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Notice Under Section 148 of the Income Tax Act, 1961

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Laxmi Navlani

Income Tax
IT Notice
Notice u/s 148
Last updated on July 24th, 2021

Section 148 stands for the reassessment of income escaping assessment. The Assessing Officer could pick income tax return for reassessment by sending a notice under section 148 subject to some pre-defined criteria for income Escaping Assessment.

Issuance of Notice under Section 148

There are various reasons as well as terms and conditions under section 148 for the issue of Notice as follows:-

Before issuing any notice u/s 148 the assessing officer must have reason to believe that any income chargeable to tax has escaped assessment along with the strong evidence. Without any proof, the officer can’t produce a notice based on mere suspicion.

There must be a direct nexus between the material coming to the notice of the assessing officer and the belief of AO that there has been escapement of income.

The material for formation of belief must be relevant and not vague based on any superficial reasoning and understanding.

The assessing officer must record reasons in writing before issuing notice under section 148. Merely a change of opinion cannot constitute a reason to believe. 

Mere a reason recorded that there is concealment of income without any specific evidence or material will not constitute a valid reason as it is vauge.

The Assessment officer cannot issue a notice based on the facts and information gained by reading the documents and information that assessee has already submitted during the course of the assessment.

The Assessing Officer can only issue a notice if and only if he/she has been presented with the new information and not by reading it by himself/herself.

If any fact or information arises, which has been disclosed previously relevant to the assessment in question, the assessing officer can immediately issue a notice under Section 147/148, even if the information has come to notice in a later period.

Who can issue a notice under Section 148

As per section 148 of the Income Tax Act 1961, the following persons can issue a notice to the assessee who has escaped assessment or reassessment of taxable income under the following conditions:-

Time limit to issue a notice under Section 148

As per section 149 of the Income Tax Act, If the income escaped doesn’t exceed INR 1 lakh the notice under section 148 can be issued within a period of 4 years from the end of the relevant AY (assessment year).

If the income escaped is more than INR 1 lakh the notice under the said section can be issued within a period of 6 years from the end of relevant AY subject to provisions contained in section 151.

If the income escaping assessment relates to assets located outside India the notice under section 148 can be issued within a period of 16 years from the end of the relevant AY.

Further, if an assessment has been completed under section 143(3) or 147 no further action can be taken under section 147 after the expiry of 4 years from the end of relevant AY unless income chargeable to tax has escaped assessment for such AY due to failure on assessee’s part to file the return under section 139 or 142 or 148 or fully and truly disclosing all the material facts required for the assessment for that AY.

Replying to notice under Section 148

In case assessee receives the notice under section 148, he should follow the below-mentioned pointers:

Firstly, check the notice for reasons to believe which are recorded by the assessing officer for issuing the notice under section 148. If the notice doesn’t include the reasons, then the assessee can request the assessing officer to send a copy of the recorded reasons.

In case the assessee is satisfied with the reasons recorded by the assessing officer, he/she should file the return at the earliest. If the return is already filed, he/she send the copy to the assessing officer.

In case the assessee files the income tax return in response to notice issued under section 148, it is necessary to ensure that the assessee files it carefully by declaring all the incomes and expenses to avoid unnecessary penalties.

Assessee can challenge the validity of notice before the assessing officer or higher authorities if notice isn’t served validly or reasons provided for opening assessment under section 147 aren’t proper. However, in case the decision doesn’t go in favour of the assessee, then the assessing officer could proceed with the reassessment.

FAQs

What assessee needs to do after receiving notice under section 148?

The assessee needs to produce the details of his/her income tax returns within 30 days duration that has been specified by the assessing officer in the notice given.

Who can issue a Notice under Section 148?

Assessing Officer currently who does not ranks below the rank of Assistant Commissioner or Deputy Commissioner can issue a notice under Section 148.

What happens if the assessing officer does not files his IT return after receiving notice u/s 148

The assessee shall be liable to pay interest under Section 243(3) for late filing of Income Tax return or for not filing of Income Tax return,

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    What is the time limit in which I need to respond to the notice under section 139(9)?

  2. How can I respond to the notice received online?

  3. How much time it will take to process the refund once response to notice u/s 139(9) is filed?

  4. Hey @HarshitShah

    It is very common to receive a notice from the Income Tax Department. The notice sent to you might be a routine inquiry or a request for clarification. There is no need to worry when you get a notice from the Income Tax Department. You will have 15 days time in which you will need to respond to the notice/file revised ITR.

    Hope this helps!

  5. Hey @ViraajAhuja47

    In case of any defects in the Income Tax Return, Assessing Office can issue notice u/s 139(9). If you have filed a return within 15 days of issue of notice, then it will generally take 60 days to process the return once it is sent for processing.

    Hope this helps! :slight_smile:

  6. Hey @HarishMehta

    It is mentioned in the notice that in case one does not respond in the stipulated time, the return will be processed by restricting the credit for the TDS proportionately.

    To give an example: There are 2 incomes mentioned in Form 26AS as below:

    Salary from A - 100000 & TDS deducted - 10000
    Salary from B - 200000 & TDS deducted - 20000

    In case you have not reported either of the above income in ITR then you may receive a notice for the mismatch.

    Thus, in the above example if you don’t respond in the time, then ITD will add the income of both of the above but will not give the credit of TDS not mentioned in ITR and process the return.

    Hence, it is always advisable to respond to the Income Tax Notice in the given time period.

    Hope this helps!

  7. Hi @Shweta_Saini ,

    Notice u/s 144(1) is issued in the following cases:

    -When ITR is not filed within due date by a taxpayer
    -When a taxpayer fails to provide a response to an inquiry of AO (Assessing Officer) for filed ITR,
    -When a taxpayer fails to provide a response to assessment notice for filing ITR.

    Here, AO can assess the total income or loss of a taxpayer based on the information gathered by them. AO usually gives the taxpayer an opportunity to present their case and provide necessary documents. Hence response to 144(1) can be given after looking at the cause of the notice and with supporting documents.

  8. Hey @SreeSSXP

    Since you had high value transactions and ITR has not been filed for AY 2020-21, ITD has flagged your PAN. Thus, you have to file ITR before March 31, 2021 and respond to the transactions on IT Portal.

    You can reach out to us on help@quicko.com or alternatively get in touch with us at +91-7575831310 so someone from our team can get in touch with you for process, pricing and discounts?

  9. Hi,

    I filed IT return for last financial error in the month of 10-Jan-2021 via Quicko. I made a loss in trading and I have shown the same in IT return for carrying forward.

    Today I got a mail from IT stating it cannot be carry forwarded as I filed late. The IT filing last date was extended due to covid and I remember filing before the last date. This is my first IT filing and I’m not sure what to do. Kindly advice.

    Snapshot of email attached below

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