How to deal with notice under section 142(1)?

When is notice under section 142(1) issued?

Notice under section 142(1) can be issued in both the cases where:

1. return has been filed and
2. where return has not been filed and time specified to file such return has been expired.

Why is notice under section 142(1) issued?

This notice is issued to the assessee:

1. to file income tax return if the same is not filed within the time limit specified.
2. to produce specific accounts and documents such as sales register, purchase register, voucher, receipts / proof of deductions availed, invoices of expenses made etc.
3. to produce other details and documents as the Assessing Officer thinks fit.

How to deal with notice under section 142(1)?

1. When the notice is issued requiring the assessee to file the return, the same should be filed within the time specified in the notice. A proof of the same is required to be submitted to the Assessing Officer.
2. If the return has been filed and certain documents and details are asked for, the same should be submitted to the Assessing Officer within the time specified in the notice.

Assessee is given a reasonable opportunity of being heard for any matter that has been gathered on the basis of such inquiry.

Consequences of failure to comply with the notice under section 142(1) 

If the notice under section 142(1) is not complied with:

1. it may result in Best Judgement Assessment under section 144 (the assessing officer will make the judgement and proceed the case on his own)
2. penalty of Rs. 10,000/- may be levied for each failure
3. imprisonment up-to one year along with fine may be imposed.