PROSPERR.IO

The Income Tax Act, 1961, provides various mechanisms for the Assessing Officer (AO) or the prescribed Income-tax authority to gather necessary information for accurate assessment of income. One such mechanism is the issuance of a notice under Section 142(1) of the Income-Tax Act. This notice plays a crucial role in the pre-assessment procedure, ensuring that the AO has all the relevant details before making an assessment. Below is a detailed explanation of the notice u/s 142(1)

Purpose of Notice

The primary purpose of issuing a notice under Section 142(1) is to gather information for making an accurate assessment of income. This notice can be served to any person who has:

• Filed a return under Section 139
• Failed to file the return within the due date prescribed under Section 139(1) or before the end of the relevant assessment year.

When Can the Notice Be Issued?

The notice under section 142(1) can be issued in the following scenarios:

• Filed a Return Under Section 139: Any individual who has filed their return under Section 139 can receive this notice, if his return is taken up for scrutiny by issuing a notice under section 143(2) 
• Failed to File a return Within Time Allowed: Individuals who have not filed their return within the time allowed under Section 139(1) or before the end of the relevant assessment year can also be issued this notice.

Types of Information or Actions Required

The notice under section 142(1) can require the individual to undertake various actions or provide different types of information, as discussed below:

1. Filing of returns by Non-Filers

• If an individual has not filed a return within the allowed time or before the end of the relevant assessment year, the AO may require them to furnish a return of income.
• This return needs to be submitted in the prescribed form, verified in the prescribed manner, and include additional particulars as specified.

2. Production of Accounts or Documents

• The AO or prescribed authority may require the individual to produce or cause to be produced specific accounts or documents necessary for assessment.

3. Furnishing Information

• The AO may require the individual to furnish, in writing and verified in the prescribed manner, information in a specified form at the specified point, including a statement of all assets and liabilities, whether or not they are included in the accounts.

Consequences of Non-Compliance

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

• Penalties: Non-compliance can attract penalties under the Income Tax Act.
• Further Action: The AO may take further action as deemed necessary, which could include a best judgment assessment under Section 144.

Conclusion

The notice Under Section 142(1) is an essential tool for the AO to ensure that all relevant information is available before making an assessment. It helps maintain transparency and accuracy in the assessment process. Taxpayers are advised to respond promptly and accurately to such notices to avoid penalties and ensure a smooth assessment process. Understanding the requirements and implications of this notice can help taxpayers comply effectively and maintain good standing with the tax authorities. Click here to book your FREE tax assessment call

Disclaimer- The article is only for educational purposes, covering limited aspects of relevant provisions of the Income-tax Act. The relevant provisions of the Income-tax Act may be referred to, for complete understanding.