Procedure for conducting reassessment proceedings was changed from 01.04.2021 wherein a section 148A was inserted before section 148 of the Income tax act.
Section 148A deals with conducting inquiry, providing opportunity before issue of notice under section 148. Hence, it’s procedure to be followed before initiating reassessment proceedings and section 148A includes 4 sub clauses which are as under:
148A(a): It deals with conducting enquiry if required by AO wherein the AO needs to have prior approval from competent authority.
148A(b): It deals with issuing show cause notice to assessee and informing him about the information based on which the reassessment proceedings is being initiated and asking the assessing to show cause as to why reassessment proceedings should not be initiated. Assessee should be given a minimum 7 days to respond to such notice but such timeline cannot exceed 30 days. After 01.04.2022 no prior approval of competent authority is required by assessing officer.
148A(c): It deals with considering the response submitted by assessee against above show cause notice. In response to the show cause notice assessee can ask the officer to provide the information on which he has relied upon while preparing show cause notice.
148A(d): It deals with the assessing officer passing an order after considering the reply of assessee as to whether reassessment proceedings are to be initiated or not. Such order should be passed after prior approval of competent authority.
After passing the order under section 148A(d), assessing officer can issue notice u/s 148.
Please note that there is no timeline for issuing 148A notice however, it needs to be issued before issuing notice u/s 148 and there is timeline to issue 148 notice which is 3 years from the relevant assessment year if the income escaping assessment is less than Rs.50 lakh and 10 years from the end of relevant assessment year if the income escaping assessment is more than Rs.50 lakh.
Please note the currently under the Income tax act the notice u/s 148A is issued by local assessing officer and the proceedings after issuance of notice u/s 148 is conducted in faceless manner.
If one chooses not the respond to notice issued u/s 148A of the Act, assessing officer may choose to initiate 148 proceedings based on material available on record. Thus, it is advisable to always respond to notice issued under section 148A wherein there are chances that proceedings might be dropped at this level itself.
Before 01.04.2021 there was no such show cause being issued to assessee and reassessment proceedings were directly initiated. It was only after 01.04.2021 that assessee was provided the information beforehand based on which reassessment proceedings are going to be initiated so that he can disclose the same in his return of income filed against notice u/s 148 of the Act.
Further, in case of assessee where search and seizure has been conducted or where information in relation to such assessee was received in case of other person’s search and seizure and assessing officer is satisfied with the information received he is not required to initiate any proceedings u/s 148A of the Act and can directly initiate proceedings under section 148 of the act and conduct reassessment proceedings u/s 147 of the Act.
Many people must have received notice u/s 148A of the Act in relation to AY 2020-21 or earlier years for income escaping assessment and it is requested to kindly respond to all the notices otherwise it could result in initiation of penalty proceedings in case of assessee.
Guidance on above article for Indian Income Tax by:
Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments before Income Tax authority, Tax Audit, International Taxation, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo
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