Income Tax Authorities issue notices to the assessees under the various provisions of the income tax act. Understanding the notices correctly is very important as it will help you to respond to notice precisely. This article provides the information about the inquiry notice before assessment U/ Section 142(1).
Section 142(1) of the Income Tax Act
Income tax department sends notice U/Section 142(1) generally to call for any additional details from the taxpayer and; to take a specific case under assessment, in case any detail is missing in his return. Department can also send him notice to ask him to file his return; in case he has failed to furnish the return. The taxpayer may receive notice before or after the assessment of his tax return.
Section 142(1)-Inquiry Before Assessment
To make an assessment under the income tax act, the AO may issue a notice to the taxpayer, who has filed the return U/S 115WD or 139 or in whose case, the time allowed U/S 139(1) to furnish the return has expired. The assessing officer may require him;
- To furnish the return of his income or the income of any other person in respect of which he is assessable, in the prescribed form & verified in the prescribed manner and setting forth such other particulars as may be specified.
- To produce, or cause to be produced, such accounts or documents as the AO may require for assessment.
- For furnishing in writing & verified in the prescribed manner any information in such form & on such points or matters (including a statement of all assets & liabilities of the taxpayer, whether contained in the accounts or not) as the AO may require.
Note: Where any notice is issued under clause (i) of this subsection after the end of the relevant AY starting on or after the 1st April 1990 to a person; who has not made a return within the time allowed U/S 139(1) or before the end of the relevant AY; any such notice issued to him shall be assumed to have been issued as per the provision of section 142(1).
The AO shall obtain the approval of the Joint Commissioner before requiring the assessee to furnish the statement of all assets & liabilities, which are not included in the accounts. The AO shall not need the production of any accounts relating to a period of more than three years before the PY.
Where the notice U/ Section 142(1), 143(2), 148, 153A, 153C of the Income Tax Act has been issued to a person for an assessment year; he will be ineligible from declaration for those assessment years for which; a notice under these sections is issued. However, he is free to declare undisclosed income for other years for which; no notice under these sections has been issued.
Penalty for Non-Compliance with Notice U/S 142(1)
Compliance with the notice U/ Section 142(1) is mandatory. In case of failure to comply with this notice,
- Penalty U/S 271(1) (b) i.e., Rs. 10,000 for each failure may be imposed, or
- May result in ‘Best Judgement Assessment’ of your case U/S 144, or
- The prosecution may extend up to 1 year with or without fine U/S 276D.