Understanding of Section 142(1) Notice: Inquiry before Assessment.

Section 142(1) of the Income Tax Act, 1961, grants the Income Tax Department the authority to issue a notice seeking clarification or additional details from taxpayers. Here’s what you need to know:

1) When is the Notice Issued?

a. Filed Return: If you’ve filed your income tax return under Section 139(1), the Assessing Officer (AO) may issue this notice to seek further information.

b. Non-Filing: If you haven’t filed your return within the specified period, the AO can request the necessary details even after the return due date has passed.

2) Purpose of the Notice:

a. Prompt Filing: If you haven’t filed your return, the notice encourages timely compliance.

b. Specific Information: After filing, the AO may ask for specific accounts, documents (e.g., purchase/sales books), and other relevant information.

c. Assets and Liabilities: You might need to provide additional details, including a statement of your assets and liabilities.

3) Penalties for Non-Compliance:

a) Rs 10,000 Penalty: Failure to comply can result in a penalty under Section 271(1)(b).

Remember, accurate reporting and cooperation with tax authorities contribute to a fair system!

Will come back with another post regarding other crucial provisions of the Income Tax Act of 1961.

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