Section 148 of Income Tax Notice: Notice Under Assessment or Reassessment

Section 148 of the Income Tax Act, 1961 empowers the Income Tax Department to reassess an individual's previously filed income tax returns. This section allows the Assessing Officer to issue a notice under Section 148 if there is a suspicion that the taxpayer has not disclosed their complete income or has provided inaccurate information. In this article, we will explore the details of Section 148, the process of issuing a notice, the time limits involved, and the rights and responsibilities of the taxpayer.

What is Section 148?

The Assessing Officer has the authority to send a notice to a taxpayer whose income has not been properly assessed under Section 148 of the Income Tax Act of 1961. If the officer believes the taxpayer has not disclosed all of their income or has provided false information, they may start legal action under this section. A Section 148 Notice is used to reassess the taxpayer's income tax return and is the notice given under Section 148.

The Finance Act of 2022 included Section 148A, which mandates that the Assessing Officer inquire first and give the taxpayer a chance to present their case before issuing a notice under Section 148. The assessing officer must give the taxpayer a chance to respond with their own information and supporting evidence after presenting information and material that suggests income has escaped assessment.

Time Limit to Issue a Notice under Section 148

Within the following time frames, a notice under Section 148 may be published for the applicable assessment year:

• 3 years from the conclusion of the applicable assessment year are the typical time limits.
• Specified deadline: If the Assessing Officer has proof of income totaling at least Rs. 50 lakhs that has not been taxed and it has been at least three years but not more than ten years since the end of the relevant assessment year.

Only if the taxpayer has submitted their returns in accordance with Section 139, failed to do so after receiving a notice under Section 142 or Section 148(1), and provided all necessary information for the Assessing Officer to complete the assessment of that relevant year can the Assessing Officer issue a notice under Section 148.

Answering a Section 148 Notice

A notice under Section 148 must be responded to by the taxpayer within the allotted time period, which is typically 30 days, if at all possible. The taxpayer can reply to the notice by filing a return or sending a written response to the Assessing Officer with all the required information and supporting documentation.

The following must be done in order to respond to a notice under Section 148:

1. Check the notice to see why the Assessing Officer issued it, as stated in the notice. The taxpayer may ask for a copy of the recorded reasons if they are not mentioned in the notice.
2. Within the given time, respond to the notice by filing a return or sending a written reply with all the required information and documentation.
3. After doing your due diligence to ensure that all income and expenses are reported accurately, file your income tax return.
4. If the taxpayer feels that the notice is invalid or that the justifications given are untrue, they should contest its validity.
5. cooperate with the assessing officer and give them all the information and proof they need to complete the reassessment.

Duties and Rights of the Assessee after Receiving a Notice under Section 148

After receiving a notice under Section 148, the assessee has certain duties and rights. These include:

1. The submission of tax returns for any income deemed "Income Escaping" for the applicable assessment year.
2. requesting a copy of the notice, which includes the justifications for the Assessing Officer's action.
3. Filing an objection if the reasons provided in the notice are unsatisfactory or baseless.
4. In expressing objections and challenging the legality of the notice, please provide justification..
5. Requesting separate reasons for the dismissal of objections if the Assessing Officer dismisses the assessee's claims.
6. Filing a writ petition with the appropriate High Court to challenge the legality and validity of the notice, even before the assessment or re-assessment is concluded.
7. Questioning the legality and validity of the notice under Section 148 by filing a writ petition with the appropriate High Court even after the assessment is over and the case is being appealed.
8. Providing evidence of actions taken, such as requesting a copy of the reasons, filing objections, and challenging the lawfulness of the notice.

Income Tax Assessment Cases Being Reopened

The window for reopening income tax assessment cases has been shortened from six to three years as part of the Union Budget 2021. In cases of serious tax evasion, assessments may be reopened for up to ten years, provided the hidden income exceeds Rs. 50 lakhs.

Conclusion

The Income Tax Department may reassess a taxpayer's income tax return if there is a suspicion that income is evading assessment under Section 148 of the Income Tax Act of 1961. It is crucial for taxpayers to respond quickly and completely to any notice they receive under this section by providing accurate and detailed information about their income and outgoings. Taxpayers can guarantee a just and legal assessment of their tax liabilities by cooperating with the authorities and adhering to the rules.