Receiving an Income Tax notice under Section 148 can be unsettling for any taxpayer. With the 2021 amendments and the ongoing use of faceless assessments, the Income-tax Department has strengthened its powers to reopen assessments where income has escaped taxation.
But does every Section 148 notice mean tax liability? What are your rights, time limits, and remedies? This post provides a taxpayer-friendly yet legally grounded guide—covering the law, practical process, and a comprehensive set of FAQs for residents and NRIs alike.
The Legal Framework of Section 148
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Relevant Provisions
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Section 147 empowers the Assessing Officer (AO) to assess or reassess income that has escaped assessment.
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Section 148 deals with the issuance of notice to taxpayers for reassessment.
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Section 148A (inserted by Finance Act, 2021) makes it mandatory for the AO to conduct an enquiry, provide an opportunity of being heard, and pass an order (u/s 148A(d)) before issuing a notice u/s 148.
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Time Limits (Section 149)
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Up to 3 years from the end of the relevant assessment year in normal cases.
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Up to 10 years if escaped income is ₹50 lakhs or more (represented in the form of asset, expenditure, or entries in books).
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Sanction Requirement (Section 151)
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Prior approval of specified authority is required before issuing notice u/s 148.
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Why You May Receive a Section 148 Notice
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High-value transactions not disclosed in ITR (property purchase, shares, cash deposits).
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Information flagged by AIS/TIS, banks, or other reporting entities.
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Non-filing of ITR despite taxable income.
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Mismatch between reported income and third-party data.
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Cases flagged in NRI remittances, property sales, or offshore transactions.
Taxpayer’s Rights and Obligations
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Right to be Heard: You must be given an opportunity under Section 148A before reopening.
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Right to Reasons: You can demand reasons recorded for reopening.
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Obligation to Respond: Ignoring a notice may lead to ex parte reassessment and penalties.
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Right to Appeal: Orders can be challenged before CIT(A), ITAT, and higher courts.
Taxpayer-Friendly FAQs
1. Can I ignore a Section 148 notice?
No. Ignoring the notice will result in reassessment without your side being heard, along with possible penalties and prosecution. Always respond within the given timeline.
2. What should NRIs do if they get a Section 148 notice?
NRIs should:
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Verify whether they had taxable Indian income.
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Check if tax was already deducted (TDS).
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File a proper response with DTAA relief documents (Form 10F, TRC, etc.) if applicable.
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Authorize a representative in India, if abroad.
3. How much time can the Income Tax Department go back?
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Up to 3 years in most cases.
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Up to 10 years if escaped income is above ₹50 lakhs.
4. Is approval required before issuing a Section 148 notice?
Yes. The AO needs prior approval from the specified authority under Section 151.
5. What if I never filed my ITR for that year?
The AO can still issue a Section 148 notice. You will have to file the return in response and explain the income and transactions.
6. Can reassessment be challenged in court?
Yes. If procedure under Section 148A is not followed, or if notice is beyond limitation, courts have quashed such notices.
7. What documents should I keep ready?
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Original ITR and computation.
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Form 26AS, AIS, and TIS reports.
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Bank statements, property documents, share transaction records.
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For NRIs: TRC, Form 10F, proof of remittances, NRO/NRE bank details.
8. What happens after I file a response?
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The AO will pass an order u/s 148A(d).
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If satisfied with your explanation → No reassessment.
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If not satisfied → Reassessment proceedings start under Section 147.
9. What if I disagree with reassessment findings?
You can:
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File an appeal before CIT(A).
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Approach ITAT, High Court, or Supreme Court depending on the matter.
10. Can penalty or prosecution follow a Section 148 notice?
Yes, if concealment or misreporting is established. Penalty under Section 270A and prosecution in extreme cases may apply.
Practical Tips for Taxpayers
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Always cross-check AIS/TIS vs ITR before filing.
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Keep documentary evidence for high-value transactions.
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For NRIs: Ensure DTAA compliance and maintain tax records both in India and abroad.
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Seek professional help immediately upon receipt of notice.
Conclusion
Section 148 notices are not meant to harass but to ensure that escaped income is correctly taxed. The law has built-in checks like Section 148A enquiry and approvals to safeguard taxpayer rights.
The key is timely response, proper documentation, and professional handling. A well-prepared reply often prevents prolonged litigation and reassessment.
