Received a Notice for Political Donations? Here's What You Must Know

A notice under Section 142(1) of Income Tax Act is a formal communication from the Income Tax Department requesting specific documents, explanations, or evidence to complete the assessment of your return.

This is not a notice of default or penalty. However, it indicates that the Assessing Officer has found certain discrepancies, unusual claims, or high-value transactions that require clarification. It falls under the framework of faceless assessment compliance introduced by the department to improve transparency and efficiency.

A Real-Life Case: Why the Notice Was Issued

In a recent assessment for AY 2024–25, a salaried individual received a income tax scrutiny notice under Section 142(1). After reviewing the individual’s ITR, the department flagged several concerns:

✔️ Deductions Claimed:

• ₹1,50,000 under deduction under section 80C
• ₹50,000 under section 80CCD(1)
• ₹2,34,468 under section 80CCD(2)
• ₹11,72,340 as house rent allowance under section 10(13A)

✔️ Political Contribution:

• ₹12,00,000 donation to a political party under section 80GGC political donation

✔️ High-Value Expenditure:

• ₹11,42,556 worth of credit card expenses made via ICICI, which raised questions about the source of funds

Such high-value deductions &transactions triggered scrutiny under the department's risk-based parameters. As a result, the taxpayer was served a notice requesting documentary evidence to support the claims."

Key Details Requested in the Notice

The annexure attached to the Section 142(1) notice listed the following requirements:

1. Brief explanation of income or business activities for the financial year.
2. Details & statements of all bank accounts.
3. Clarification on the section 80GGC political donation, including:
   • Party details
   • Donation receipt
   • Bank transaction proof
   • Explanation regarding the genuineness of the donation
4. Documentary evidence for:
   • deduction under section 80C
   • section 80CCD(1) and section 80CCD(2) contributions
5. For house rent allowance under section 10(13A):
   • Rent agreement
   • Rent receipts
   • Payment proof from bank
   • PAN of the landlord
   • HRA calculation sheet
6. Copy of Form 16 issued by employer
7. ICICI credit card statement along with source of fund used for payment

The department clearly mentioned that non-compliance would attract proceedings under Section 272A(1)(d), which may lead to a monetary penalty.

Also Read: Penalty Cancelled After Voluntary Correction: A Real-Life Guide to Escaping Section 271(1)(c) Trouble

How to Respond Professionally

The taxpayer must respond using the income tax e-proceedings facility via the e-filing portal at www.incometax.gov.in.

Steps to follow:

1. Log in to your account.
2. Go to “Pending Actions” > “e-Proceedings.”
3. Select the notice with the matching DIN number.
4. Upload requested documents in PDF format with proper file names.
5. Ensure the response is submitted before the deadline mentioned in the notice.

This is part of the faceless assessment compliance process—no physical appearance is required, & all communication remains online."

Consequences of Non-Compliance

Failure to respond within the stipulated timeline can lead to:

• Section 272A(1)(d) penalty up to ₹10,000
• Disallowance of deductions claimed in the ITR
• Assessment under Section 144 (best judgment), which may not be favourable

Responding accurately and on time is essential to avoid unnecessary litigation or financial burden.

Lessons from the Example

This real case illustrates the importance of maintaining complete documentation for all claims made in your tax return. High-value deductions such as:

• house rent allowance under section 10(13A)
• section 80GGC political donation
• deduction under section 80C
• Contributions under section 80CCD(1) & 80CCD(2)
• Significant credit card transactions

...can be flagged by the system if not appropriately substantiated.

Even salaried individuals with no business income can come under scrutiny if their return contains inconsistent or unusually high claims.

Also Read: Section 142(1) of Income Tax Act: Meaning, Use and Response Guide for Taxpayers

Final Thoughts

Receiving a Section 142(1) notice does not necessarily mean you're in trouble. It is often part of the department’s standard process to verify high deductions or large transactions. However, timely & professional compliance is critical.

If you're unsure how to handle the notice, seek expert guidance. Incorrect or incomplete responses can result in reassessment, penalties, or prolonged scrutiny.

At Callmyca.com, we help taxpayers respond to notices with complete documentation, legal accuracy, and strategic presentation.

✅ Expert-drafted replies
✅ Assistance with document preparation
✅ Deadline tracking
✅ End-to-end handling of income tax scrutiny notices

Upload your Section 142(1) notice at callmyca.com and let our team take it from here.