Notice under section 142(1) of the Income Tax Act, 1961 is to call for further details and documents from the assessee after filing the return. This notice can also be sent to require him to file his return where he has not yet furnished it. This notice is issued when information is missing from the taxpayer’s end.
Purpose of Notice under section 142(1) of Income Tax Act
Notice u/s 142(1) can be issued by the Income Tax Department for the following reasons:
1. To ask the assessee to file the Income Tax Return: If the assessee has not filed a return within the specified period of time or before the end of the relevant assessment year, then the assessee might receive notice u/s 142(1) asking to file the return.
2. Producing specific accounts and documents: If the assessee has already filed an income tax return, the Assessing Officer (AO) may ask assessee to produce such specific accounts and documents as required by him by way of Notice u/s 142(1). For example, assessee might need to produce your purchase books, sales books, or proofs of any deductions, etc.
3. Any other information, notes, or workings as desired by the AO: Assessing Officer may require the assessee 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 the part of books of accounts. For example, A statement of assets and liabilities.
Penalty for non-compliance of Notice under section 142(1)
Failure in compliance with the Section 142(1) Tax Notice may result in Best Judgment Assessment by assessing officer u/s 144. Further, the penalty includes:
- Imposition of penalty of Rs 10,000 for each failure u/s 271(1)(b) or;
- Prosecution under section 276D may extend up to 1 year with or without fine.
- A warrant may also be issued u/s 132 for conducting the search.
When notice is for filing of return, an assessee should file his return within the time period in the notice and if documents and details asked to produce and then give the same to A.O. within the specified period.
Your return will be sent for processing. If everything looks good to AO, No further action is required. Also, there are changes of notice under section 143(2) for scrutiny assessment if any information is doubtful to AO as per the documents and information submitted by you.
You need to respond to notice in the manner which is mentioned by AO