Before making the assessment, reassessment, or recomputation, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable. The assessee is required to produce the details of his/her income tax returns within such period as may be specified in such notice by the assessing officer. A return of his income or the income of any other person in respect of which he is assessable under this Act In the case that the assessee needs to provide income tax returns of any other assessable person, then he or she has to provide them in the format specifically mentioned as per provisions of the act, with any other information to be provided with the detailed information. Before issuing a notice, the Assessing Officer will not state the reason for the notice given to the assessee in question.
What is Section 148?
The Income Tax Department can send a notice to the taxpayer under section 148 if he/she deems that the taxpayer’s income has not been assessed properly. In other words, if the assessing officer has a reason to believe that some income has escaped assessment, he/she can send a notice under section 148 to the taxpayer.
Why do you receive a Notice under Section 148 of the Income Tax Act?
There are numerous reasons under Section 148 for the issuance of a Notice to an assessee by an assessing officer, some of them are given below:-
- Before issuing any notice u/s 148, the assessing officer must have reason to believe that any income chargeable to tax has escaped assessment along with strong evidence. Without proof, the officer can’t produce a notice based on suspicion.
- A solid link must be presented, linking the material presented to the assessing officer with a reason to believe that the assessee has tried to evade assessment for the particular year in question.
- The information provided to the assessing officer should be of utmost relevance to the particular and not be based on any superficial reasoning and understanding.
- Before issuing the notice, the assessing officer must provide in writing why he/she thinks that the assessee in question has tried to evade the assessment of income.
- Simply stating and doubting that the assessee is hoarding a large sum of money without providing proof, reason, and information to back up the claim will not be considered a valid reason to issue a notice under Section 148.
- Unless any new information or reason is presented to the assessing officer, he or she can’t issue a notice to the assessee purely based on a difference of understanding. The assessment officer shall have no reason to suspect the assessee if he/she has provided disclosure regarding the particulars related to his/her taxable income and disclosed the practical and factual information that has led to his/her completion of his her assessment and reassessment.
- The Assessment officer cannot issue a notice based on the facts and information gained by reading the documents and information that the assessee has already submitted during the course of the assessment. The Assessing Officer can only issue a notice if and only if he/she has been presented with the new information and not by reading it by himself/herself.
- If any fact or information arises, which has been disclosed previously relevant to the assessment in question, the assessing officer can immediately issue a notice under Section 147/148, even if the information has come to notice in a later period.
Who is authorized to issue a notice under Section 148?
As per the rules and regulations stated under Section 148 of the Income Tax Act 1961, the following persons are authorized to issue a notice to the assessee who has escaped assessment or reassessment of taxable income under the following conditions:-
- No Assessing Officer currently ranked below the rank of Assistant Commissioner or Deputy Commissioner will be permitted to issue a notice under Section 148. This is in line with the provisions regarding any assessment that has been carried out for the assessment year of relevance under sub-section (3) of Section 143 or Section 147. This can only be circumvented by the Joint Commissioner, provided he or she is content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to the assessee.
- No supply of notice to the associate assessee will be manifested following the expiration of a four-year period from the conclusion of the assessment year in question. This may otherwise be circumvented solely by the Chief Commissioner of Commissioner, provided he or she is content that the explanations given by the Assessing Officer are valid enough to send a notice to the assessee.
- For any cases that don't seem to be lined underneath Section 151, sub-section (1), the associate Assessing Officer is ready to issue a notice to the associate assessee as per Section 148 if:
- His or her rank or position is below that of a Joint Commissioner.
- The four-year period following the conclusion of the assessment year of connectedness has terminated.
- Note that the Joint Commissioner may solely circumvent this, provided he or she is content that the explanations given by the Assessing Officer are valid enough for the issuance of a notice to the assessee in question.
What is the time limit to issue a notice to an associate Assessee under Section 148?
As per the provisions given under Section 149, notices issued under Section 148 will manifest over the subsequent time frames:
- No notice under section 148 shall be issued for the relevant assessment year.
(a) Normal time limit - Three years from the end of the relevant assessment year.
(b) Specified time limit- if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of
- An asset;
- Expenditure in respect of a transaction or in relation to an event or occasion; or
- An entry or entries in the books of account which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more
The Assessing Officer will issue the notice The Assessing Officer will solely issue a notice if any taxable income has been proved to have evaded assessment for the relevant year for the subsequent reasons:
- The assessee should have furnished his or her returns under Section 139.
- The assessee didn't furnished his or her returns following the issuance of a notice under Section 142, sub-section (1) of Section 148.
- The assessee should have given full and complete revelation with regard to any info, factual information, or particulars that are needed for the completion of the assessment for that relevant year.
How to respond to the Notice received under Section 148?
Here’s how you can respond to the notice u/s148 -
When a notice under section 148 is received, the assessee is asked to file a return of the relevant assessment year. After filing the return, the assessee must ask for a copy of the reasons recorded for issuing a notice under section 148, after which they are permitted to file an objection to the issuance of notice. The assessee must specifically ask the assessing officer to pass a speaking order by disposing of 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 are to be filed, highlighting the reasons for challenging the legality of the notice issued under Section 148. All of these procedures have been laid down by the Honorable Supreme court in GKN Driveshafts (India) Ltd case. This procedure was provided by the Honorable Supreme court to enable the assessee to file a writ petition before the respective High Court, challenging the legality of the notice served under Section 148 before the assessment is completed.
In the case that an assessment order is passed and the matter is in appeal, the assessee may still file a writ petition in the high court challenging the legality of the notice under section 148 and even the consequent assessment if the above procedure as laid down by the Supreme Court in GKN Driveshafts (India) Ltd case is not followed. For this to happen, the assessee will have to show proof that he asked for a copy of the reasons for the issue of notice under section 148 and filed objections to that, and asked the assessing officer to pass a separate reasoned order disposing of the objections filed and deciding on the legality of the notice issued Under Section. 148.
What is the Provision of Section 148 if the assessee does not furnish Income Tax Return?
If the assessee does not furnish the Income Tax return within the timeframe underlined in the notice issued under Section 148 by the presiding Assessing Officer, the assessee shall be made to pay interest under Section 243(3) for late filing of the Income Tax return or for not filing of Income Tax return, if the income has already been determined under Section 143(1) or if the income if the assessment has already been done under Section 144 or Section 147.
Contrarily, if the assessee hadn’t furnished any return with respect to any assessment year and no assessment of such year has been done under Section 144. The interest of late filing of return in response to notice under Section 148 shall be levied on the assessee under Section 234(1) instead of Section 234(3).