Section 148 of Income Tax Act | Income Tax Act Section 148, Assessment or Reassessment Notice

Section 148 of Income Tax Act: Section 148 of the Income Tax Act deals with issuing a notice when if any income has escaped assessment or taxation. This section also mentions that an Assessing Officer will reach out to the assessee who is being questioned by issuing him or her a notice wherein he or she will be needed to provide with the following documents –

  • His or her income returns;
  • The income returns of a person other than the assessee who is being questioned and is deemed to be assessable as per the provisions of the Income Tax Act during the year which was before the assessment year of relevance.

In this article, we will discuss in detail Section 148 of the Income Tax Act and its workings.

The Capacity of the Assessing Officer Under Section 148 of the Income Tax Act

As per Section 148 of the Income Tax Act, an Assessing Officer has the power to either assess or reassess any taxable income that may have escaped taxation and has not been assessed as per the guidelines laid down in the Income Tax Act. Suppose the Assessing Officer has any reason to suspect that the taxable income of an assessee may have avoided assessment. In that case, the Assessing Officer can exercise the right to carry out their powers of income Types of assessment or re-assessment as per the provisions laid out under Section 147 through to Section 153.

The Issuance of Notice by An Assessing Officer to An Assessee Under Section 148 of the Income Tax Act

  1. Before issuing a notice to an assessee based on the provisions under Section 148, an Assessing Officer should possess concrete evidence that the assessee who is being questioned has evaded assessment of income for the relevant assessment year. To put it another way, the Assessing Officer cannot issue a notice to an assessee based on trivial suspicion.
  2. Any solid link must be presently linking the material information provided to the Assessing Officer with the evidence to prove that the assessee has escaped income assessment for an assessment year.
  3. The information or data provided to the Assessing Officer must be of maximal relevance to the case and must not possess any irrelevant facts or figures.
  4. Before issuing any notice to an assessee, the Assessing Officer is compulsorily required to record and provide reasons in written form mentioning why they believe that the assessee is escaping assessment of income as per Section 148.
  5. Suppose the Assessing Officer states that the assessee has escaped assessing 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 or allegations. In that case, it will not be considered a definite cause to issue a notice to the assessee under Section 148. Such causes will be termed to be ambiguous and vague.
  6. Until and unless new and relevant information or material is brought to the Assessing Officer, they cannot issue a notice to an assessee based on the differences in perspectives or opinions. The Assessing Officer will have no reasons to believe or suspect an assessee if the assessee who is being questioned has provided disclosure with regards to all the relevant things concerning his or her taxable income, as well as disclosed and provided documents, factual information, and data, which has led to the completion of his or her assessment or re-assessment.
  7. The Assessing Officer cannot issue a notice to an assessee just by reaching a new conclusion based on the documents and factual information that the assessee has already provided during the assessment. Issuance of notice can only occur if further information or material has been presented to the Assessing Officer.
  8. However, if any of the information or facts have either been concealed or not been disclosed by the assessee who is being questioned, and such details have come to the notice of the Assessing Officer at a later time, in that case, the Assessing Officer will have the complete authority to issue a notice to the offending assessee under Section 147 or Section 148.

Individuals Authorised to Issue Notice Under Section 148 of the Income Tax Act

As per the provisions under Section 148, only the following individuals are authorised to issue notices to an assessee who has escaped assessment or re-assessment of the taxable income under the following conditions –

  • Any Assessing Officer who is presently ranked below the position of an Assistant Commissioner or Deputy Commissioner is allowed to issue a notice to an assessee under Section 148. This is in line with Section 151(1) provisions regarding any assessment carried out for the assessment year of relevance under sub-section (3) of either Section 143 or Section 147. This issue can only be evaded by the Joint Commissioner, provided they are content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to an assessee.
  • No issuance of notice to an assessee can occur following the expiration of four years from the conclusion of the assessment year, which was being questioned. This issue can once again only be evaded by the Chief Commissioner of Commissioner, provided her or she is content that the reasons given by the Assessing Officer are valid and strong enough for the issuance of any notice to an assessee.
  • In a situation where the cases that are not covered under Section 151, sub-section (1), and Assessing Officer can issue a notice to an assessee as per Section 148 if:
    • His or her position or rank is below than that of a Joint Commissioner;
    • The four-year period which follows the conclusion of the assessment year of relevance has expired.

The Joint Commissioner can only evade this issue, provided he or she is content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to an assessee.

Time Frame Given for The Issuance of Notice to An Assessee Under Section 148 of the Income Tax Act

As per the provisions of Section 149, notices issued under Section 148 can occur over the following time frames –

  1. The Assessing Officer can issue the notice prior to the end or expiration of the four years from the conclusion of the assessment year of relevance, provided that the taxable income that evaded the assessment is not more than Rs 1 lakh.
  2. Suppose the taxable income that has evaded assessment is more than Rs 1 lakh. In such a scenario, the Assessing Officer can issue a notice within a time frame of six years from the conclusion of the assessment year of relevance. The issuance of this notice will take place in place of the provisions outlined under Section 151.
  3. However, the provisions mentioned under Section 147 state that if an assessment or reassessment has taken place and concluded under Section 143(3), then an Assessing Officer will not be authorised to issue any notices to an assessee under Section 147, which follows the expiration of the period of four years from the conclusion of the assessment year of relevance. A notice could be issued by the Assessing Officer only if any taxable income was proven to have evaded assessment for the relevant year for the following causes –
    1. The assessee has failed to provide his or her returns as per Section 139;
    2. The assessee has failed to provide his or her returns after the issuance of a notice under Section 142 and Section 148(1);
    3. The assessee has failed to provide complete disclosure with regards to any information, factual data, or particulars required to complete the assessment for that relevant year.

Duties and Rights of The Assessee After Receiving Notice Under Section 148 of the Income Tax Act

If an Assessing Officer issues an assessee a notice for the evasion of taxable income assessment, then the assessee is duty-bound to carry out the following measures –

  • The assessee will be required to file his or her tax returns for the evaded income for the assessment year of relevance.
  • After the filing of returns, the assessee can request a copy, which mentions the reasons for the Assessing Officer to issue a notice to him or her under Section 148 of the Income Tax Act.
  • If the assessee finds the reasons contained in the copy to be groundless or inadequate, in that case, the assessee has the right to file an objection challenging the issuance of such notice by the Assessing Officer.
  • The assessee must also provide valid reasons for filing the objection and challenging the legality of the issuance of the notice under Section 148 by the Assessing Officer.
  • The assessee also has the right to request the Assessing Officer to provide different reasons if he or she dismisses the assessee’s claims.
  • The assessee can also refer to the relevant High Court and file a writ petition. In this petition, the legality, legitimacy, and lawfulness of the notice issued under Section 148 can be challenged even before the conclusion or completion of the assessment or re-assessment that is taking place.
  • The assessee can then also file a writ petition with the relevant High Court, wherein the legality and lawfulness of the notice issued under Section 148 can be challenged even after the assessment has been completed and the case is under appeal.
  • The assessee will be required to provide evidence that he or she has –
    • Requested a copy of the reasons mentioned by the Assessing Officer for the notice issued by him or her under Section 148;
    • Filed an objection to the reasons stated by the Assessing Officer under section 148;
    • Requested the Assessing Officer to provide reasons for the rejection of the assessee’s objections;
    • Challenged the legitimacy of the issuance of the notice.

Provision of Section 148 if The Assessee Does Not Furnish Income Tax Return

Suppose the assessee does not furnish the Income Tax return within the timeframe underlined in the notice issued under Section 148 by the presiding Assessing Officer. In that case, the assessee shall be made to pay interest under Section 243(3) for late filing of Income Tax return or for not filing of Income Tax return, if the income has already been determined under Section 143(1) or if the income if the assessment has already been done under Section 144 or Section 147.

On the other hand, if the assessee does not furnish any return concerning any assessment year and no assessment of such year has been done under Section 144, then the interest of late filing of return in response to the notice under Section 148 will be levied on the assessee under Section 234(1) instead of Section 234(3) of the Income Tax Act.

FAQ’s on Section 148 of Income Tax Act

Question 1.
What are the different notices that are issued under the Income Tax Act?

Answer:
The various notices or assessments issued under the Income Tax Act are given below – 

  • Section 131(1A): Income is concealed or is expected to be concealed.
  • Section 139(9): Defective Income Tax Return.
  • Section 142(1): Preliminary Enquiry before an assessment.
  • Section 143(1): Letter of Intimation.
  • Section 143(2): Follow up on the notice under section 142(1).
  • Section 143(3): Scrutiny Assessment.
  • Section 144: Best judgment assessment.
  • Section 148 and Section 147: Income escaped assessment.
  • Section 156: Notice of Demand.
  • Section 245: Set off of refunds against tax remaining payable.

Question 2.
Can we revise the return filed under section 148 of the Income Tax Act?

Answer:
Return filed in response to notice under section 148 can also be revised. It is provided under section 148 that all the provisions of section 139 shall apply for such a return. It is to be noted that notice under section 148 is issued to assess the escaped income.

Question 3.
How many years can income tax go back?

Answer:
As per Section 149 of the Income-tax Act, 1961, the income tax department has the power to issue a notice to taxpayers for seven years from the end of the financial year. So, this would mean that if you have filed ITR for FY 2019-20, you must keep the related documents with you until the end of FY 2023-24.

Question 4.
What is income escaping assessment in income tax?

Answer:
Income Escaping Assessment under section 147 is the assessment done by the Assessing Officer if there is a reason for him to believe that income chargeable to tax has escaped assessment for any assessment year. It gives power to him to reassess or recompute income, turnover, etc.

Question 5.
What is the assessee required to do after receiving notice under Section 148?

Answer:
The assessee is required to produce the details of his or her income tax returns within a 30 days duration that the Assessing Officer has specified in the notice issued. In case the assessee needs to

provide income tax returns of any other assessable person, then he or she has to provide them in the format specifically as mentioned under the provisions of the Income Tax Act with any additional information deemed to be provided with the detailed information. Before issuing the notice, the Assessing Officer will not give the cause of the notice issued to the assessee in question.

 

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