🧾 Income Tax Notice Under Section 142(1): What It Means & How to Respond

🧾 Income Tax Notice Under Section 142(1): What It Means & How to Respond

Income Tax Notice Under Section 142(1): What It Means and How to Respond

Getting a notice from the Income Tax Department can feel stressful — especially when it arrives under a section number you may have never heard of before.
Section 142(1) is one of the most common notices issued by the department. But it’s not always something to panic about. Often, it’s a standard part of the assessment process or simply a request for clarification.

Here’s everything you need to know about a Section 142(1) Income Tax Notice — including its purpose, how to reply, and how to avoid penalties.

What Is Section 142(1) of the Income Tax Act?

Section 142(1) empowers the Assessing Officer (AO) to issue a notice to an individual or business for:

• Furnishing the return of income (if not filed already), or
• Providing additional documents, accounts, or information related to a filed return.

This section is part of the pre-assessment inquiry stage, where the AO collects details to ensure the income declared is correct and complete.
It applies to both individuals and companies under the Income Tax Act, 1961.

When Is a Notice Issued Under Section 142(1)?

You can receive a Section 142(1) notice in two main situations:

1. Return Not Filed Yet
   • If you haven’t filed your ITR (Income Tax Return) by the due date, the AO can issue a notice requiring you to file your return within a specified time.
2. Return Already Filed, But More Information Needed
   • If you’ve filed your ITR, but the AO wants to verify or clarify certain entries, deductions, expenses, or sources of income, they may request:
     • Bank statements
     • Loan agreements
     • Investment proofs
     • Expense vouchers
     • Details of foreign income or assets
     • Books of accounts, if applicable

Format and Contents of a Section 142(1) Notice

A typical Section 142(1) notice contains:

• PAN and name of the assessee
• Assessment year under review
• Date and reference number
• Details of the required documents
• Timeline to respond (usually 15–30 days)
• Mode of response (e-filing via income tax portal)

Frequently Asked Questions

Is a notice under Section 142(1) a scrutiny notice?
No. A 142(1) notice is not a full-fledged scrutiny assessment. It is a preliminary stage where the AO seeks further details. However, if discrepancies are found, it may lead to scrutiny under Section 143(2).

Is there a penalty for not replying to Section 142(1)?
Yes. Non-compliance can result in:

• Best judgment assessment under Section 144
• Penalty of Rs. 10,000 under Section 271(1)(b)
• Prosecution under Section 276D, which can involve fines or imprisonment in extreme cases

How to respond to a Section 142(1) notice?
You must reply through the income tax e-filing portal:

• Login to www.incometax.gov.in
• Go to ‘Pending Actions’ → ‘E-Proceedings’
• Select the relevant notice
• Upload the required documents in PDF or specified formats
• Submit the response online and keep an acknowledgment copy

Professional help is advisable for large transactions or complex matters.

Can I get an extension to respond?
Yes, in some cases, you can file an application requesting more time, especially if the documents are voluminous or need to be collected from third parties. However, it is always better to respond within the original timeline.

Checklist: What to Do If You Receive a Section 142(1) Notice

• Read the notice carefully and check the assessment year
• Identify whether it is asking for a return or more documents
• Gather the requested documents — income proofs, bank details, property documents, etc.
• File a complete and timely response
• Consult a Chartered Accountant if the matter involves foreign assets, share trading, crypto, or capital gains

Real-Life Example

Suppose you filed your return for AY 2023–24 showing Rs. 10 lakh income from business. The AO notices a mismatch between your ITR and Form 26AS or AIS showing Rs. 13 lakh credited from clients. You may receive a Section 142(1) notice asking for:

• Reconciliation statement
• Invoices for the extra Rs. 3 lakh
• GST returns, if applicable

Failure to clarify can lead to an addition to your income and a tax demand.

Final Thoughts from a Chartered Accountant’s Desk

A Section 142(1) notice is not a punishment — it is an opportunity to clarify and correct. But ignoring it can lead to serious consequences.

These notices are a part of India’s evolving tax compliance environment, where data matching through AIS, TDS, and PAN-linked records is becoming more rigorous. Hence, staying transparent and responsive is critical.

Need Help Responding to a Section 142(1) Income Tax Notice?

At CallmyCA, we help individuals and businesses:

• Draft and file proper responses to notices
• Upload documents and reconcile data
• Avoid penalties through timely compliance
• Represent before the Assessing Officer, if needed

Visit our website to book your notice-handling service with CallmyCA.