The Notice under Section 142(1) is usually served to call upon documents and details from the taxpayers and to take a particular case under assessment. The basic purpose is to inquire about the details of the assessee before making the assessment under the Act.
The Finance Bill, 2021 has brought the amendment in Section 142(1)(i) of the Income Tax Act which says that in section 142 of the Income Tax Act, in sub-section (1), in clause (i), after the existing proviso, the following proviso shall be inserted, namely “Provided further that a notice under this subsection for the purposes of this clause may also be served by the prescribed income-tax authority,”
Allowing prescribed authority to issue a notice under section 142(1)(i)
The Central Board of Direct Taxes (CBDT) has prescribed that the income-tax authority under the second proviso to section 142(1)(i) shall be an income tax authority not below the rank of Income-tax Officer who has been authorized by the board to act as such authority to serve notice to assessee.
Section 142 of the Act provides for the conduct of inquiry before assessment. Clause (i) of sub-section (1) of the said section gives the Assessing Officer the authority to issue a notice to an assessee, who has not submitted a return of income, asking for submission of return.
Rationale
This is necessary to bring into the fold of taxation non-filers or stop filers who have transactions resulting in income. However, this power was invoked only by the Assessing Officer before, September 13, 2021, now it can be invoked by Income Tax Officers also.
The Faceless Assessment Scheme seeks to eliminate the human interface between the taxpayer and the income tax department. The scheme lays down the procedure to carry out a faceless assessment through electronic mode.
The government is following a conscious policy of making all the processes faceless and digital by eliminating the person-to-person interface between the taxpayer and the Income Tax Officer. Accordingly, the Finance Act 2021 added a new second Proviso to empower the prescribed Income Tax authority to centralize the issue of notice under the said clause. Therefore, to enable centralized issuance of notices in an automated manner, the prescribed Income Tax Authority would now be empowered to issue a notice under Section 142(1) requiring a person to furnish his return of income.
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