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Section 148 of the Income Tax Act empowers the Assessing Officer to issue a notice to a taxpayer when there is information indicating that income chargeable to tax has escaped assessment for a relevant assessment year. However, before issuing such notice, the officer must comply with the procedure laid down under Section 148A of the Income Tax Act, which includes conducting a preliminary inquiry and passing an order under section 148A(3). The notice issued requires the assessee to furnish a return of income within a period specified in the notice, not exceeding three months from the end of the month in which the notice is issued. Such notice can only be issued when the Assessing Officer possesses credible information suggesting escaped income. This information may originate from risk management strategies framed by the Central Board of Direct Taxes, audit objections, international information-sharing agreements under sections 90 or 90A, information obtained through schemes notified under section 135A, directions arising from court or tribunal orders, or findings from surveys conducted under section 133A.
In simple terms-A notice under Section 148 of the Income Tax Act is sent to reopen a previously filed income tax assessment. The department asks you to file or revise your return for that specific assessment year because they suspect unreported income. Usually, it comes after a prior notice under Section 148A(1) of the Income Tax Act, which gives you a chance to explain.
Common Reasons for Receiving This Notice
The Income Tax Department may issue the notice due to:
Mismatch in financial information
- High bank deposits
- Property purchases
- Large investments
Information from other databases
- Data from Annual Information Statement (AIS)
- Data from Tax Deducted at Source (TDS)
Unreported income
- Capital gains not declared
- Interest income not declared
- Business receipts mismatch
Information from investigation
- Data from banks, property registries, or other agencies.
Time Limit for Issuing Notice under section 148A
Under the updated law:
- Up to 3 years from end of relevant assessment year in normal cases
- Up to 5 years if, escaped income exceeds ₹50 lakh and relates to assets or investments.
Who Can Respond to the Notice?
The notice can be responded to by:
- The taxpayer themselves
- Chartered Accountant (CA)
- Authorized representative through the income tax portal
- Tax Lawyer
Note: Authorization can be done through the Income Tax e-Filing Portal.
How to Respond to a Section 148 Notice
Steps on the portal:
- Log in to Income Tax e-Filing Portal
- Go to e-Proceedings / Pending Actions
- Select the notice under Section 148
- Download the notice and check the reason for reopening
- Prepare a response with:
- o Explanation
- o Supporting documents
If required, you must file a fresh return for that assessment year.
Important Documents Usually Required
Steps on the portal:
- Bank statements
- ITR of that year
- Investment proofs
- Sale/purchase documents
- Books of accounts (for businesses)
- TDS certificates (Form 16 / 26AS)
What Happens If You Ignore the Notice?
Ignoring the notice may lead to
- Best judgment assessment
- Penalties
- Additional tax demand
- Possible prosecution in serious cases
Note: It is important to respond within the deadline mentioned in the notice.