Assessee got notice u/s 142(1). What to do suggest.
Fact: The assessee did not file his return of income for the AY 2017-18. He was working as a commission agent but he has a trade license where business nature is "whole sale of rice".
Now in the FY 2016-17 total cash deposited in the account was 1.5 crore. The assessee said that he took rice order from one place and send it to another place. After delivery of the rice, party deposited 5 lakh in cash each time to assessee's bank and the assessee paid to rice mill 4,95,000. His profit was only 5000 per transaction. Assessee was a 20 year boy. he was doing business for family after his father was died. now he is doing nothing only studying. what to do now.
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Notice from 142(1) of IT Act 1961.
Replies (4)
No options but to comply with notice and file return for AY 2017-2018.
Assessee's personal profile such as age study father deceased etc are irrelevant.
Assessee's personal profile such as age study father deceased etc are irrelevant.
Notice under section 142(1) is issued when return has not been filed by the assessee or for producing required documents asked by the A.O. When notice is received, an assessee should file his return within the time period provided in the notice and if documents and details asked to produce and then provide the same to A.O. within the specified period.
file return of income, showing 1% of 1.5 cr as his commission income . collate details in support of payment made to rice vendor. if possible obtain confirmation from rice vendor. since total turnover is 1.5 crs, explore the possibilities of tax audit. if you do not respond to 142(1) notice, 144 exparty order will be passed, taking 1.5 cr as taxable income
1. Notice u/s 142(1) will be served to the assessee when he failed to file ROI or for the purpose of inquiry of his return.
2. The notice will call for the record of information and particulars that are necessary for the purpose of inquiry and nothing more. And only upon confirmation of inquiry demand (if any) will be raised.
3. In your case notice is only for filing the return of income and there is no need for panicking. The due date for filing the ROI has already expired. However, the assessee will be given time within which he needs to file his ROI.
4. In the given case the amount deposited into the bank account is nothing but a revenue belonging to his principal. It cannot be considered for determining the T.O or gross receipt of the assessee. Since he is an agent and no risk is undertaken by him in this case.
5. His income will be categorized as professional income and only when his total T.O or gross receipts exceeds Rs. 50 lakhs tax audit under sec 44AB will be applicable to him.
6. File ROI specifying commission income within the time limit allowed by the A.O.
Please correct me if the above interpretation has an alternative view.
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