Decoding Section 148 of the Income Tax Act, 1961

When we talk about Income Tax Assessment, Section 148 of the Income Tax Act 1961 is one of the section which comes to our mind that deals with the issuance of a notice by the Assessing Officer (AO) to the taxpayers whose income is deemed to have escaped assessment.

Today, we will discuss about What is Section 148, when a notice can be issued, how to respond to noticed received under Section 148 notice, and what happens if you fails to reply to notice u/s 148.

What is Section 148 of the Income Tax Act 1961?

Section 148 of the Income Tax Act 1961 empowers the Assessing Officer to issue a notice to a taxpayer whose income has escaped assessment.

This means that if the Assessing Officer has a reason to believe that a taxpayer has not disclosed or has under reported his/her full income, AO can initiate proceedings under this section.

When is notice under Section 148 issued?

A notice under Section 148 can be issued to a taxpayer within 3 years from the end of the relevant assessment year, If the escaped assessment amounts to or likely to amounts to less than Rs. 50 Lakhs.

However, if the escaped income is Rs. 50 Lakhs or more, the notice under this section can be issued within 10 years from the end of the relevant assessment year.

How to reply to notice received under Section 148?

On receipt of notice under Section 148, you should carefully read and understand the reasons for issue of the notice. The notice will specify the reason for initiating proceedings under section 148 and will also provide you with an opportunity to file a return of income u/s 48.

You need to respond to the notice within the stipulated time frame i.e 30 days. To respond to the notice, you can either file a return of income u/s 148 or provide a written response to the Assessing Officer online at Income Tax Portal by logging in to your Income Tax E-Filing Portal.

In your response, you should provide all the relevant details/information related to your income and expenses, along with documents in support of your claim.

What happens, if you fails to respond to notice received under Section 148?

If you fail to respond to a notice received under Section 148 of the Act, the Assessing Officer have the power to proceed with the assessment based on the available information i.e. Best Judgment Assessment.

If you don’t agree with the assessment, you can file an appeal with the Commissioner of Income Tax (Appeals) / the Income Tax Appellate Tribunal.

Crux

Section 148 of the Income Tax Act 1961 is an essential provision that allows the Assessing Officer to initiate proceedings against the taxpayers whose income has escaped assessment. Its important to respond to the notice within the stipulated time frame and provide all the relevant information. Failure to respond can result in Best Judgment Assessment which might not be in your favour.