Section 142(1) Income Tax Notice: Inquiry Before Assessment - How to Respond
A Section 142(1) notice can arrive for two very different reasons - either you haven't filed your return at all, or the department simply wants more information before processing one you already filed. Knowing which situation you're in changes everything about how to respond.
What Is Section 142(1)?
Section 142(1) of the Income Tax Act empowers an Assessing Officer (AO) to issue a notice for "inquiry before assessment". This notice can be issued in two distinct scenarios:
- You have not filed your ITR for a particular assessment year, and the AO requires you to file it (this can be for the relevant AY or, in certain cases, even for an earlier year).
- You have filed your ITR, but the AO requires additional information, documents, or accounts to verify the return before processing it further (often before issuing a scrutiny notice under Section 143(2), or in connection with a 143(2)/144 assessment already underway).
What the Notice Can Demand
Under Section 142(1), the AO can require you to:
- File a return of income, if not already filed, in the prescribed form
- Produce accounts, documents, or records the AO considers necessary
- Furnish information on specified points, including a statement of assets and liabilities (whether or not included in the books of account)
- Provide details in such form and verified in such manner as may be prescribed (e.g., through the e-proceedings facility on the income tax portal)
Common Triggers for a 142(1) Notice
| Trigger | What It Usually Means |
|---|---|
| High-value transactions reported in AIS/SFT but no ITR filed | Department wants you to explain the income source or file a return |
| ITR filed but selected for scrutiny/limited scrutiny | AO is gathering documents before formal assessment proceedings |
| Mismatch between ITR figures and third-party data (TDS, AIS) | AO seeks clarification/supporting documents before processing |
| Return filed claiming large refund or deductions | Verification of supporting documents before refund is released |
How to Respond
1. Check the Notice on the e-Filing Portal
Most 142(1) notices today are issued electronically under Faceless Assessment. Log in to incometax.gov.in, go to "Pending Actions" → "e-Proceedings" to view the notice, the specific queries raised, and the response deadline.
2. Respond Within the Stipulated Time
The notice will specify a date by which you must respond - typically a few weeks. Responses, along with supporting documents, are usually submitted electronically through the e-proceedings module.
3. If You Haven't Filed a Return
If the notice requires you to file a return that is overdue, do so promptly through the e-filing portal, attaching all relevant disclosures (income, deductions, assets/liabilities as required).
Consequences of Non-Compliance
Failing to comply with a Section 142(1) notice can result in:
- Best judgment assessment under Section 144 - the AO can complete the assessment based on available information and their own estimate, which is often less favourable to the taxpayer.
- Penalty under Section 272A - ₹10,000 for each failure to comply with the notice.
- Prosecution under Section 276D in serious cases of wilful failure (imprisonment up to 1 year, with or without fine), though this is rare and reserved for egregious non-compliance.