Inquiry before Assessment [Section 142] :

For the purpose of making an assessment, the Assessing Officer may serve on any person who has made a return under section 139 or in whose case the time allowed under section 139(1) for furnishing the return has expired, a notice requiring him:

(i) To furnish a return of his income or the income of such other person in respect of which he is assessable, in the prescribed form and verified in the prescribed manner and set tingforth such other particulars as may be prescribed [This is in a case where such person has not made a return within the time allowed under section 139(1) or before the end of the relevant assessment year]

Further, where any notice has been served under the aforesaid provision after the end of the relevant assessment year to any person who has not made a return of his income within the time allowed under section 139(1) or before the end of the relevant assessment year, such notice shall be deemed to be a notice served in accordance with the provisions of section 142(1).

Now, the department can issue notice either under section 142(1) or under section 148. Notice under section 142(1) saves the department from the requirement of having to record reasons for the belief that income chargeable to tax has escaped assessment.

It may be noted that the time-limit for completion of assessment under section 153(1) is 2 years from the end of the assessment year in which the income was first assessable. Therefore, since assessment has to be completed within the said period of 2 years, it appears that notice under section 142(1) should also be issued within that period.

(ii) To produce, or cause to be produced, such accounts or documents as the Assessing Officer may require.

(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.

However, the previous approval of the Joint Commissioner has to be obtained before requiring the assessee to furnish the statement of all assets and liabilities not included in the accounts.

Further, the Assessing Officer shall not require the production of any accounts relating to a period more than 3 years prior to the previous year.

Where the business is carried on in several places the assessment of the total profits must be made by the Assessing Officer having jurisdiction at the principal place of business. He can call for the accounts pertaining to any Branch office even if independent inquiries have a lready been made and the accounts have been examined by the Assessment Officer exercising jurisdiction at the Branch. Similarly the Assessing Officer has power to call for the account books of a foreign business carried on abroad provided that such books are in the possession or control of the assessee.