Section 147 of the Income Tax Act gives the I-T Department power to reassess your previously filed I-T returns. An Assessing Officer can pick your return for reassessment based on a certain pre-defined criteria by sending you an Income Escaping Assessment notice under section 148 of Income Tax Act. This comprehensive guide by H&R Block India will help you understand when you can get this notice and how to resolve such a situation.
You can get notice u/s 148 if the assessing officer has a reason to believe that your income which was chargeable to tax has escaped assessment. If he has materials to support his belief, he will record his reasons in writing and send you a notice u/s 148. The AO cannot simply change his mind and decide to re-investigate your case without any valid reason.
If you have disclosed correct information and documents during the original assessment, the AO cannot send you a notice for the reassessment of the same documents. Some new documents / facts which indicate that income has escaped assessment must come into light. If some new information comes to light which shows that you have concealed some income, then he can take action against you under section 147 and 148.
[ Read: Tax Notices under Income Tax Act 1961 ]
The I-T Act has specified time limit for completion of reassessment by AO:
|Maximum time limit for completion of reassessment u/s 147|
|Notice served u/s 148||9/12 months from the end of FY|
|Notice served u/s 148 and reference made to TPO||21 months from the end of FY|
The most important thing to keep in mind here is to not take this notice lightly. If the tax department has sent you the notice u/s 148, please take the following actions quickly:
If the reassessment of your case results in demand for tax, you may face the following consequences depending upon whether you filed your tax return or not before receiving the notice:
If your case has been chosen for reassessment u/s 147, then an AO who holds the rank of Assistant Commissioner or Deputy Commissioner or higher can only send you a notice unless the reasons recorded by AO are found fit by Joint Commissioner for the issue of notice.
If the notice u/s 148 is to be sent after the expiry of 4 years from the end of the relevant assessment year then it should be sent only after due approvals from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
Income Tax department has the power to scrutinize your tax return within 6 months from the end of the financial year in which it is filed. This is a regular scrutiny assessment and your case may get selected for this type of scrutiny based on certain pre-defined criteria. This notice does not necessarily mean that tax department believes that you have done something wrong.
In case such notice was not issued to you within 6 months or you had not filed your return at all, the tax department can still scrutinise your return by issuing you a notice under section 148. Through this notice, the assessing officer can ask you to furnish your return within a specified period. He can then issue scrutiny assessment notice u/s 143(2) to proceed with the reassessment of your case.
If your assessment was completed u/s 143(3), the tax department cannot take any action (u/s 147) against you after 4 years from the end of relevant AY unless:
The time limit also depends on the amount of income which has escaped assessment:
Where the income which has escaped the assessment relates to any asset located outside India then notice cannot up to 16 years from the end of relevant AY.
|Maximum time limit for notice u/s 148 to be issued|
|Escaped income < Rs 1 lakh||4 years from the end of relevant AY|
|Escaped income > Rs 1 lakh||6 years from the end of relevant AY|
|Escaped income relates to foreign asset||16 years from the end of relevant AY|
Receiving a scrutiny notice is never a pleasant experience and failure to respond to it correctly can result in further proceedings or penalties. To ensure any notices you receive are handled with care and attention to detail, consult your personal tax experts at H&R Block India to get instant tax notice assistance.