Section 148 of the Income-tax Act, 1961 gives authority and power to the Assessing Officer to reassess the previously filed return of income by sending notices to the assessee whose income has not been properly assessed or has not been disclosed for taxation (Income escaping assessment). This implies that if the Assessing Officer suspects that the assessee has not disclosed complete income or has provided an inaccurate representation of it, they can commence proceedings under this section (Income escaping assessment). 

Sections 148, 148A, 149 and 151 of Income-tax Act, 1961 of Income escaping assessment / reassessment have been substituted by new provisions with effect from 01.09.2024. 

What is Income Escaping Assessment / Reassessment?

If any income chargeable to tax in the case of an assessee has not been disclosed for taxation (income escaping assessment) for any Assessment Year, the Assessing Officer may assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such AY. The Income-tax department is extending the scope of an assessee for Income escaping assessment or reassessments under the Income-tax Act, 1961 to assess or reassess the income chargeable to tax of an assessee beyond 5 AYs i.e. till AY 2019-20. 

When can Assessing Officer consider it as an Income Escaping Assessment / Reassessment?

The information with the Assessing Officer suggests that the income chargeable to tax has not been disclosed for taxation (Income escaping assessment) based on the following circumstances: 

  1. Any information in the case of the assessee for the relevant AY in accordance with the risk management strategy formulated by the Board from time to time; or
  2. Any audit objection to the effect that the assessment in the case of the assessee for the relevant AY has not been made in accordance with the provisions of Income-tax Act, 1961; or
  3. Any information received under an agreement referred to u/s 90/90A of Income-tax Act, 1961 (Double Taxation Relief); or
  4. Any information made available to the Assessing Officer under the scheme notified u/s 135A of Income-tax Act, 1961; or
  5. Any information which requires action in consequence of the order of a Tribunal or Court; or
  6. Any information in the case of the assessee arising from survey conducted u/s 133A (other than survey conducted for verifying TDS or TCS compliances) of Income-tax Act, 1961, on or after the 1st day of September, 2024. 

Time Limits for Issuing Notices under Sections 148 and 148A of the Income-tax Act, 1961 as per substituted by new provisions with effect from 01.09.2024 (Income escaping Assessment / Reassessment) 

Sr. No.   Types of cases Time limit for issue of notice 
 Notice u/s 148A of Income-tax Act, 1961   Notice u/s 148 of Income-tax Act, 1961  
1 Normal scenario  Notice can be issued within 3 years from the end of the relevant AY unless the case falls under special scenario Notice can be issued within 3 years and 3 months from the end of the relevant AY unless the case falls under special scenario  
2   The special scenario covers cases where the Assessing Officer has in his possession books of accounts or other documents or evidence related to any asset or expenditure or transaction or entries which show that income chargeable to tax, which has escaped assessment, amounts to Rs.50 lakhs or more Notice can be issued beyond the period of 3 years but not more than 5 years from the end of the relevant AY   Notice can be issued beyond the period of 3 years and 3 months but not more than 5 years and 3 months from the end of the relevant AY   

Provision pertaining to issue of notice – The table given below summarizes to issue notices u/s 148 and 148A of Income-tax Act, 1961 as per the substituted by new provisions with effect from 01.09.2024 and covering the financial year from 01 April 2025 to 31 March 2026: 

Sr. No.  Assessment Year   Notice u/s 148A of Income-tax Act, 1961 Notice u/s 148 of Income-tax Act, 1961

Normal scenario – 3 years from end of relevant AY 

 Special scenario – Beyond 3 years but not more than 5 years from end of relevant AY Normal scenario
– 3 years and 3 months from end of relevant AY		 Special scenario – Beyond 3 years and 3 months but not more than 5 years and 3 months from end of relevant AY
1  2024-25

(31.03.2025) 

  Notice can be issued up to 31.03.2028 
 		 Notice can be issued up to 31.03.2030  Notice can be issued up to 30.06.2028 Notice can be issued up to 30.06.2030
2  2023-24 

(31.03.2024) 

 Notice can be issued up to 31.03.2027 Notice can be issued up to 31.03.2029 Notice can be issued up to 30.06.2027  Notice can be issued up to 30.06.2029
3   2022-23 

(31.03.2023) 

 Notice can be issued up to 31.03.2026  Notice can be issued up to 31.03.2028  Notice can be issued up to 30.06.2026  Notice can be issued up to 30.06.2028
4 2021-22

(31.03.2022) 

  Notice cannot be issued up to 31.03.2025  Notice can be issued up to 31.03.2027  Notice can be issued up to 30.06.2025 Notice can be issued up to 30.06.2027
5 

 

 2020-21 

(31.03.2021) 

 Notice cannot be issued up to 31.03.2024 Notice can be issued up to 31.03.2026 Notice cannot be issued up to 30.06.2024 Notice can be issued up to 30.06.2026
 

6 

 2019-20 

(31.03.2020) 

 Notice cannot be issued up to 31.03.2023  Notice cannot be issued up to 31.03.2025  Notice cannot be issued up to 30.06.2023 Notice can be issued up to 30.06.2025
 

7

 2018-19 

(31.03.2019) 

  Notice cannot be issued up to 31.03.2022   Notice cannot be issued up to 31.03.2024  Notice cannot be issued up to 30.06.2022  Notice cannot be issued up to 30.06.2024 

Procedure of Assessment / Reassessment before issuance of notice u/s 148 and 148A of Income-tax Act, 1961. 

  1. If the Assessing Officer has information which suggest that income chargeable to tax has income escaping assessment / reassessment in the case of an assessee for the relevant AY, the Assessing Officer can issue notice u/s 148A of Income-tax Act, 1961, provide an opportunity of being heard to such an assessee, by serving upon him a notice to show cause as to why a notice u/s 148 of Income-tax Act, 1961 should not be issued in this case. Such show cause notice shall be accompanied by the information which suggests that income chargeable to tax has income escaping assessment.
  2. On receipt of notice u/s 148A(1) of Income-tax Act, 1961, the assessee may furnish his reply within such period as specified in the notice.
  3. The Assessing Officer on the basis of material available on record and taking into account the reply of the assessee furnished, pass an order u/s 148A(3) of Income-tax Act, 1961 with the prior approval of the specified authority (Additional Commissioner / Director, Joint Commissioner / Director) whether or not it is fit case to issue notice u/s 148 of Income-tax Act, 1961.
  4. If the order u/s 148A(3) of Income-tax Act, 1961 is passed against the assessee and the Assessing Officer proceeds to issue a notice u/s 148 of the Income-tax Act, 1961; then the assessee is liable to file a return of income u/s 148 of Income-tax Act, 1961 within a period not exceeding 3 months from the end of the month in which such order is passed.
  5. The provisions of section 148A of Income-tax Act, 1961 shall not apply in case of an assessee where the AO has received information under the scheme notified u/s 135A of Income-tax Act, 1961. In such a case, the Assessing Officer shall proceed to issue a notice u/s 148 of the Income-tax Act, 1961 and the assessee is required to furnish a return of income within such period as may be specified but not exceeding a period of 3 months from the end of the month in which such notice is issued.  

Key Takeaways and How We Can Help

 Received a tax notice u/s 148A of the Income-tax Act, 1961 (Income escaping assessment) from the Income Tax Department? Don’t worry — contact us and we shall assist the following steps for replying to notice u/s 148A of the Income-tax Act, 1961 (Income escaping assessment).

  1. Expert and technical guidance:  Get personalized assistance from our team of experienced Chartered Accountant.
  2. Notice analysis: We shall decode the notice to help you understand exactly what the Income-tax Department requires.
  3. Documentation: We shall assist in identifying and compiling all necessary documents needed for your reply.
  4. Drafting responses in respect to notices received u/s 148A of the Income-tax Act, 1961: We shall provide the experts guidance in drafting the responses to show cause notices for dropping reassessment proceedings. We shall represent to the Income-tax department on behalf of assessee to jurisdictional assessing officers (Income Tax Officer) in response to the notices issued u/s 148A of the Income-tax Act, 1961. 
  5. Compliance: We ensure your response aligns under the Income-tax Act, 1961 to reduce the chances of further queries.
  6. Filing of Return of Income u/s 148 of Income-tax Act, 1961: If Assessing Officer has issued order u/s 148A(3) of the Income-tax Act, 1961 against the assessee then we shall prepare and assist in filing of return of income u/s 148 of the Income-tax Act, 1961 (Income escaping Assessment). 
  7. Assessment / Reassessment Proceedings u/s 147 of Income-tax Act, 1961: We shall provide the experts guidance in drafting the responses to notices u/s 143(2), 142(1) of the Income-tax Act, 1961 and shall complete the reassessment proceedings u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961.   

Authored by:
Nilay Jhaveri | Direct and International Tax

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