconsistencies in filed returns, missing information, under-reported income, suspected tax evasion, reassessments, or statute-of-limitations issues. An inquiry notice under Section 142(1) is sent when you haven’t filed a return or when the Income Tax Department needs more details about the information you’ve already provided. This guide will explain what a Section 142(1) notice entails and offer advice on how to respond effectively.

What Is a Notice Under Section 142(1) of the Income Tax Act?

Section 142(1) of the Income Tax Act, 1961, empowers tax authorities to serve a notice requesting additional information or clarification about an income‑tax return. This applies whether you have already filed your return under Section 139(1) or not, ensuring the department has all the details it needs to complete its assessment.

Who Can Issue a Notice Under Section 142(1)?

• The Assessing Officer (AO) has the authority to issue a Section 142(1) notice, whether or not you’ve already filed your return under Section 139(1).
• If you failed to file your return by the deadline under Section 139(1), the AO may serve a notice directing you to submit your return within the timeframe specified in that notice.
• Such a notice may even be issued after the end of the relevant assessment year.
• Finally, even if you aren’t ordinarily required to file a return under the Income Tax Act, you must still comply with a Section 142(1)(i) notice by submitting a return.

When is Notice Under Section 142(1) Issued?

A Section 142(1) notice may be issued in either of these situations:

1. Return Filed: Even after you’ve filed your return under Section 139(1), the Assessing Officer can serve a 142(1) notice if they require further information or clarification.
2. Return Not Filed: If you miss the deadline for filing under Section 139(1), the AO can issue a notice directing you to submit your ITR within the timeframe specified in that notice. This power extends beyond the close of the relevant assessment year.

Additionally, if a Section 142(1)(i) notice is sent to someone who normally isn’t obligated to file a return, they must nonetheless comply by filing one in response. In all cases—whether your return has been filed or not—a 142(1) notice can be used to request any additional details the Income Tax Department needs.

Notice to File Income Tax Return:

If a taxpayer does not file their income tax return within the prescribed time or before the end of the relevant assessment year, they may receive a notice under Section 142(1). This notice acts as both a reminder and a legal directive to comply with their tax filing obligations. For non-audit cases, the last date to file the ITR without incurring any penalty is 31st July 2025.

Request for Specific Accounts and Documents:

After the income tax return is filed, the Assessing Officer (AO) may ask the taxpayer to submit specific accounts and documents relevant to the assessment. This may include proofs for claimed deductions, invoices for expenses reported under different income sources such as business income, and other supporting records.

Any other information, notes, or workings as desired by the AO:

The Assessing Officer may ask you to provide, in writing and in the prescribed format, specific information, notes, or calculations on certain matters as deemed necessary. These details may or may not be part of your regular books of accounts. For instance, you may be required to submit a statement of your assets and liabilities.

Purpose of Notice under Section 142(1)

The main aim of issuing a notice under Section 142(1) of the Income Tax Act is to assist in the proper assessment of income. It serves the following purposes:

• To obtain details related to the taxpayer’s income, as well as the income of another person for whom the taxpayer is legally responsible, such as a minor, a person under guardianship, or a deceased individual.
• To require the submission of relevant accounts and documents necessary for completing the assessment process.
• To seek written information on specific issues, including a comprehensive statement of the taxpayer’s assets and liabilities as of a particular date.

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

Failure to comply with a notice issued under Section 142(1) can lead to serious consequences, including:

• A penalty of ₹10,000 under Section 271(1)(b).
• Assessment under the “Best Judgment” method as per Section 144, where the Assessing Officer will determine your tax liability based on the information available to him.
• Prosecution under Section 276D, which may result in imprisonment for up to one year, with or without a fine.
• Issuance of a warrant under Section 132 to conduct a search operation.

Steps to Submit a Response to the Notice u/s 142(1)

To respond to a notice issued under Section 142(1) of the Income Tax Act, you can use the ‘e-Proceedings’ feature available on the Income Tax e-filing portal. Follow these steps:

1. Log in to the Income Tax e-filing portal.
2. Navigate to the “Pending Actions” tab and click on “e-Proceedings”.
3. Select the “View Notices” option to access the notice.
4. Click on “Submit Response” to proceed.
5. Choose “Select Response Type for Notice”. ”. ”.
6. Then, select either “Partial Response” or “Full Response” based on the information you wish to submit.

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