FAQs on Is your Notice of Section 148 Valid?

The old assessment/reassessment provision allowed the department to issue notices under Section 148 for six years from the end of the relevant assessment year. However, the new assessment/reassessment provision has reduced the period for issuing notices to three years under Section 148A (w.r.f April 1, 2021) and allows the taxpayer to be heard by the officer before the notice u/s 148 is issued.

Taxpayers who have received notices under Section 148 must now treat these notices as issued under Section 148A, which allows them to respond and provide necessary explanations after receiving the information and material relied upon by the revenue. The assessing officers must also pass an order expressing their positive or negative view for issuing the notice under Section 148 and initiating the assessment/reassessment proceedings u/s 148.

If a taxpayer has received a notice u/s 148 or 148A or under any other section of Income Tax, the best way forward would be to engage an experienced Income Tax Consultant who will help the taxpayer to navigate the litigation process and assist them in drafting replies to notices, filing these replies, representing before income tax authorities and drafting and filing appeal against an unfavourable order before commissioner appeals & ITAT. Understanding the rights and defenses available under the law is essential to ensure the best possible outcome in such cases.

Yes, a taxpayer can challenge the validity of a notice received under Section 148 or 148A. The challenge can be based on procedural grounds, such as the notice being issued beyond the prescribed time limit or without proper authority, or on substantive grounds, such as the notice being based on incorrect facts or assumptions. However, taxpayers don’t have to fight all by themselves, experienced income tax consultants can guide them with the best approach to challenge the notice and represent the taxpayer before the Income Tax Department.

The introduction of Section 148A aims to simplify the taxation regime and improve compliance by allowing taxpayers to give an explanation of why they should not receive an assessment/reassessment notice. This new provision is brought with an intent to reduce litigation and make the faceless assessment/reassessment process more transparent and fair. However, its impact on reducing corruption or increasing ease of compliance remains to be seen, as it depends on the implementation and enforcement of the provision by tax authorities.

If the assessee is unable to respond u/s 148A then the tax authorities may proceed to pass an unfavourable order without even considering the taxpayer’s explanation or defense. Post this the case goes under faceless assessment/reassessment as per the provisions of section 148. Taxpayers must respond promptly and adequately to such notices to avoid unfavourable outcomes and protect their rights.

 Follow these steps to check show cause notices received from Income Tax Department, on the Income Tax e-Filing portal:

1. Visit the Income Tax e-Filing portal: https://www.incometaxindiaefiling.gov.in
2. Log in using your user ID (typically your PAN), password, and captcha code.
3. Once logged in, go to the “e-File” tab on the dashboard.
4. In the dropdown menu, click on “View Notices/Orders.”
5. You will now see a list of notices or orders, if any, issued by the Income Tax Department.

To check outstanding demands, follow these steps:

1. Follow steps 1 & 2 above and then from the dashboard, go to the “Services” tab.
2. In the dropdown menu, click on “View Outstanding Tax Demand.”
3. You will now see the details of any outstanding tax demand, if any, against your PAN.

‘Upholding an order’ means when a higher authority or court confirms, supports, or validates the decision made by the lower court or authority, it is said to have “upheld” the order. In this case, the original decision remains in force and is considered legally enforceable.

‘Quashing an order’ means when a higher authority or court overturns, invalidates, or cancels the decision made by the lower court or authority, it is said to have “quashed” the order. In this case, the original decision is considered legally incorrect and no longer in force.

After being issued a notice under Section 148A, the taxpayer must explain within the time specified in the notice (it cannot be less than seven days and cannot be more than 30 days, practically officers give 7 days only). Responding promptly and providing all relevant information is important to avoid any adverse consequences such as interest, fine, prosecution or penalties. The officer is bound to pass an order within one month from the end of the month in which the reply is received or time to reply expires.

1. Section 148A is not applicable in the following cases – 

1. Income Tax Search Case is initiated u/s 132 or books etc. are requisitioned u/s 132A
2. The Assessing Officer is satisfied with prior approval of PCIT or CIT that any money, bullions, jewellery etc. seized in search or requisition in another person’s case belong to assessee.
3. The Assessing Officer is satisfied with prior approval of PCIT or CIT that books or documents seized in search or requisition in another person’s case pertains to assessee.
4. The Assessing Officer has received any information under scheme notified u/s 135A pertaining to income chargeable to tax escaping assessment for any AY in the case of the assessee.