Introduction

As per Section 148 of the Income Tax Act, 1961, the main reason why the assessee would receive notice under Section 148 is due to an income escaping assessment under Section 147. The person who has received notice under Section 148 owes a responsibility to prove regarding the income that has been escaped contain all the details regarding the income escaped.

Thus these notice issued under this sections holds a vital place in bringing out all the information.

Synopsis of Section 148

As per Section 151 of the Income Tax Act, 1961.

1. Notice can be issued by the assessing officer after the expiry of four years from the end of the relevant assessment year, unless year the higher authorities (Principal Commissioner or Principal Chief Commissioner are referred to.
2. In other cases, no notice can be issued, if the officer is below the rank of Joint Commissioner.

Time Limit under Section 148 of Income Tax Act, 1961.

1. 4 years from the end of the relevant assessment year if income escaped does not exceed 1 lakhs.
2. But if income is more than 1 lakhs, the time limits turn out to be 6 years from the end of the relevant assessment year.
3. If the location of assets is situated outside India, then the time limit is 16 years from the end of the relevant assessment year.
4. But if a notice is issued to Non-Resident Agent then it is for 4 years from the end of the relevant assessment year.

Some Important FAQS

Can notice under Section 148 be issued based on audit objections of the Revenue Audit team?

• Answer- Objections of the Audit party do not amount to a reason to believe that income has been escaped, therefore the officer cannot issue a notice under Section 148.

Is it necessary for the assessing officer to assess the reasons for which notice under Section 148 is issued?

• Answer-The Assessing officer needs to abide by the provisions and has to supply all the Reasons for issuing notice under Section 148.

When the notice under Section 148, be squashed?

• Answer-The assessee can challenge the invalid notice (If it does not have any valid reason) then by filing a WRIT Petition in the High court where the High court can consider the notice to be invalid.

Important Landmark Judgements

1) Jet Airways(Bombay High Court).

If the Assessing officer issues notice under Section 148 for assessing income “Z” and if income “Z” has not escaped assessment, but income “T” has escaped assessment, then the assessing officer will have to drop proceedings under Section 148 and issue fresh notice for assessing income “T”

2) Vipin Walla(2016)(DEL)

A notice under Section 148 on 27th March 2019, addressed to the assessee for the assessment year 2012-13. But the notice returned (unserved ) stating the assessee had expired. Later the Assessing officer issued a letter to legal heirs on 15/06/2019 to complete the proceedings.The legal heir said that notice was barred by limitation.

The time limit for notice for AY-2012-13 ( and amount greater than 1 lakhs) shall be 31.03.2019, then the assessing officer after getting to know about the assessee had expired could have continued proceedings by sending a notice to legal heirs before 31.03.2019.

The high court confirmed that serving notice to even legal representatives beyond the limitation period is invalid.