ITR
Penalty for ignoring a 142(1) notice
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Failure to comply with a Sec 142(1) notice can attract a penalty of ₹10,000 for each failure. The officer can also complete a best judgment assessment on the material available. Wilful failure can lead to prosecution.
Provisions and law
- Sec 272A(1)(d), Income-tax Act 1961Penalty of ₹10,000 for each failure to comply with a notice under Sec 142(1)
- Sec 144 (now Sec 271)Best judgment assessment if the person fails to comply with a Sec 142(1) notice
- Sec 276D, Income-tax Act 1961Prosecution for wilful failure to produce accounts and documents under Sec 142(1)
Analysis
A best judgment assessment is the bigger risk. If AIS shows ₹25 lakh of cash deposits and you do not explain them, the officer may treat the whole amount as unexplained, taxed at a high rate with penalty. Each missed notice can add ₹10,000. Even a late reply is better than none, because it can be considered before the order is passed.
Conclusion
- Check e-Proceedings for all pending notices and their dates
- Reply to the oldest pending notice first, even if late
- Explain the delay briefly and attach documents
- If an order has been passed, consider appeal within 30 days
A Savvy can do this for you
Inquiry before assessment, Sec 142(1) (now 268(1))
₹4,999
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.