Income Tax Notice? Section 148A And 148 Changes You Must Know in 2024

The Income Tax Act, 1961, has introduced major changes with Section 148A and the updated Section 148 through the Finance Act, 2021. These changes, effective from April 1, 2022, aim to make the tax reassessment process fairer, faster, and more transparent for taxpayers. Herewith, provided full details of Section 148A, Section 148, Income Tax Reassessment, Tax Notice Reply

In this article, we’ll break down Section 148A and Section 148 in simple terms, explaining how they work, their impact, and what taxpayers need to know.

1. Why Were Sections 148A and 148 Introduced?

Earlier, tax officers had broad powers to reopen old tax cases (up to 6 or even 16 years in some cases). This led to:

• Unnecessary harassment of honest taxpayers.
• Long legal battles due to unclear rules.
• Delays and confusion in the tax assessment process.

To fix these problems, the government introduced Section 148A, which ensures a proper inquiry before reopening any case.

2. What is Section 148A? – The New Pre-Reassessment Check

Section 148A makes it mandatory for tax officers to first conduct an inquiry before issuing a reassessment notice. Here’s how it works:

A. When Can the Tax Officer Reopen a Case?

The officer must have  information and reason to believe (not just suspicion) that:

• Some income was not reported in the original tax filing.
• The taxpayer may have hidden income or claimed false deductions.

B. Step-by-Step Process Under Section 148A

Go to the Income Tax website and login to website, then go to pending action tab , then e- proceeding

1. Tax Officer Receives Information – This could be from tax audits, data matching, or other sources.
2. Initial Verification – The officer checks if the information is reliable.
3. Notice to Taxpayer – The AO must issue a show-cause notice under Section 148A and taxpayer must have reply within the period as mentioned in the notice.(Generally, It is time of 7 to 30 days to respond )
4. Taxpayer’s Reply – The taxpayer can explain their side with documents.
5. Final Decision –
   1. If the Assessing officer is satisfied, the matter u/s 148A is closed and concluded.
   1. If not, a escape assessment proceeding under Section 148 is initiate and notice will be issued.

C. Time Limits for Reopening Cases

• Normal Cases – Up to 3 years from the end of the financial year.
• Serious Cases (Income hidden > ₹50 lakhs) – Up to 10 years (with senior tax authority approval).

3. What is Section 148? – The Reassessment Notice

If taxpayer has unable to just jusfiy the matter before assessesing office and the assessing officer is not satisfied with the taxpayer’s submission under Section 148A, they issue a formal reassessment notice under Section 148.

Key Points About Section 148 Notice

✔ Cannot Be Issued Without Section 148A – The officer must follow the inquiry process first.
✔ Time Limits Apply – 3 years (normal cases) or 10 years (serious cases).
✔ Taxpayer Can Challenge – If the officer skips steps or acts unfairly, the taxpayer can appeal.

4. How Does This Benefit Taxpayers?

✅ More Transparency – No surprise reassessments; taxpayers get an opportunity of being hearing.
✅ Stricter Time Limits – Prevents never-ending tax disputes.
✅ Reduced Harassment – Only cases with strong evidence are reopened.

5. What Should Taxpayers Do If They Get a Notice?

• Don’t Panic – A notice doesn’t always mean you owe taxes.
• Reply on Time – Submit documents to support your case within the given period.
• Consult a Tax Expert – If the notice seems unfair, a professional can help challenge it.

6. Recent Updates & Legal Protection

• Courts Support the New Rules – The process is seen as fairer.
• CBDT Guidelines – The tax department has issued instructions to ensure officers follow the rules correctly.

7. Section 148A of income tax act bare act

7.1 Procedure before issuance of notice under section 148.

148A. (1) Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant assessment year, he shall, before issuing any notice under section 148 provide an opportunity of being heard to such assessee by serving upon him a notice to show cause as to why a notice under section 148 should not be issued in his case and such notice to show cause shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year.

(2) On receipt of the notice under sub-section (1), the assessee may furnish his reply within such period, as may be specified in the notice.

(3) The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 148.

(4) The provisions of this section shall not apply to income chargeable to tax escaping assessment for any assessment year in the case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A.

Explanation.—For the purposes of this section and section 148, “specified authority” means the specified authority referred to in section 151.]

7.2 Issue of notice where income has escaped assessment.

148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall, subject to the provisions of section 148A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A, requiring him to furnish, within such period as may be specified in the notice, not exceeding three months from the end of the month in which such notice is issued, a return of his income or income of any other person in respect of whom he is assessable under this Act during the previous year corresponding to the relevant assessment year:

Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year:

Provided further that where the Assessing Officer has received information under the scheme notified under section 135A, no notice under this section shall be issued without prior approval of the specified authority.

(2) The return of income required under sub-section (1) shall be furnished in such form and verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act shall, apply accordingly as if such return were a return required to be furnished under section 139:

Provided that any return of income required under sub-section (1), furnished after the expiry of the period specified in the notice under the said sub-section, shall not be deemed to be a return under section 139.

(3) For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—

(i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; or

(ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or

(iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or

(iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or

(v) any information which requires action in consequence of the order of a Tribunal or a Court; or

(vi) any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the said section, on or after the 1st day of September, 2024.

Final Thoughts

The new Section 148A and Section 148 make India’s tax system more taxpayer-friendly. By ensuring a proper inquiry before reassessment, the government has reduced unnecessary disputes.

If you ever receive a notice, respond promptly and seek expert advice if needed. Staying informed helps avoid unnecessary tax troubles!

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