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1. Notice for assessment or reassessment under section 148 of Income Tax Act, 1961

The power of assessment or reassessment of any income chargeable to tax that have escaped assessment has been provided under section 147 r w s 148 of Income Tax Act of 1961. If the assessing officer has the reason to believe that any income chargeable to tax has escaped assessment then the assessing officer may subject to the provisions of section 147 to 153 assess or reassess such income.

Assessment or Reassessment Notice Us 148

2. What is reason to believe for issue of notice under section 148

Before issuing any notice under section 148 the assessing officer must have reason to believe that any income chargeable to tax has escaped assessment. Reason to believe can not be a reason to suspect merely. There must be a direct nexus between the material coming to the notice of the assessing officer and the formation of the belief that there has been escapement of income of the assessee from assessment in a particular year. The material for formation of belief must be relevant and not vague. The assessing officer must record reasons in writing before issuing notice under section 148. Mere a reason recorded that “there is a huge concealment of income’ or ‘For further investigation’ without any specific instance of entries or material relevant to the assessee will not constitute a valid reason as it is vague and general in nature.

To constitute a valid reason to believe there must be some new material coming into light with the assessing officer, merely a change of opinion cannot constitute a reason to believe. If the assessee has disclosed basic and all the true facts during the course of assessment and the assessment is completed. Later on notice u/s 148 can not be issued merely because there is another inference possible from the same documents and the facts placed before the assessing officer during the course of assessment as it will amount to change of opinion. There must be some new material coming into light for action u/s 147/148. But if the assessee has suppressed some relevant facts which leads to concealment of income and later those facts come before the assessing officer the notice u/s 147/48 can be issued validly.

3. Who can issue notice under Section 148:

Section 151(1) provides for sanction of issue of notice:

(i) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.

(ii) In a case other than a case falling under part (i), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.

(iii) For the purposes of part (i) and (ii) ,, the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.

4. Time Limit for Issuing of notice under section 148:

Section 149 provides that notice u/s 148 can be issued within 4 years from the end of relevant assessment year if the income escaped does not exceed one lac Rs. If the income escaped is Rs. one lac or more the notice u/s 148 can be issued within 6 years from the end of relevant assessment year subject to the provisions of section 151.The notice u/s 148 can be issued within 16 years from the end of the relevant assessment year if the income which has escaped assessment is related to assets( including financial interest in entity) is located outside India.

Further first proviso to section 147 provides that if the assessment has been completed u/s 143(3) or u/s 147 no action can be taken u/s 147 after the expiry of 4 years from the end of relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.

Second proviso to section 147 states that nothing mentioned in first proviso shall apply in a case where the income which has escaped assessment is related to assets ( including financial interest in entity) is located outside India.Time Limits for Issuance of Notices, Orders under Different Sections of Income Tax Act, 1961

5. What to do when notice u/s 148 is received:

 when a notice u/s 148 is received the assessee is asked to file a return of the relevant assessment year. After filling the return the assessee should ask for the copy of reasons recorded for issue of notice u/s 148 and can file objection to the issuance of notice. The assessee should ask specifically assessing officer to pass a speaking order by disposing off the objections giving reference of the Judgment of Honorable Supreme Court in GKN Driveshafts (India) Ltd vs ITO (2003) 259 ITR 19 (SC). The objections should be filled giving reasons for challenging the legality of the notice u/s 148. All this procedure has been laid down by the Honorable Supreme court in GKN Driveshafts (India) Ltd case. This procedure has been provided by the Honorable Supreme court to enable the assessee to file writ petition before the respective High court challenging the legality of the notice u/s 148 before the assessment is completed.

Even if the assessment order has been passed and the matter is in appeal the assessee can still file writ petition in the high court challenging the legality of notice u/s 148 and the consequent assessment if the above said procedure as laid down by the Supreme court in GKN Driveshafts (India) Ltd case is not followed. But for that assessee off course will have to show that he asked for the copy of reasons for issue of notice u/s 148 and filled objections to that and asked the assessing officer to pass a separate reasoned order disposing off the objections filled and deciding on the legality of the notice issued u/s. 148.

(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

Read Other Articles from Advocate Amit Bajaj

(Republished With Amendments)

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78 Comments

  1. Sharma says:

    Whether two notices can be issued u/s 148 for the same AY year and same reason. One notice bears correct PAN number and other having wrong PAN number .

  2. Santosh says:

    Dear Sir,
    Please assist me when I got notice u/s 148,
    i am filling ITR 2 form in that i have to select original or revise return.

  3. MAHESH KASHYAP says:

    SIR MERA ITR 2014-2015 KA HAI JIS ME MERE EMPLOYER NE MERI SALARY KA TDS KATA THA USKE AGAINST AB ME ITR BHAR RAHA HU TO ITR FILL NHI HO RAHA HAI.
    PLZ SOLUTION

  4. sai says:

    sir
    My friend sai work from CA
    He did some mistake Dat is he Forget file Return of one salary person asking he scared file return after due date he filed Income Return by Using U/s 148 notice fake date and notice
    As the return has been filed u/s.148, in response to the notice issued by the Jurisdictional Assessing Officer. he this Notice what he need do Now he was Confused …
    pls Give any Solution’s to him for this notice

  5. H R KAMBIYAVARU B.COM LL.B.(SPL) says:

    DEAR SIR
    IT IS REALLY AMAZING
    AND VERY EDUCATIVE & ENLIGHTEN

    AND FURTHER UPGRADE THE MY KNOWLEDGE
    SIR IT IS REALLY GOOD DEVELOPMENT& CREATIVE SIR REALLY HATS UP YOUR WISDOM SIR THANKING YOU YOURS SINCERELY.

  6. Rupak singh says:

    I received notice under section 148 and was received on 4th April 2017 for AY2010-2011 the notice was dispatched by office on 1st april2017 is it lawful

  7. BHASKAR says:

    PLEASE LET ME KNOW CAN I FILE ITR FOR THE ASSESSMENT YEARS 2014-15,2015-16, AND 2016-17 WHICH COMES UNDER TAX AUDIT, IF SO WHAT IS THE PROCEDURE
    REGARDS
    BHASKAR R

  8. Sunny Arora says:

    We have received a section 148 notice for the assessment year 2010-1011. We have not filled any return for the said year. Now, this Pvt Ltd company is closed and we don’t have any documents/ expenditure details. Pls guide.

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