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Navigate Section 148 of the Income Tax Act 1961 with insights on notice issuance, how to respond, and consequences of non-response. Stay informed about timelines, reply procedures, and potential penalties. Expert guidance on understanding and complying with this crucial tax provision.

When it comes to taxes, it’s essential to understand the various sections of the Income Tax Act. Section 148 of the Income Tax Act 1961 is one such section that deals with the issuance of a notice by the Assessing Officer (AO) to taxpayers whose income is deemed to have escaped assessment.

In this article, we will discuss the details of Section 148, including when a notice can be issued, how to respond to a Section 148 notice, and what happens if you don’t reply.

What is Section 148 of the Income Tax Act 1961?

Section 148 of the Income Tax Act 1961 empowers the Assessing Officer to issue a notice to a taxpayer whose income has escaped assessment. This means that if the Assessing Officer believes that a taxpayer has not disclosed their full income or has underreported it, they can initiate proceedings under this section.

When Notice is issued under Section 148?

A notice under Section 148 can be issued to a taxpayer within 3 years from the end of the relevant assessment year, If the escaped assessment amounts to or likely to amounts to less than Rs. 50,00,000. However, if the escaped income is Rs. 50,00,000 or more, the notice can be issued within ten years from the end of the relevant assessment year.

How to Reply to Section 148 Notice?

If you receive a notice under Section 148, the first step is to carefully read and understand the contents of the notice. The notice will specify the reason for initiating proceedings and will also provide you with an opportunity to file a return of income. You will need to respond to the notice within the stipulated time frame, which is usually 30 days.

To respond to the notice, you can either file a return of income or provide a written reply to the Assessing Officer (now a day, you have to submit your response online). In your response, you should provide all the relevant details of your income and expenses, including any supporting documents.

What happens, if we do not respond to Section 148?

If you fail to respond to a notice under Section 148, the Assessing Officer can proceed with the assessment based on the available information. This means that they can estimate your income and make an assessment based on their best judgment. If you don’t agree with the assessment, you can file an appeal with the Commissioner of Income Tax (Appeals) / the Income Tax Appellate Tribunal.

Conclusion

Section 148 of the Income Tax Act 1961 is an essential provision that allows the Assessing Officer to initiate proceedings against taxpayers whose income has escaped assessment. If you receive a notice under this section, it’s crucial to respond within the stipulated time frame and provide all the relevant details of your income and expenses. Failure to respond can result in an assessment based on the Assessing Officer’s best judgment, which may not be in your favour.

Income Tax Act

FAQs

Q.1 Can a notice under Section 148 be issued for an assessment year that is more than ten years old?

Ans. No, a notice under Section 148 can only be issued within three years/ ten years based on escaped income criteria from the end of the relevant assessment year.

Q.2 What is the time limit for responding to a notice under Section 148?

Ans. The time limit for responding to a notice under Section 148 is usually 30 days or shorter period as prescribed in notice, from the date of receipt of the notice.

Q.3 Can a notice under Section 148 be issued if the taxpayer has already filed a return of income?

Ans. Yes, a notice under Section 148 can be issued even if the taxpayer has already filed a return of income.

Q.4 What happens if the Assessing Officer makes an assessment based on their best judgment?

Ans. If the Assessing Officer makes an assessment based on their best judgment, they will estimate your income and expenses based on the available information. This assessment may not be accurate and may result in a higher tax liability. If you don’t agree with the assessment, you can file an appeal with the Commissioner of Income Tax (Appeals) / the Income Tax Appellate Tribunal. It’s always advisable to respond to a notice under Section 148 and provide all the relevant details of your income and expenses to avoid any unnecessary complications.

Q.5 What is the penalty that can be imposed under Section 148?

Ans. Under Section 148, there is no specific maximum penalty that can be imposed as it deals with the issuance of a notice for reassessment. However, if you fail to respond to a notice issued under Section 148, the Assessing Officer may impose penalties under Section 271(1)(b) for concealment of income or Section 271(1)(c) for furnishing inaccurate particulars of income. Therefore, it’s important to respond to a notice under Section 148 and provide accurate details of your income and expenses to avoid any penalties or legal issues.

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Disclaimer: This article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. This article is written on the basis of author’s personal experience and provision applicable as on date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers. The Author “CA. Shiv Kumar Sharma” can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp–9911303737

Author Bio

My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. I am writing Articles for Taxguru.in, casansaar.com and in the expert panel of ca View Full Profile

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