Understand Section 148A of the Income Tax Act

A new section 148A under the Income Tax Act has been introduced by the government of India in Budget 2021, which requires tax authorities to follow the specific procedure before issuing any notice under section 148 for initiating reassessment. In this article, we are going to understand the provisions of section 148A of the Income Tax Act in detail.  

So, without further ado, let’s start. Happy reading :) 

Section 148A of the Income Tax Act 

If the assessing officer has the information which suggests that the taxpayer has escaped income that is chargeable to tax in any assessment year, then before issuing notice as per section 148 for initiating reassessment under section 147, he needs to follow the specific procedure laid down in section 148A of the Income Tax Act, with effect from 1at April 201. 

Please note that if any notice is issued to the assessee under section 148 afterward 1st April 2021, without following the procedure explained above (as laid in section 148A) then the notice issued would be void-ab-initio.   

As per section 148A, the assessing officer before issuing any notice under section 148, shall have to adhere to the following:- 

• If required, the assessing officer has to conduct any inquiry related to information with the prior approval of a higher authority.  
   

• The assessing officer must provide a reasonable opportunity of being heard to the assessee, with the prior approval of higher authority, by serving a show-cause notice to the assessee to reply as to why notice under section 148 should not be issued to him for reassessment or assessment. 

Please note the assessing officer has to give a time period of not less than 7 days but not more than 30 days to the assessee for giving his response against the show cause notice issued to him as mentioned above. Further, an assessee can submit an application to the assessing officer requesting him an extension.  

• The assessing officer after reviewing the assessee's response as well as the material available on record shall pass an order under section 148A that whether the case is fit to reopen or not by issuing an issue notice under section 148.  

Please note the aforesaid order under section 148A shall be passed within 1 month from the end of the month.  

• In which reply of show cause notice is received by the assessing officer, or 

• In which time or extended time to file reply expired (in case the assessee has not replied).   

Also, it is stated in section 148A that an appeal to CIT(A) and ITAT is not possible against an order passed under section 148A. The assessee has only option to file a writ petition to High Court if the principle of natural justice is not complied with by the assessing officer.  

Section 148 shall not be applicable in the following cases:- 

• A search is initiated under section 132 or books of accounts or any other documents are requisitioned under section 132A.  

• The assessing officer is satisfied with the prior approval of the PCIT/CIT, that any assets or books of accounts or any documents seized or requisitioned in case of any other person, actually belong to or pertain to the assessee.  

In the above cases, the assessing officer has the power to issue a notice under section 148 without following the procedure laid under section 148A. 

We hope you now get a clear understanding of section 148A of the Income Tax Act. To know more about assessment or reassessment read our article here (please link to the respective article).  

To get any further assistance please feel free to reach out to our team of experts.