I have the following queries?
1. Is there a time limit for issuing notice u/s 142 (1) ?
2. Can a notice u/s 142(1) be issued after a notice under 143(2) has been issued? If, yes what is the rational behind issuing such notice as powers under 143(2) are much wider than 142(1).
I presume you are asking about the powers of enquiry u/s 142(1) of the I T Act. There is no time limit for issuing notice u/s 142(1) of the I T Act .
However, power of enquiry u/s 142(1) is vested in A.O for completing assessment which is started by notice u/s 143(2). The purpose of issuing notice u/s 143(2) of the I T Act is to tell the assessee that your total income shall be computed after thoroughly checking your accounts. For this purpose , he serves a notice fixing hearing on a particular day and time . The section 143(2) throws burden on the assessee to bring all documents and evidence support of the total income computed by him. Section 143(2) is
"(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,
(i).................
(ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return:
Provided that no notice under clause (ii)] shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished."
As you can see the wording in the provision (in red) "any evidence on which the assessee may rely in support of the return" is suggesting that law cast burden on the assessee to produce any evidence in support of his return of income. Therefore, A.O basically utilises section 143(2) for selecting the case for scrutiny and fixes hearing for the case and under this section he can not compel assessee to bring or submit any specific information or documents or evidence.
Section 142(1)
Under section 142(1), there are two clauses which gives immense power to A.O for conducting enquiry before making assessment. The two clauses are given as under
(ii)] to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require, or
(iii)to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the Assessing Officer may require :
Therefore, the A.O u/s 142(1)(ii) & (iii) can ask assessee almost any information which he thinks necessary for passing assessment and information can be asked in a pro forma .
What A.O can not do u/s 142(1)?
1. where the statement of accounts (balance sheet) is not necessary and A.O seeks that from assessee, the A.O will have to take prior approval of Joint Commissioner of Income Tax .
2. The A.O can not ask for production of books of account for a period more than three years prior to the year he is assessing income.
In essence, the powers vested u/s 143(2) is the starter for the proceeding of scrutiny ,the power u/s 142(1) is immense power of enquiry which is not under section 143(2).
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