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Section 148A of the Income Tax Act, introduced in the Budget of 2021, has ushered in a significant change in the realm of taxation in India. This section empowers Income Tax officers to initiate reassessment proceedings when they suspect that a taxpayer may have concealed income during any assessment year. Section 148A, while allowing the tax authorities to reopen cases, also emphasizes the importance of providing taxpayers with an opportunity to present their side of the story. In this guide, we delve into the intricacies of Section 148A of the Income Tax Act and its implications for taxpayers.
Section 148A is a newly added section that was introduced in Budget 2021. Suppose the Income Tax officer suspects that the taxpayer has tried to escape any income for any assessment year; he/she can issue a notice to the taxpayer informing that there will be a reassessment.
Section 148A states that the income tax officer should provide the taxpayer with a chance to explain their case before issuing the notice. In other words, it provides the taxpayer with an opportunity to be heard.
The assessing officer can grant a minimum of 7 days and a maximum of 30 days to the taxpayer to furnish his/her explanation. If the income tax department still suspects tax evasion, then it can issue a notice under section 148, intimating the taxpayer about the reopening of the case.
Section 148 of the Income Tax Act in India allows the tax authorities to re-evaluate a taxpayer's income if they believe some income was not properly assessed for a specific year. Such notice is received if the income tax department suspects that there is some income that escaped assessment in previous assessment years.
The taxpayer can respond to the notice by providing documents and explanations to support their reported income. They can also challenge the notice if they think it's incorrect.
After considering the taxpayer's response, the tax authorities might reassess the taxpayer's income for that year. This could result in the taxpayer owing more taxes if additional income is found.
If the income tax department decides to open your case for reassessment even after analyzing your response to the notice, then you might have to -
The income tax department can reopen the assessment under section 148 if it believes that any income that was supposed to be charged to tax has escaped assessment or the taxpayer has knowingly tried to evade tax. These could be the reasons for such belief -
The income tax department is allowed to reopen the assessment under section 148A within a time frame of 4 years from the end of the relevant assessment year. If the income that has escaped assessment exceeds Rs.1 lakh, then the case can be reopened for assessment within 6 years from the relevant assessment year.
In case the income tax department opens a reassessment under section 148, the taxpayer might have to pay additional penalties, additional tax, and interest on the income that was not reported. However, there are a few things that every taxpayer must know -
Section 148A of the Income Tax Act is a crucial section that empowers taxpayers to provide an explanation to the income tax department regarding any income that escaped assessment. While it safeguards the rights of taxpayers, it also grants the assessing officer the authority to reopen cases.
Taxpayers must be aware of the implications of Section 148A, as it can lead to additional tax liabilities, penalties, and even legal consequences if willful tax evasion is suspected. It underscores the importance of accurate and transparent income reporting. If you have also received an income tax notice and need help responding to it, Tax2win’s tax experts provide you with excellence, experience, and expertise. Get Tax Advisory Services Now!
While section 148 deals with the notice that can be issued by the income tax department against any income that might have escaped assessment during previous assessment years, section 148A makes it mandatory for the income tax department to provide the taxpayer with a chance to explain the reason for escaping the assessment.
An order under section 148A says that the assessing officer can conduct an inquiry with the prior approval of the relevant authority before issuing the notice.
Section 148A of the Income Tax Act was first announced in Budget 2021 and inserted through Finance Act 2022. Under section 148A, the assessing officer can grant not less than 7 days and not more than 30 days to the assessee to provide an explanation.
You have two options to address the notice: either submit a tax return or send a written response to the Assessing Officer, including all necessary details and evidence. If you agree with the reasons provided by the assessing officer, promptly submit your tax return.
In the 2021 budget, the government added Section 148A to the Income Tax Act. Under this provision, if the income tax officer believes that a taxpayer has undisclosed income for a certain assessment year, they are required to give the taxpayer an opportunity to explain before issuing a notice.
