Section 142(1) Income Tax Notice: What It Means and How to Respond in 2026

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

A Section 142(1) notice is an enquiry issued by the Assessing Officer (AO) during assessment proceedings. It is not an accusation of tax fraud or evasion—it is a request for information, documents, or explanation. However, failing to respond has serious consequences: the AO can make a Best Judgment Assessment (assume worst case) and you lose your right to explain.

This guide covers what Section 142(1) means, the three types of notices, how to respond on the e-filing portal, what documents to submit, and how to avoid becoming subject to a worst-case assessment.

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What Is Section 142(1)? The Legal Basis

Section 142(1) of the Income Tax Act, 1961 allows an Assessing Officer to issue an enquiry notice during assessment proceedings to gather information before passing an assessment order.

The key word is enquiry—not assessment. An AO cannot assess you without understanding your position first. The notice is issued to ensure you have a fair opportunity to provide your version before tax is finalized.

Legal process:

1. You file ITR (or do not file, triggering automatic assessment)
2. AO reviews your return (via CPC processing or faceless assessment system)
3. AO issues 142(1) if clarification is needed
4. You submit response and supporting documents
5. AO passes assessment order (Section 143)

Missing step 4 gives the AO power to proceed to step 5 based on best judgment, which almost always works against the taxpayer.

Three Types of Section 142(1) Notices (Most Important)

Section 142(1) is structured into three sub-clauses. Identifying which one applies to your notice is the first critical step.

Type (i): Notice to File ITR or Furnish Documents

When issued: If you have NOT filed an ITR for the relevant assessment year, the AO can issue a notice asking you to file your return.

What it means: You are required to file an ITR (or furnish accounts/documents). This is a preliminary step; the AO has not yet started formal assessment.

How to respond: File your ITR on the e-filing portal within the deadline stated in the notice (usually 15-30 days). If you cannot file a full ITR, submit the documents/accounts you do have.

Consequence of non-response: Section 144 applies—AO makes a Best Judgment Assessment without your ITR.

Type (ii): Notice to Produce Documents or Accounts

When issued: During assessment, the AO asks you to produce books of accounts, bank statements, investment proofs, property documents, TDS certificates, etc.

What it means: The AO is gathering evidence to verify claims made in your ITR. Examples:

• "Produce bank statements for account ending XXXX for FY 2025-26"
• "Furnish books of accounts for the business"
• "Provide proof of investment in ELSS funds claimed under 80C"
• "Explain large cash deposits flagged in the AIS (Annual Information Statement)"

How to respond: Compile and submit all requested documents. Digital copies (scanned PDFs) are sufficient; no need to send originals.

Type (iii): Notice to Furnish Information on Specific Points

When issued: The AO asks you to explain or furnish information on a specific issue. Examples:

• "Explain the source of the Rs 5 lakh deposit on 15-March-2026 in your bank account"
• "Furnish computation for capital gains claimed in your ITR"
• "Explain the mismatch between TDS shown in your 26AS and TDS claimed in your ITR"
• "Provide explanation for foreign income not reported in previous year"

How to respond: Write a detailed, point-by-point explanation with supporting documents. Keep the explanation clear and factual.

How Section 142(1) Is Issued

Faceless Assessment System (introduced 2020): Most 142(1) notices now come from the National Faceless Assessment Centre (NFAC), not your local AO.

Delivery method: Via email and on the income tax e-filing portal under:

• Login → My Account → e-Proceedings

The notice includes a DIN (Document Identification Number) which is unique to each notice. Always verify the DIN matches before responding.

No face-to-face meeting required (unless your response is contested and formal scrutiny is triggered under Section 143(2)).

Timeline to Respond (Critical)

Deadline: As stated in the notice, usually 15 to 30 days from the date of issue.

Calculation: Day 1 = date of notice (or date received, whichever is later). Count 15/30 days from there.

Extension: If you need more time, file a request on the e-filing portal before the deadline expires, explaining the reason. AO may grant 15-30 day extension, but this is discretionary—do NOT count on it.

Missing deadline: If you do not respond by the deadline, Section 144 applies. The AO makes a Best Judgment Assessment without your input. This is almost always worse than your actual tax position.

How to Respond on the e-Filing Portal (Step-by-Step)

Step 1: Login to the portal

Go to www.incometax.gov.in and login with your PAN and password.

Step 2: Navigate to e-Proceedings

After login, select My Account → e-Proceedings (or Pending Actions > Response to Outstanding Demand).

Step 3: Identify your notice

The portal shows all pending 142(1) notices. Select the relevant one by checking:

• DIN number matches the notice you received
• Assessment Year matches
• AO name/jurisdiction (if applicable)

Step 4: Read the notice carefully

Click on the notice to see the full text. Identify which sub-section (i), (ii), or (iii) it is. Read every line—the notice specifies exactly what is being asked.

Step 5: Prepare your response

Write your explanation (if Type iii) or compile documents (if Type ii) or file your ITR (if Type i).

For documents:

• Scan as PDF (high quality, legible)
• Bundle in a single PDF or separate files by category
• Write a cover letter indexing each document

For explanation:

• Number each point corresponding to the notice
• Keep language clear, professional, factual
• Avoid emotional language or defensive tone
• Cite relevant sections of the law or your actual records

Step 6: Submit on portal

Attach your explanation/documents in the portal response box. Click Submit.

Step 7: Download acknowledgment

After submission, the portal issues an acknowledgment with a timestamp. Download and keep this acknowledgment. You now have proof of timely submission.

Common Documents Requested Under 142(1)

Most frequently asked for:

1. Bank statements: All savings, current, and loan accounts for the relevant FY
2. Books of accounts: Profit & loss statement, balance sheet, general ledger
3. Expense documentation: Invoices for claimed deductions (medical insurance, donations, etc.)
4. Investment proofs: Certificates from banks, mutual funds, insurance, PPF for 80C claims
5. TDS certificates: Form 16 (salary TDS), Form 16A (other TDS)
6. Property documents: Title deeds, registration papers, sale agreements for property transactions
7. Dividend/interest statements: From banks, brokerages, mutual funds
8. Cash deposit explanations: If large deposits flagged in AIS
9. Loan documents: Repayment schedules, bank statements showing EMI payments for home/education loan interest claims

What NOT to Submit

• Originals: Only send scans/photocopies; originals remain with you
• Personal documents unrelated to income: Passport, Aadhar, driving license (unless specifically asked)
• Undated or unsigned documents: Ensure all documents are properly authenticated
• Irrelevant materials: Stick to what is asked; do not include extraneous papers

Section 144: What Happens If You Do Not Respond

Best Judgment Assessment:

If you do not respond to a 142(1) notice within the deadline, Section 144 applies. The AO makes an assessment without your input, based on available records and best judgment.

In practice:

• AO assumes all income flagged in AIS is taxable
• AO rejects or ignores claimed deductions (no proof)
• AO applies a default rate of tax (often assumes worst-case)
• AO raises a tax demand

Example:

• You earned Rs 50 lakh salary (Form 16 issued, all legitimate)
• AO issues 142(1) asking for proof of investments claimed under 80C
• You do not respond
• AO makes BJ assessment, disallows all 80C claims (assuming no proof)
• Tax demand is raised assuming Rs 50 lakh fully taxable

You lose your right to explain why the deduction was valid. The remedy then is to appeal the assessment—costly and time-consuming.

Section 271(1)(b): Penalty for Non-Compliance

Even if you respond late (after deadline), you may face a penalty under Section 271(1)(b): Rs 10,000 for each failure to comply with a notice from the AO.

Penalties can be waived if you provide evidence of "reasonable cause" for the delay (illness, office fire, loss of records, etc.), but this is decided at the AO's discretion.

When to Hire a CA

Hire a CA if:

• Multiple issues raised (mismatch on multiple income heads)
• Large or complex income (foreign income, capital gains, business)
• Substantial cash deposits flagged
• You believe the notice is based on misunderstanding or error
• English communication is a challenge

A CA can:

• Analyze the notice and identify exact issues
• Prepare comprehensive response with proper citations
• Compile documents in organized, indexed format
• Submit on your behalf via portal
• Handle subsequent correspondence with AO

Practical Tips for Responding

1. Respond early: Do not wait till the last day. Submit by day 10-15 at the latest.
2. Be thorough: Answer every point raised in the notice. Avoid vague or evasive language.
3. Keep copies: Maintain digital copies of everything submitted; you may need to refer to them later.
4. Index documents: Number all documents and create a cover sheet listing them. Makes it easy for AO to review.
5. Provide originals if in doubt: If the document is critical, email a certified copy to the AO as well (optional, but protects you).

After You Respond

Possible outcomes:

1. AO accepts your response: Assessment order passed, no issue.
2. AO has follow-up questions: Another 142(1) issued; repeat the process.
3. AO disputes your position: Formal scrutiny triggered (Section 143(2) assessment). This is more serious; you may need to appear in person.

Key Takeaways for Action

1. Do not ignore the notice. Respond within the deadline.
2. Identify the sub-section (i/ii/iii). Understand exactly what is being asked.
3. Compile documents carefully. Index, organize, and verify legibility.
4. Submit via portal. Keep the acknowledgment.
5. Respond factually. Avoid emotional or defensive tone.
6. Hire a CA if needed. Especially for complex or multi-issue notices.

Frequently Asked Questions

I received a 142(1) notice asking for bank statements. Must I submit originals?

No. Scanned copies (high quality, legible) are sufficient. You can also submit e-statements directly from your bank's portal. Keep originals for your records and for AO verification if demanded later.

I cannot find one of the documents requested in the 142(1) notice. What do I do?

Submit a written explanation stating the document is not available and why (e.g., old bank account closed, mutual fund statement lost). Provide what you do have as alternative proof. Example: If you cannot find the mutual fund statement for 80C, provide your mutual fund passbook or CAS (Consolidated Account Statement). AO will decide if the alternative proof is sufficient.

The 142(1) notice deadline is in 2 days. I haven't prepared anything. Can I ask for an extension?

Yes, you can request an extension on the e-filing portal BEFORE the deadline expires. Provide a reason (illness, unavailability of documents). However, extensions are discretionary; do not count on approval. Submit whatever you can by the deadline and request an extension in the same submission.

Is there a difference between a 142(1) notice and a 143(2) scrutiny notice?

Yes. 142(1) is an enquiry BEFORE assessment; 143(2) is a formal scrutiny AFTER assessment. If you receive 143(2), the assessment has already been made and is being examined further. 143(2) requires detailed response and you may need to appear in person. 142(1) is typically resolved by document submission without personal appearance.

The notice asks me to explain a large cash deposit. I cannot remember the source. What do I do?

Provide whatever explanation you can based on your records. If truly unable to recall, state this honestly. Provide bank statements showing other income sources to help reconstruct the likely source. Honesty is better than speculation—if you guess wrong, it looks worse during scrutiny.

Section 142(1), Income Tax Act 1961; Section 144 (Best Judgment Assessment); Section 271(1)(b) (Penalty); CBDT Notification on Faceless Assessment (2020); e-filing portal procedure manual.