Section 148 of the Income Tax Act plays a crucial role in India’s tax administration system. If you’ve received a notice under this section, it likely means the Income Tax Department believes that some of your income has escaped assessment. Understanding your duties, rights, and how to respond properly is essential to avoid penalties or legal trouble.
In this blog, we’ll walk you through:
- What is Section 148?
- Time limit to issue a notice under Section 148
- Why you may receive a notice under Section 148
- Who is authorized to issue it?
- How to respond correctly
- Consequences of ignoring it
- Rights and responsibilities of the assessee
What is Section 148 of the Income Tax Act?
Section 148 allows the Income Tax Department to reopen past income tax assessments if it has “reason to believe” that income chargeable to tax has escaped assessment for any previous year. Essentially, it’s a second look at your financial records — usually due to red flags, high-value transactions, or discrepancies.
This process is governed by Section 147 to Section 151, which deal with income escaping assessment and the procedure for reassessment.
Time Limit to Issue a Notice Under Section 148
As per the latest amendments under the Finance Act 2021, the timelines for issuing a notice under Section 148 are:
- Within 3 years from the end of the relevant assessment year if the escaped income is below ₹50 lakh.
- Up to 10 years if the Assessing Officer has evidence that income of ₹50 lakh or more has escaped assessment and is represented in the form of asset, expenditure, or entry in books.
Additionally, prior approval from the specified authority is mandatory before issuing such notices.
Why Do You Receive a Notice Under Section 148 of the Income Tax Act?
There are several reasons why the Income Tax Department may issue a notice under Section 148:
- High-value transactions not reported in ITR (e.g., property purchase, bank deposits, stock market transactions)
- Mismatch in income details with data available through AIS or Form 26AS
- Non-filing of ITR despite having taxable income
- Information received from third-party sources or during surveys/raids
- Mistakes or omissions in previously filed returns
Who is Authorized to Issue a Notice Under Section 148?
Only an Assessing Officer (AO), having valid jurisdiction over your case, is authorized to issue a notice under Section 148. However, before doing so:
