Section 142 of the Income Tax Act
Income-tax Act, 2025: s.268
Section 142 of the Income-tax Act, 1961 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 is Well Intertrade (P) Ltd., & Another v. Income Tax Officer (308 ITR 22), cited in 74 of the 279 judgments on BharatTax that turn on this section.
Leading authorities on Section 142
An assessment cannot be reopened under Section 147 after four years unless the income escaped assessment due to the assessee's failure to disclose fully and truly all material facts. Furthermore, reassessment proceedings cannot be initiated based on a mere change of opinion by the Assessing Officer.
An intimation issued under Section 143(1)(a) cannot make adjustments for debatable issues that require detailed scrutiny, such as the disallowance of delayed employee contributions to ESI/PF. Appellate authorities also have the power to entertain fresh claims made by an assessee, even if these were not raised in the original or revised return of income.
For the purpose of identifying a bank's rural branch under Explanation (ia) to Section 36(1)(viia) of the Income-tax Act, the 'place' refers to a revenue village, not a ward of a local authority like a Panchayat or Municipality. A rural branch is located in a village where the population is less than 10,000.
Proceedings under Section 153C are invalid if the Assessing Officer records a mechanical satisfaction note without proper application of mind, regarding seized material belonging to or pertaining to a person other than the searched person.
Assessment proceedings cannot be re-opened based solely on a change of opinion by the Assessing Officer.
Reopening assessments is permissible after four years if there was an escapement of income due to the assessee's failure to disclose material facts necessary for assessment, even if the initial assessment involved a change of opinion.
A transfer of an industrial undertaking where the ownership changes hands in reality and effectively is not considered a reconstruction. Reconstruction implies the original business continues to function and its identity is preserved.
Reassessment proceedings initiated under section 147 require a live link and direct connection between the material that came into the possession of the Assessing Officer subsequently and the belief that income has escaped assessment. Borrowed satisfaction from another officer's belief is not sufficient.
Recourse to reassessment under section 147 beyond four years is not permissible if the circumstances for extending the limitation do not exist.
A tax demand subsists even if the assessment order is set aside, and the date of the original assessment remains the relevant date. This principle clarifies that tax payment methods do not alter the fundamental liability to pay tax based on an assessment order.