Any type of income you earn in India is subject to income tax. However, if an Assessing Officer (AO) finds that your taxable income has escaped assessment or requires reassessment, they can issue a notice. 

 

They can send such a notice if they find a discrepancy between the tax deductions and the information on Form 16. Section 148 of the Income Tax Act allows the AO to send this notice, after which you need to furnish documents to prove your tax compliance.

List of Authorities Who Can Issue a Notice Under Section 148

An AO ranked below the Joint Commissioner cannot issue a notice under Sec 148 of the Income Tax Act. However, in special cases, AOs below this rank may issue an order with prior approval of: 

  • Joint Director

  • Additional Commissioner

  • Additional Director

  • Joint Commissioner

 

Additionally, the authorised AO can only issue such notices as per the stipulated time limit provisions. These are: 

  • No notice can be issued if 4 years or less have elapsed from the relevant assessment year 

  • If 4 to 6 years have elapsed, the AO can issue a notice if the escaped amount is ₹1 Lakh or more

  • If 4 to 16 years have passed from the assessment year and the undisclosed income isn't overseas, the AO can issue a notice

How to Reply to the Notice

If you receive a notice under Section 148, you must take it seriously and complete the following proceedings:

  • Review the reasons noted by the Assessment Officer for serving the notice

  • You can request for the reasons if the notice does not mention them

  • Respond to the notice within the given time frame either by filing a return or sending a written reply

  • In case you have already filed the return, send a copy of the Income Tax Return to the Assessment Officer

  • If you missed adding correct tax liabilities in your previous return, you can file it by following the due diligence and paying the penalties

Consequence of Not Complying to the Notice

If you fail to respond to a notice under Section 148, the Assessing Officer can proceed with the assessment based on available information. In this case, the department will impose a non-compliance penalty on you as the taxpayer. However, if you disagree, you can appeal to the Commissioner of Income Tax (Appeals) or the Income Tax Appellate Tribunal.

FAQs on Section 148 of the Income Tax Act

Can I revise my return after receiving the Income Tax Notice?

Yes, you can revise your Income Tax Return after receiving a notice under Section 148 of the Income Tax Act. Section 139 (5) allows taxpayers you revise their return upon discovery of wrong information.

Is it mandatory to file a return if I receive a notice under Section 148?

No, if you have already filed your return or are not satisfied with the reasons noted by the Assessment Officer, you can send a written reply. You can attach a copy of the ITR if you have already filed it.

What is the new amendment made to Section 148 of the I-T Act of 1961?

In Budget 2021, the Union Government introduced Section 148A. It has provisions providing an opportunity for an assessee to explain or reply to the Assessment Officer after receiving a notice under Section 148.

Can I challenge the notice issued under Section 148A of the Income Tax Act?

Yes, you challenge the notice issued u/s 148A of the Income Tax Act before the Commissioner of Income Tax (Appeals) within 30 days. You can also file a writ petition before the High Court or Supreme Court.

 

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