Overview
Notices Under Section 148 / 147
As per the Income-tax (I-T) Act, an assessing officer of the tax department has the authority to assess, reassess or re-compute the total income of any person, if there is ample reason for the officer to believe that income chargeable to tax has escaped assessment for any of the previous assessment years.
In the present times, The Income Tax Department has started reopening old assessment cases with the help of an algorithm. The I-T Department is leveraging ‘INSIGHT’, a platform that red flags the names of potential tax offenders after going through huge data by data analytics and data mining tools.
With the new algorithm, the tax department has recently issued number of notices / letters under Section 148A of the Income Tax Act.
As per this provision, the Assessing Officer may:
As per this provision, the Assessing Officer:
1
First conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
2
Afterwards provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any; and
3
Thereafter, considering the reply submitted by the assessee, if any, in response to the show-cause notice, passes an order with the prior approval of specified authority, within one month from the end of the month in which the reply received or the due date for furnishing replies expires, whether or not it is a fit case to issue a notice under section 148.
How to respond to Notice Under 148A?
The Notice under section 148A need to responded in a same way likewise notices are response under any other assessment notice.
The assessee has to put forth his facts before the assessing officer and has to justify on the basis of facts and legal provisions as per law along with documentary evidences, as to how the income alleged in the notice is not chargeable to tax and has not escaped assessment.
Non Compliance / Incomplete compliance of Notice under section 148A
In case of non compliance / in-complete compliance of show cause notice, the assessing officer issues Order under section 148A by alleging on the basis of reasons to believe that it is a fit case to issue a notice under section 148 and accordingly, assessment proceedings are initiated in the case of the assessee by issuance of notice under section 148 of the Income tax Act, 1961. Thereafter, the assessee is required to file return of income under section 148 of the Income tax Act, 1961 and also has to comply to multiple statutory notices issued during the course of assessment proceedings seeking other details / documents as well.
Income escaping assessment.
Section 147 Of The Income Tax Act, 1961
Section 147 of the Income tax Act, 1961 specified that if any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, then the Assessing Officer may, subject to the provisions of the Act, assess or reassess such income or re-compute the loss or the depreciation allowance or any other allowance or deduction for such assessment year.
Under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.
Section 148 Of The Income Tax Act, 1961
Assessment / reassessment proceedings in cases where income has escaped assessment are initiated under section 147 of the Income tax Act, 1961 by issue of notice under section 148 of the Income tax Act, 1961.
Notice under section 148 shall be issued only if there is information with the Assessing Officer which suggests that any amount of income which is chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
The Assessing Officer along with the Order under section 148A itself, issue a notice under section 148, requiring to furnish within such period, as may be specified in such notice, a return of income for the previous year corresponding to the relevant assessment year for which the alleged income has escaped assessment.
Section 149 Of The Income Tax Act, 1961
Time limit for issue of notice under section 148 of the Income tax Act, 1961
For the purposes of computing the period of limitation, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.
ExplanationFor the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.
