Understanding Income Tax Notice under Section 142(1): What You Need to Know

 Receiving a notice from the Income Tax Department can be unsettling, but understanding its purpose and responding correctly can make the process smoother. One such commonly issued notice is under Section 142(1) of the Income Tax Act, 1961.

What is Section 142(1)?

Section 142(1) empowers the Assessing Officer (AO) to seek information from a taxpayer:

• To verify income and documents

• To compel filing of returns (if not already done)

• As part of the preliminary stage before the assessment process begins

This means the AO is essentially asking for clarification or details to ensure that the income declared is accurate and complete.

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When is a Notice Issued?

A notice under Section 142(1) can be issued in the following situations:

1. If you haven’t filed your Income Tax Return (ITR) within the due date.

2. If your filed return raises questions or seems incomplete.

3. If there's a mismatch between the income reported and third-party data (e.g., AIS or TDS).

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Common Reasons for Receiving a 142(1) Notice

Some typical triggers for such a notice include:

• Non-filing of returns

• Large financial transactions not disclosed in ITR

• Discrepancies in AIS, TIS, or Form 26AS

• Suspicious financial behavior or undeclared income

• Errors in income or deduction claims

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Is the Notice Legally Valid?

Yes. It is issued under the legal framework of the Income Tax Act. Ignoring it may result in:

• A Best Judgment Assessment under Section 144

• Penalties or prosecution, depending on the severity

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How to Respond to a 142(1) Notice

If you receive such a notice, here’s what to do:

1. Log in to the Income Tax Portal

2. Navigate to the “e-Proceedings” section

3. Carefully read the notice

4. Collect and prepare the required documents

5. Submit a complete and timely response

6. Consult a Chartered Accountant or tax expert if needed

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Documents Usually Requested

The AO may ask for:

• Bank statements

• AIS (Annual Information Statement) / TIS (Taxpayer Information Summary)

• Salary slips, rental income proofs, etc.

• Investment records (FDs, mutual funds, property details)

• TDS certificates

• PAN, Aadhaar, and ITR acknowledgements

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Timelines and Penalties

• Typical response time: 15 days

• Ignoring the notice can lead to:

  • Forced or arbitrary tax assessments

  • Financial penalties

  • Legal proceedings (in rare and serious cases)

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Tips to Avoid Receiving a 142(1) Notice

• File your tax returns on time

• Ensure AIS/TIS and ITR data match

• Report all income accurately

• Avoid rounding off or misreporting

• Keep financial records organized and updated