Section 142(1) Income Tax Notice: How To Respond To It?

We do not really look forward to intimations from the taxman. However, we often end up on the receiving end.  

The recipients often find a notice under section 142(1) from the Income Tax department for scary. However, this is a standard procedure for assessing income tax.  

The Income Tax Department sends this notice when it wants additional information about an individual’s IT return.  

In general, such notices ask the individual to provide information regarding the bank statement, evidence of deduction, and other financial data. 

Moreover, all salaried employees, business owners, and freelancers should definitely understand the proper duties of a taxpayer.  

The income tax notice under Section 142(1) allows the authorities to enforce compliance. In this article, we will learn about the main purpose of section 142(1) notice. 

Further, we shall also understand how to respond to the notice. Additionally, we shall also learn about the documents that individuals should submit once they get served with the notice. 

Everything That You Should Know About Section 142(1) Income Tax Notice 

You should understand Section 142(1) income tax notice properly to respond to it in the right way. Hence, learn about all the provisions. 

1. Why Do Individuals Receive Section 142(1) Income Tax Notice?

The income tax department often seeks certain additional information before concluding an assessment.  

Thus, they send the notice to the concerned individual to seek cooperation. Moreover, this often happens when you do not file your income tax within the due date.  

Hence, the income tax department often issues an income tax under section 142(1) to urge you to file the income tax return.  

Often, people forget to verify their return within 30 days of submitting the income tax return. The department treats the return as not filed when e-verification is not involved in the process. 

Moreover, in certain cases, the assessing officer often urges the party involved to submit relevant documents to support the income, claim, or deduction claimed on the return. 

Moreover, these things can be bills, receipts, and other account statements. The income tax department often asks concerned individuals to provide explanations for the assets and liabilities.  

Thus, the officer gains a better understanding of an individual’s financial situation. Thus, section 142(1) income tax notice ensures that the tax return is completely verifiable and accurate. 

Hence, a notice under the income tax notice under Section 142(1) does not always imply some kind of fraudulent activity.  

However, the recipient of the notice should act promptly and rationally in response to the notice within the due date for responding. 

2. What Is The Time Limit To Serve The Notice?

The Income Tax Department issues Income Tax Notice 142(1) to request details and documentation from taxpayers.   

Moreover, this department issues this notice after the return is filed. Moreover, the income tax does not exactly specify the time when the notice will be issued. 

However, the department issues the notice before concluding the assessment. The concerned person gets subjected to a penalty when they are not able to respond within the given time. 

Thus, the recipient should respond promptly to avoid significant legal consequences. Moreover, notice dictates that the concerned person provide the officer with all the required information. 

Hence, this enables the officer to assess things correctly and, more importantly, in an unbiased way. 

3. What Is The Time Limit For Responding?

The person should act within a given timeframe of 30 days after receiving a notice under section 142(1) of the Income Tax Act.  

The Income Tax Department often requires additional information on things like expenditure, income, and the record of papers. 

Responding within the time limit should save the recipients from penalties and other measures.  

The respondents should fill out their responses through the online portal of the income tax e-filing account.  Hence, a prompt response mostly leads to easier processing of the case.  

4. What Are The Key Details In The Section 142(1) Income Tax Notice?

Income Tax notice section 142(1) serves as a legal mandate of the Income Tax Department. This legal instrument falls under the Income Tax Act 1961. 

The instrument provides authority to an Assessing Officer (AO). Further, the AO can easily demand more information from the taxpayers. 

The Income Tax department issues the Section 142 (1) Income Tax Notice during the assessment. 

Hence, irrespective of whether you have filed your returns or not under 139(1), you can be served with the Section 142(1) notice. 

5. Who Issues The Section 142(1) Income Tax Notice? 

The department gives the authority to the assessing officer to serve the notice under section 142(1).  

The AO often issues a notice when the taxpayer does not file the income tax return within the time limit for submission. 

The AO also issues an income tax notice under section 142(1) when the department finds any discrepancies in the filed tax return, or they can also issue a notice when they want additional information. 

The department often issues such a notice, even after the close of the concerned Assessment Year.  

6. What Should I Do After Receiving A Notice From The Income Tax Department? 

Receiving a notice from the Income Tax department does not always mean there are discrepancies in your file return. 

Moreover, it can mean a lot of things. The department often serves a notice to seek additional information. 

However, you should always respond to the notice in a more correct and prompt way.  You should do the following things to understand the reasons for getting a notice. 

• Firstly, you should understand the reasons behind getting served with a notice. 
• You should also check the contents of the notice. Hence, give it a proper read to evaluate it properly. 
• You should always answer within the time limit that has been mandated by the notice. 
• Finally, do not hesitate to reach out to a tax professional to get advice. 

7. What Are The Demands Made For Particular Accounts And Documentation? 

The AO often requires several additional pieces of information even after the filing of the income tax return. 

Moreover, these information are mostly related to the evidence of the deductions that were made, bills of the expenses reported. Hence, they can also include the other supporting documents. 

Thus, the notice ensures that the information provided by the taxpayer remains absolutely accurate. 

The Assessing Officer often enquires information about the earnings from diverse sources. Hence, this includes profession, business, and property. 

Hence, the taxpayer should ensure to provide accurate and complete documents after the request is made by the department.  

8. What Are The Other Necessary Information About Section 142(1) Income Tax Notice?

Apart from the financial records, the assessing officer often seeks various other information in writing. Moreover, this includes explanations and notes related to various aspects of the return. 

AO often seeks an elaborate list of the assets and debts of an individual. The books of account often exclude these things. 

However, they play a key role in the overall assessment of the case. Hence, the recipient of the notice should present the information in the correct format and at the specified time that is mentioned in the notice.   

9. What Is The Penalty For Non-Compliance? 

Non-compliance with the income tax notice section 142(1) can often lead to serious consequences. 

Section 271(1)(b) allows the charging of a finest the rate of ₹10,000. The AO can also perform the assessment under the Best Judgement Assessment u/s 144. 

Hence, the AO depends on the available information to the department to determine the tax liability while performing the assessment. 

10. How To Respond To Section 142(1) Income Tax Notice?

 You will have to follow the steps mentioned in the Income Tax e-filing portal to respond to a notice under Section 142(1) of the Income Tax Act. 

• Enter the PAN card details to be able to log in to the portal. 
• Navigate to the Pending Action tab, then move to e-Proceedings and click on it. 
• Select the view notices option and view all the notices. 
• Click on the submit response button. This shall redirect you to a new page. 
• Choose the type of response mentioned on the notice. 
• Hence, use partial response or full response depending on the case. 
• Attach all the documents that have been mentioned, and then submit your answer with ease. 

You should always respond within the time limit or deadline mentioned in the notice. Moreover, delays often lead to legal consequences like lawsuits or penalties. 

Always consult a tax specialist when you are unsure of how things are supposed to be done properly. 

Things To Remember About Income Tax Notice 

The Income Tax department often issues various notices. Moreover, each notice has a different purpose. Income Tax Intimation under Section 143(1) is often sent to the recipient as an automated intimation. 

However, 142(1) serves as a formal notice that can be sent for diverse reasons. Mostly, the Assessing Officer sends the notice to seek extra information and documents related to the income tax returns. 

Additional Reading:

• How to Save Capital Gain Tax on Property?
• FICA Tax Explained: What Every Employee Should Know
• Income Tax Calculator: How To Calculate Your Income Tax For The Next Financial Year?