Section 142(1) Income Tax Notice: Inquiry Before Assessment - 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

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.