Section 142(1) of the Income Tax Act
Income-tax Act, 2025: s.268
Section 142(1) falls under section 142 of the Income-tax Act, 1961, which corresponds to section 268 (Inquiry before assessment) of the Income-tax Act, 2025.
Read section 268 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 142(1) is Collector, Land Acquisition v. Mst. Katiji (167 ITR 471), cited in 3,926 of the 17,244 judgments on BharatTax that turn on this section.
Leading authorities on Section 142(1)
Delay in filing appeals, when supported by sufficient or justifiable cause, should be condoned with a liberal approach to ensure substantial justice. This principle prioritizes the cause of justice over mere technicalities.
For revision under Section 263, the Assessing Officer's order must be both erroneous and prejudicial to the interests of the revenue; if either condition is not met, the revisionary jurisdiction cannot be invoked. An order is not erroneous merely because the Assessing Officer did not record the details of enquiries conducted, provided due enquiries were made.
An appeal before the Income Tax Appellate Tribunal can be dismissed for non-prosecution or treated as unadmitted when the appellant fails to appear, cooperate, or show diligence, in accordance with Rule 19(2) of the Income-tax (Appellate Tribunal) Rules. The law aids the vigilant, not those who sleep on their rights.
A court or tribunal is not bound to answer a reference or adjudicate an appeal on its merits if the party at whose instance the proceeding is made fails to appear at the hearing or take necessary steps for its proper conduct.
The Revenue is entitled to look behind the apparent form of a transaction to discover its true nature, applying the test of human probabilities and surrounding circumstances. If transactions defy logic or are unnatural, they can be treated as bogus, even if supported by some documentation, especially in cases of cash credits or unexplained investments.
The principle of consistency applies in tax matters, meaning a fundamental aspect found to be true in one assessment year should not be changed in a subsequent year if the order was not challenged.
An Assessing Officer cannot initiate reassessment proceedings under Section 147 of the Income Tax Act based on a mere change of opinion. Reassessment is permissible only when there is fresh tangible material leading to the belief of income escapement, not merely a review of existing facts.
Appealing a tax assessment requires more than just filing the appeal; it involves actively pursuing it. The assessee must effectively engage with the appellate process.
Tax authorities must judge evidence using the test of human probabilities and consider the apparent as real until there are reasons to believe it is not. They can rely on circumstantial evidence and the preponderance of probabilities to determine the genuineness of transactions.
Taxing statutes are presumed to operate prospectively unless a clear contrary intention for retrospective application is evident. The law applicable for determining tax liability is that which stands on the first day of the assessment year, following the principle that law looks forward, not backward (lex prospicit non respicit).
