Income Tax Assessment: Find Out Who May Get A Notice Under Section 148 By August 31

Income Tax Assessment: Under Section 148A, before issuing a reassessment notice, the Income Tax Officer must give the taxpayer a chance to explain their case

Income Tax Assessment: Taxpayers face a critical deadline on August 31, 2024, as the Income Tax Department prepares to issue reassessment notices under Section 148 of the Income Tax Act for income that has escaped assessment. This is particularly applicable to cases where the escaped income exceeds Rs 50 lakh for Assessment Year (AY) 2018-19 or later. Taxpayers can file their income tax returns who dont want to receive such notices, which can lead to reassessments and possible penalties.

Section 148: Notices for Unassessed Income

Section 148 of the Income Tax Act empowers the tax department to issue notices when income has not been reassessed. In such cases, an Income Tax Assessing Officer will reach out to the concerned taxpayer (assessee), requesting the submission of their income returns and additional tax documents. This process initiates the reassessment of the taxpayer’s financial records.

Changes After Budget 2024: New Timelines for Reassessments

The Finance Bill 2024 introduced important changes to the reassessment process under Section 148A of the Income Tax Act. Notably, income escaping assessment of Rs 50 lakh or more is now subject to specific time constraints:

• A Section 148A notice must be issued within five years from the end of the relevant assessment year.


• Notices under Section 148, following the Section 148A notice, must be issued within five years and three months.


• These amendments will take effect from September 1, 2024, reducing the previous deadline for issuing notices. For example, the reassessment deadline for AY 2018-19, previously set for March 31, 2029, has now been shortened to June 30, 2024.

New Deadline for Reassessment Notices

For AY 2018-19, where the escaped income exceeds Rs 50 lakh, the deadline to issue reassessment notices or orders under Section 148A is August 31, 2024. After this date, assessments for AY 2018-19 will be time-barred, and no further notices can be issued.

Time to Respond: Taxpayer’s Opportunity to Present Their Case

Under Section 148A, before issuing a reassessment notice, the Income Tax Officer must give the taxpayer a chance to explain their case. This allows the taxpayer a minimum of 7 days and a maximum of 30 days to respond. If the tax department remains unsatisfied with the taxpayer's explanation, a formal notice under Section 148 will be issued, reopening the case for reassessment.

Responding to Reassessment Notices

If a reassessment notice is issued for AY 2018-19 before August 31, 2024, the reassessment proceedings must be concluded by December 31, 2025. This extended timeline provides taxpayers sufficient time to address the notice and complete the proceedings in compliance with the Income Tax regulations.

As the August 31 deadline looms, taxpayers are advised to be vigilant, ensuring that all necessary documentation is in order and that they respond promptly to any notices received.