Assessment and Reassessment Notice under Section 148 of Income Tax Act

Ashish M. Shaji

10 May, 2022

Under Section 147 of Income Tax Act, the Income Tax Department has the power to reassess previously filed income tax return of an individual. The Assessing Officer may take up your ITR for reassessment purpose subject to certain predefined criteria by sending notice under section 148 for income escaping assessment. Let’s discuss more on Assessment and Reassessment notice under section 148 of Income Tax Act.

Understanding Section 148 of Income Tax Act

As per Section 148 of Income Tax Act- An income tax computation that hasn’t been recomputed or reassessed will get a notice from the IT Department. Moreover, an assessing officer will contact the assessee.

This section talks about the issuance of notice wherein an income has escaped re-computation or assessment. It specifies that the assessing officer will contact the assessee in question by giving them a notice. Such person to whom the notice has been served is required to provide their income returns, the income returns of the person apart from the assessee in question, who is deemed to be assessable according to the provisions of the Act during the year before the relevant assessment year.

When can a notice be issued under Section 148 of Income Tax Act?

• Here you must know that before a notice is issued to an assessee as per the provisions of section 148, the assessing officer must have concrete evidence that such assessee has evaded assessment of income for the assessment year of relevance. Thus, it means that the assessing officer can’t issue a notice to the assessee based on suspicion of income escaping assessment.
• There must be a vital link linking the information or material provided to the assessing officer with the reason to believe that assessee escaped income assessment over the duration of an assessment year.
• The evidence in the form of information provided to the assessing officer should have utmost relevance to the case. Mere superficial facts or figures won’t suffice.
• Before a notice is issued to an assessee as per the provisions of section 148, the assessing officer should mandatorily record and provide reasons in writing specifying the reason as to why he/she believes that the assessee is escaping assessment of income.
•  In case where it is stated by the assessing officer that the assessee has concealed considerable amount of income or that assessee is to be investigated without any material or information to back up such claims, won’t be accepted as a definite reason to issue a notice to the assessee. Such reasons are ambiguous and vague in nature.
• There must be a new and relevant information or material presented to the assessing officer otherwise, such officer cannot issue a notice to an assessee. A mere difference in perspective or opinion cannot induce serving of notice.
• The assessing officer will not have any reason to believe or suspect an assessee if such assessee has given disclosure about all relevant particulars pertaining to their taxable income and disclosed and given information and data based on facts which have caused completion of his or her assessment or reassessment.
• The assessing officer will not be able to issue a notice to an assessee just by drawing a conclusion based on documents and factual information which has been already provided by the assessee over the assessment duration. The notice can only be issued in case where the new information or material has been provided to the assessing officer.
• Further, the assessing officer can also issue a notice to the offending assessee under Section 147 or 148 of Income Tax Act, in case where any information or particulars have been concealed or not disclosed by the assessee in question and where such action came to assessing officers’ notice at a later stage.

How to respond to such notice?

The Supreme Court has framed the procedure which can be followed once a notice has been issued under Section 148.

The steps are as follows:

• The assessee can file a fresh return providing the authentic income in compliance to such notice. Income could be same or in excess of what the assessee had declared in the original return.
• The assessee can write to the assessing officer declaring that the returns filed under section 139(1) can be treated as a return filed in compliance to the notice under Section 148^[1].
• Once the returns are filed, the assessee can ask for reasons for the issuance of notice under section 148. If such reasons are not provided, the assessment proceedings and assessment order passed can be quashed (Case law- CIT vs. Jagat Talkies Distributors, 2017).
• Assessee also has the right to file objections to such notice, and the assessing officer is bound to dispose of such objections by a speaking order (Case law- Simaben Vinod Rai Ravani vs. ITO, 2017).
• In case where the assessing officer doesn’t not accept the objections filed by the assessee, he shall not proceed for 4 weeks, so that gives the assessee sufficient time to take remedial actions to challenge rejection order.
• If the assessing officer doesn’t dispose of the objections and start assessment proceedings, then the assessee can file an application under section 144A to the additional/joint commissioner.
• The assessee can assist in assessment proceedings with dissent and can appeal in the Commission (Appeals) against the order of assessment.

Conclusion

Hence it can be concluded that a notice can be issued from the IT Department under section 148 of income tax act, wherein an income has escaped re-computation or assessment. However, the assessing officer must have concrete evidence that such assessee has evaded assessment of income for the assessment year of relevance.

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