How to Interpret Notice u/s 142(1) – Inquiry Before Assessment


One of the biggest worries of Income Tax payers is getting notices from Income Tax Department. The Department issues notices under various provisions of the Income Tax Act. The purpose of the same is to ensure greater tax compliance. If you understand these notices, you will be far less worried about them and also find it easy to respond to them correctly.

Notice u/s 142(1) is usually served to call upon documents and details from the tax payers, and to take a particular case under assessment. This notice can be sent to assessee before or after assessment of his tax return

By serving a notice u/s 142(1) your AO may ask you to:

1.

furnish a return of income in respect of which you are assessable, where you have not filed your return of income within the normal time allowed (which may include return in respect to your own income or income of other person for which you are liable to be assessable), for e.g., in case of a legal guardian/ deceased person;

2.

produce accounts or documents which he may require for the purpose of making an assessment;

3.

furnish in writing any information on matters including your statements, for example, statement of your assets and liabilities on a particular date;

Compliance with this notice u/s 142(1) is mandatory.


If you fail to comply with the provisions of this section:

1.

It may result in ‘Best Judgment Assessment’ of your case u/s 144 or;

2.

imposition of penalty u/s 271(1)(b) i.e. Rs10,000 for each failure or;

3.

prosecution u/s 276D which may extend up to 1 year with or without fine.

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