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Income Tax Notice under section 148 in India
According to Section 148 of the Income Tax Act, any income tax computation that has not been recomputed or reassessed will receive a notice from the IT department. This section further mentions that an Assessing officer will get in touch with the assessee.
Section 148 of the Income Tax Act deals with the issuance of a notice wherein any income has escaped re computation or assessment. This section states that an Assessing Officer will intimate the assessee in question by serving him or her a notice wherein he or she will be required to provide the following:
- His or her income returns
- The income returns of a person other than the assessee in question, who is deemed to be assessable as per the provisions of this Act during the year prior to the assessment year of relevance.
The assessee will be required to provide his or her income returns either within a 30-day notice period or within a duration that has been explicitly specified in the notice given by the Assessing Officer. In case of the assessee providing income returns of any other assessable person, he or she will be required to provide the income returns of in the form and manner that has been prescribed and verified as per the provisions of the Act, while also providing any other relevant particulars that may be required to be furnished. Prior to the issuance of any notification to the assessee in question, the Assessing Officer will make his reasons known for the issuance.
As per Section 147 of the Income Tax Act, 1961, the Income Tax Department has the power to reassess an individual’s previously filed income tax returns. The Assessing Officer could pick your income tax return for reassessment subject to some pre-defined criteria by sending a notice under section 148 for income Escaping Assessment.
Reasons For Issuance of Notice To An Assessee By An Assessing Officer Under Section 148
- Prior to the issuance of a notice to an assessee based on the provisions under Section 148, an Assessing Officer should possess concrete evidence that the assessee in question has evaded assessment of income for the relevant assessment year. In other words, the Assessing Officer cannot issue a notice to an assessee based on mere suspicion.
- A solid link must be present linking the information or material that has been presented to the Assessing Officer with the reason to believe that the assessee has escaped income assessment over the duration of an assessment year.
- The information or data provided to the Assessing Officer must be of utmost relevance to the case, and must not possess any superficial facts or figures.
- Prior to the issuance of any notice to an assessee under Section 148, the Assessing Officer will be compulsorily required to record and provide reasons in written form stating why he or she is of the belief that the assessee is escaping assessment of income.
- Simply stating that the assessee has concealed a large amount of income or that the assessee is to be investigated in further detail, with no material or information to back up these claims, will not be considered to be a definite reason to issue a notice to the assessee under Section 148. Such reasons will be termed to be ambiguous and vague.
- Unless new and relevant information or material is presented to the Assessing Officer, he or she cannot issue a notice to an assessee merely based on a difference in perspective or opinion. The Assessing Officer will have no reason to believe or suspect an assessee, if the assessee in question has provided disclosure regarding all relevant particulars in relation to his or her taxable income, as well as disclosed and provided factual information and data, which has led to the completion of his or her assessment or re-assessment.
- The Assessing Officer cannot issue a notice to an assessee simply by reaching a new conclusion based on documents and factual information that has already been provided by the assessee over the duration of the assessment. An issuance of notice can only take place if new information or material has been presented to the Assessing Officer.
- However, if any information or particulars have either been concealed or not been disclosed by the assessee in question, and such an action has come to the notice of the Assessing Officer at a later time, then the Assessing Officer will have complete authority to issue a notice to the offending assessee under Section 147/148
Who can issue a notice under Section 148
Section 151(1) of the Income Tax Act, 1961 contains the provisions for issue of notice:
- No notice would be issued by an Assessing Officer under section 148, after expiry of four years from the end of relevant AY (assessment year), unless Principal Chief Commissioner or Principal Commissioner or Chief Commissioner or Commissioner is satisfied, on reasons recorded by the AO, that it’s a fit case for issuing such notice.
- In cases other than the one mentioned above, no notice would be issued by an Assessing Officer under section 148, where AO is below the rank of a Joint Commissioner unless Joint Commissioner is satisfied, on reasons recorded by such AO, that it’s a fit case for issuing such notice.
a. The notice can be issued by the Assessing Officer before the end or expiration of a three-year period from the conclusion of the assessment year of relevance, provided the taxable income that has evaded assessment is not more than Rs 1 lakh
b. However, if the concealed income exceeds Rs.50 lakh, reassessment can be done up to 10 years from the relevant assessment year.
c. However, the provisions laid out under Section 147 state that is an assessment or re-assessment has been carried out and concluded under Section 143(3), then an Assessing Officer will not be authorized to issue any notices to an assessee under Section 147, following the expiration of the three-year period from the conclusion of the assessment year of relevance. The Assessing Officer can only issue a notice if any taxable income has been proven to have evaded assessment for the relevant year for the following reasons:
d. The assessee has failed to furnish his or her returns under Section 139
e. The assessee has failed to furnish his or her returns following the issuance of a notice under Section 142, sub-section (1) of under Section 148
f. The assessee has failed to provide full and complete disclosure with regards to any information, factual data or particulars that are required for the completion of the assessment for that relevant year.
Time Frame Provided For The Issuance Of Notice To An Assessee Under Section 148
As per the provisions laid out in Section 149, notices issued under Section 148 can take place over the following time frames:
The notice can be issued by the Assessing Officer before the end or expiration of a three-year period from the conclusion of the assessment year of relevance, provided the taxable income that has evaded assessment is not more than Rs 1 lakh
However, if the concealed income exceeds Rs.50 lakh, reassessment can be done up to 10 years from the relevant assessment year.
However, the provisions laid out under Section 147 state that is an assessment or re-assessment has been carried out and concluded under Section 143(3), then an Assessing Officer will not be authorized to issue any notices to an assessee under Section 147, following the expiration of the three-year period from the conclusion of the assessment year of relevance. The Assessing Officer can only issue a notice if any taxable income has been proven to have evaded assessment for the relevant year for the following reasons:
- The assessee has failed to furnish his or her returns under Section 139
- The assessee has failed to furnish his or her returns following the issuance of a notice under Section 142, sub-section (1) of under Section 148
- The assessee has failed to provide full and complete disclosure with regards to any information, factual data or particulars that are required for the completion of the assessment for that relevant year.
Replying to notice under Section 148
The key thing to bear in mind is to not to take the notice lightly. In case you receive the notice under section 148, please follow the below-mentioned pointers:
1.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 you could request the assessing officer to send a copy of the recorded reasons.
2.In case you’re satisfied with reasons to believe which was recorded by the assessing officer, file the return at the earliest. In the case already filed, send the copy to the assessing officer.
3.In case you’re filing the income tax return in response to notice issued under section 148, ensure that you file it after performing proper due diligence that you declare all your income and expenses carefully. In case you miss reporting any of your income correctly then it could result in unnecessary penalties.
4.If you believe that notice isn’t served validly or reasons provided by the assessing officer for opening assessment under section 147 aren’t proper then you could challenge the validity of such notice before the assessing officer or higher authorities.
5.In case you win your case, the Court would halt your assessment proceedings. However, in case the decision doesn’t go in your favour, then the assessing officer could proceed with the reassessment.
Notes on Income Tax Notice under Section 148 of Income Tax Act 1961
Income tax in India is complicated with various sections, rules and penalties. It is important and advised to take help of Practicing Chartered Accountant in case you have received any Income Tax Notice under section 148 of Income Tax Act 1961.