Section 148 of Income Tax Act: Notice Under Assessment or Reassessment Under Section 147 of the Income Tax Act, 1961, the Income Tax Department holds the authority to reassess an individual’ previously filed income tax returns. The Assessing Officer may select a return for reassessment based on specific predefined criteria by issuing a notice under Section 148 for Income Escaping Assessment. Section 148 of Income Tax Act: Notice Under Assessment or ReassessmentUnderSection 147 of the Income Tax Act, 1961, the Income Tax Department holds the authority to reassess an individual’ previously filed income tax returns. The Assessing Officer may select a return for reassessment based on specific predefined criteria by issuing a notice underSection 148for Income Escaping Assessment.What is Section 148?Section 148 of the Income Tax Act, 1961, empowers the Assessing Officer to issue a notice to a taxpayer whose income has not been adequately assessed.
This means that if the Assessing Officer suspects that a taxpayer has either not fully disclosed their income or has misrepresented it, they can initiate reassessment proceedings under this section.ASection 148 Noticeis issued by the Income Tax Officer when they believe that certain income has not been properly assessed in the taxpayer’ return. This notice allows the department to reassess the taxpayer’ income tax return (ITR).With the introduction ofSection 148Aunder theFinance Act 2022, the Assessing Officer is now required to conduct an inquiry and provide the taxpayer with an opportunity to explain their case before issuing a notice under Section 148.As perSection 148A(), the Assessing Officer must issue a notice to the taxpayer, detailing the adverse material that suggests income has escaped assessment. The taxpayer is then allowed to respond by submitting supporting documents and evidence.The2021 budgetintroducedSection 148Ain the Income Tax Act, making it mandatory for the officer to provide the taxpayer an opportunity to explain if they have undisclosed income for a specific assessment year. The taxpayer also has the right to be heard by the officer.The Assessing Officer is required to grant the taxpayera minimum of seven days and a maximum of 30 daysto submit their explanation.After reviewing the taxpayer’ response, the Income Tax Officer will decide whether to proceed with reassessment.
If the case is reopened, the officer must provide the taxpayer with a copy of the order along with the notice underSection 148.A notice underSection 148cannot usually be issued if more thanthree yearshave passed since the end of the relevant assessment year. However, if there is evidence oftax evasion of ₹50 lakh or more, a notice can still be issuedwithin 10 yearsfrom the end of the relevant assessment year.Before initiating inquiries, granting an opportunity to the taxpayer, or issuing any orders, the Income Tax Officer must first obtain approval from thespecified authority.The Assessing Officer must furnish the taxpayer with all the materials and information relied upon when issuing a notice underSection 148Aor aShow Cause Notice.There must be substantial evidence to suggest that income has escaped assessment. A mere assertion of “reason to believe” is not sufficient to justify issuing a notice underSection 148A.The Assessing Officer is also required to consider the taxpayer’ response to theShow Cause Noticeissued underClause () of Section 148A.If a taxpayer requests apersonal hearing, cross-examination of a third party, or a third-party statement, the Assessing Officer must provide it, subject to approval from thespecified authority.AnySection 148 noticeissued after the introduction ofSection 148A—without following its prescribed procedure, including giving the taxpayer an opportunity to be heard—will be consideredinvalidand in violation of the income Tax Act.Courts have consistently ruled that the procedure outlined inSection 148Amust be strictly followed in line with the legislative intent behind its introduction.Once the taxpayer receives the order and theSection 148 notice, they must file their income tax return for the relevant assessment year within the specified time frame and undergo thereassessment process.Time Limit to Issue a Notice Under Section 148A notice underSection 148cannot be issued for a particular assessment year after the following time limits:a)Standard Time Limit: A notice must be issued within3 yearsfrom the end of the relevant assessment year.)Extended Time Limit: If more than3 years but less than 10 yearshave passed from the end of the relevant assessment year, a notice can only be issued if the Assessing Officer hasevidenceindicating that income of₹50 lakhs or morehas escaped taxation.the assessing Officercan issue a notice only if one of the following conditions is met for the relevant assessment year:The taxpayer hasfiled their income tax returnunderSection 139.The taxpayerfailed to file a returneven after receiving a notice underSection 142orSection 148(1).The taxpayer wasrequired to furnish complete and accurate detailsfor the proper assessment of that year but failed to do so.Replying to a Notice Under Section 148It is crucialnot to ignore a noticeunderSection 148. If you receive one, follow these steps carefully:Review the Notice: Check whether the notice includes the”reasons to believe”recorded by the assessing Officerfor issuing the notice.
If the notice does not include the reasons, you can request acopy of the recorded reasonsfrom the Assessing Officer.Respond Within the Given Time Frame: The response must be submittedwithin 30 days. You can either:File a revised income tax returnin response to the notice, ORSubmit a written replyalong with relevant documents and proofs supporting your case.Filing a Return: If you agree with the reasons provided by the assessing Officer,file the return as soon as possible.