What is Notice U/s 142 (1) | How to reply Income Tax Notice U/s 142 (1)

Introduction

Hi, if you search on google for “what is a notice under 142(1)?” and you’re not getting any relevant answers, so let me give you an answer in this article. 

So, what is this notice in the context under Section 142(1)? and what is the purpose of issuance of notice and last how to handle such kind of notices? 

Hi, I’m CA Arun Tiwari and I’m a tax litigation expert. Basically, from seven years I’m handling the income tax and its related notices, and I have filed quite some appeals also. So, I can answer this question Now, 

i.e. what is income tax notice under section 142(1) ?. 

What is the Income-tax notice under section 142(1)

This notice is issued when the income tax officer is not happy with your income tax return during income tax assessments. If you have filed a return or if you have not filed the return, then of course this notice is issued to file your income tax return first. So, there are two situations under which section 142 is used. 

Situation-I: –  IT return not filed

where you have not filed the return, but the income tax officer feels that you qualify to file their income tax return and purposely or by mistake you forgot to file the IT return than the officer can issue this notice U/s 142(1) to file a proper IT return

 So if you have received a notice under this section, you have to first file the proper income tax return and then you need to submit supporting documents and provide information as asked by the assessing the offer as the assessment proceeds.

Situation-II: –  IT return Filed

If You receive income tax notice U/s 142 (1) even when you have filed the income tax return, that means the IT officer found something a miss in your IT return. There seems something missing as per the income tax officer and now he is not having all the information, all the documents on the basis of which you have filed, the income tax return to check whether your return is proper or some income has been missed out some income has not been evaded. 

In this situation, he will ask you to provide supporting documents and information on basis of which you have filed your return and will like to cross-check if you have filed a well-supported IT return

How to reply to Income tax notice under section 142(1) 

The Prevention is a cure, and for sure if you file your return carefully and if required seek professional help from a qualified Chartered Accountant to file it for you, you are rarely going to receive any such notices.

However, if you got this Notice, should you worry about that? Yes, because generally income tax department is not going to issue notice for just like that, they got something serious where they feel at least more than one Lac rupees of income is under-reported.  And they can add that much income in your income and claim taxes to be paid

 That means they got some substantial information and that’s why they are issuing a Notice to know more from you.

 So in case you received the Notice U/s 142(1), the first important part you have to check is the reason for the notice and if you have not filed the return then it should be properly filed after checking all the details. You should file a proper return so that after that the income tax department should not come back to you and levy some heavy kind of penalty. 

For the second situation, if you have already filed the return and still you feel something missing, in that case again you have to do all computation. That means you resubmit all your bank statements and everything and properly you have to prepare one later. You don’t have to file, but you do prepare it and you have to compare this return with your old return and see whether something has missed out or not, maybe a dividend, maybe some interest income maybe some shares you sold, maybe some property was sold, but you forget to mention so these are basically the reasons why you receive the income tax demand notice under Section 142.

What to do after you submitted a reply?

Now what to do after that? So, as I mentioned above in the two situations, if the return is not filed then file the proper return, take professional help, and yes, they will charge something but they will ensure that the notice return is filed properly because you should understand that you already are under the scanner of the income tax department, if you’re not going to take it seriously then, of course, they’re going to levy penalty on you and penalty is going to be very huge. It’s not a joke.

 The second important part, if you file the return and something is feels missing, Pls revise the IT return and don’t hesitate to take the help of a professional CA firm.

 Again as most of the people file their returns themselves, they generally tend to make mistakes when there is any new income or expenses and end up getting notices 

How to avoid notice

So, it’s all OK to file it return yourself, but sometimes in some year, when happens to be some special income you earn or some special kind of transaction has been done such as, you sold some houses or some shares has been sold and because it is a new thing for you, which you might have missed out that at the time of filing IT returns.

So, in that situation, I will recommend that you approach somebody who knows how to handle this notice.

 For example, you can approach me as well we are doing this for quite some time and sometimes we see that there is a problem in the way the notice has been prepared. So, we basically prepared it properly and filed it and in most cases, the things are resolved.

In some cases, when the return is filed but something is missing, we basically prepare all documents again and submit that, and then, if there is some additional liability, we pay and the income tax department and income tax officer are happy, he’s not going to penalize you. 

So, this is how you have to approach it. if you feel that if you work this kind of notice and you need some professional consulting, you can approach us.

Hope I have answered most of the questions and it is not very complicated. If you follow some professional person who has experience in handling complex notices, it can be easily sorted.

Don’t try to do it yourself. Once you submit something it is all documents on record and later you cannot say, Oh, it is submitted by mistake. Once the proceeding started, it’s the same as a judicial proceeding, so you cannot submit anything in front of a court or in front of a judge.

Same way if income tax officer also has a semi-judicial power. So, if you submit anything and you found that it’s wrong, it’s kind of you’re trying to evade something and the penalty will follow They can put it.

I will tell you about the penalty, which is under section 271 which is very severe hence always try to avoid saying or submitting something which you can’t substantiate.

Conclusion

So, Yes, sometimes we miss out on something, but this is a chance to rectify it, you should do it with the help of some professional who is dealing in this. So that’s all in this article.

Nothing to worry.

 I hope at least now you have clarity about these notices. If you want to contact us, Then you can contact on 9969042660/9372644735. 

Thank you. Have a nice day. 

CA Arun Tiwari

Tax Litigation & International Taxation Expert