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:-
- Assessing Officer who ranks below the rank of Assistant Commissioner or Deputy Commissioner cannot issue a notice under Section 148. AO can issue notice only if Joint Commissioner is satisfied, on reasons recorded by such AO, that it’s a fit case for issuing such notice.
- AO cannot issue notice to associate assessee following the expiration of a four-year period from the conclusion of the assessment year in question. Unless the Chief Commissioner is satisfied that the explanations given by the Assessing Officer are valid enough for the sending of a notice to the assessee.
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.
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.
Assessing Officer currently who does not ranks below the rank of Assistant Commissioner or Deputy Commissioner can issue a notice under Section 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,