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  • Section 148

    Section 148 of the Income Tax Act deals with the issuance of a notice wherein any income has escaped recomputation or assessment. This section states that an Assessing Officer will intimate the assessee in question by serving him or her a notice wherein he or she will be required to provide the following:

    • His or her income returns
    • The income returns of a person other than the assessee in question, who is deemed to be assessable as per the provisions of this Act during the year prior to the assessment year of relevance.

    The assessee will be required to provide his or her income returns either within a 30 day notice period of a within a duration that has been explicitly specified in the notice given by the Assessing Officer. In case of the assessee providing income returns of any other assessable person, he or she will be required to provide the income returns of in the form and manner that has been prescribed and verified as per the provisions of the Act, while also providing any other relevant particulars that may be required to be furnished. Prior to the issuance of any notification to the assessee in question, the Assessing Officer will make his reasons known for the issuance.

    Power of the Assessing Officer Under Section 148:

    Section 148 grants an Assessing Officer the power to either assess or re-assess any taxable income that may have gone under the radar, and has not been assessed as per the stipulated guidelines of the Income Tax Act. If the Assessing Officer has any reason to suspect that the taxable income of an assessee may have avoided assessment, then the Assessing Officer can exercise the right to carry out his or her powers of income assessment or re-assessment as per the provisions laid out under Section 147 through to Section 153.

    Reasons For Issuance of Notice To An Assessee By An Assessing Officer Under Section 148:

    • Prior to the issuance of a notice to an assessee based on the provisions under Section 148, an Assessing Officer should possess concrete evidence that the assessee in question has evaded assessment of income for the relevant assessment year. In other words, the Assessing Officer cannot issue a notice to an assessee based on mere suspicion.
    • A solid link must be present linking the information or material that has been presented to the Assessing Officer with the reason to believe that the assessee has escaped income assessment over the duration of an assessment year.
    • The information or data provided to the Assessing Officer must be of utmost relevance to the case, and must not possess any superficial facts or figures.
    • Prior to the issuance of any notice to an assessee under Section 148, the Assessing Officer will be compulsorily required to record and provide reasons in written form stating why he or she is of the belief that the assessee is escaping assessment of income.
    • Simply stating that the assessee has concealed a large amount of income or that the assessee is to be investigated in further detail, with no material or information to back up these claims, will not be considered to be a definite reason to issue a notice to the assessee under Section 148. Such reasons will be termed to be ambiguous and vague.
    • Unless new and relevant information or material is presented to the Assessing Officer, he or she cannot issue a notice to an assessee merely based on a difference in perspective or opinion. The Assessing Officer will have no reason to believe or suspect an assessee, if the assessee in question has provided disclosure regarding all relevant particulars in relation to his or her taxable income, as well as disclosed and provided factual information and data, which has led to the completion of his or her assessment or re-assessment.
    • The Assessing Officer cannot issue a notice to an assessee simply by reaching a new conclusion based on documents and factual information that has already been provided by the assessee over the duration of the assessment. An issuance of notice can only take place if new information or material has been presented to the Assessing Officer.
    • However, if any information or particulars have either been concealed or not been disclosed by the assessee in question, and such an action has come to the notice of the Assessing Officer at a later time, then the Assessing Officer will have complete authority to issue a notice to the offending assessee under Section 147/148

    Persons Who Are Authorised To Issue Notice Under Section 148:

    As per the provisions laid out under Section 148, only the following persons are authorised to issue notices to assessees who have escaped assessment or re-assessment of taxable income under the following conditions:

    • No Assessing Officer who is currently ranked below the position of an Assistant Commissioner or Deputy Commissioner will be permitted to issue a notice to an assessee under Section 148. This is in line with the provisions of Section 151(1), regarding any assessment that has been carried out for the assessment year of relevance under sub-section (3) of either Section 143 or Section 147. This can only be circumvented by the Joint Commissioner, provided he or she is content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to an assessee.
    • No issuance of notice to an assessee can take place following the expiration of a four year period from the conclusion of the assessment year in question. This can once again only be circumvented by the Chief Commissioner of Commissioner, provided her or she is content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to an assessee.
    • For any cases that are not covered under Section 151, sub-section (1), an Assessing Officer will be able to issue a notice to an assessee as per Section 148 if:
      • His or her rank or position is below that of a Joint Commissioner
      • The four year period following the conclusion of the assessment year of relevance has expired

    Once again this can once again only be circumvented by the Joint Commissioner, provided her or she is content that the reasons given by the Assessing Officer are valid enough for the issuance of any notice to an assessee.

    Time Frame Provided For The Issuance Of Notice To An Assessee Under Section 148:

    As per the provisions laid out in Section 149, notices issued under Section 148 can take place over the following time frames:

    • The notice can be issued by the Assessing Officer before the end or expiration of a four year period from the conclusion of the assessment year of relevance, provided the taxable income that has evaded assessment is not more than Rs 1 lakh
    • In the event the taxable income that has evaded assessment is more than Rs 1 lakh, a notice can be issued by the Assessing Officer within a time frame of six years from the conclusion of the assessment year of relevance. The issuance of this notice will take place in lieu of the provisions outlined under Section 151
    • However, the provisions laid out under Section 147 state that is an assessment or re-assessment has been carried out and concluded under Section 143(3), then an Assessing Officer will not be authorised to issue any notices to an assessee under Section 147, following the expiration of the four year period from the conclusion of the assessment year of relevance. The Assessing Officer can only issue a notice if any taxable income has been proven to have evaded assessment for the relevant year for the following reasons:
      • The assessee has failed to furnish his or her returns under Section 139
      • The assessee has failed to furnish his or her returns following the issuance of a notice under Section 142, sub-section (1) of under Section 148
      • The assessee has failed to provide full and complete disclosure with regards to any information, factual data or particulars that are required for the completion of the assessment for that relevant year.

    Duties and Rights Of The Assessee Following The Receipt Of Notice Under Section 148:

    Should an assessee be issued a notice by an Assessing Officer for the evasion of taxable income assessment then the assessee is duty bound to carry out the following:

    • The assessee will be required to file his or her tax returns for the escaped income for the assessment year of relevance
    • Following the filing of returns, the assessee can request for a copy, which states the reasons for the Assessing Officer to issue a notice to him or her under Section 148
    • Should the assessee find the reasons contained in the copy to be unsatisfactory or baseless, then the assessee has the right to file an objection challenging the issuance of such a notice
    • The assessee should also provide valid reasons for filing an objection and for challenging the lawfulness of the issuance of the notice under Section 148
    • The assessee also has the right to request the Assessing Officer to provide separate reasons should he or she dismiss the assessee’s claims
    • The assessee can also file a writ petition with the relevant High Court, wherein the legal traits and lawfulness of the notice issued under Section 148 can be challenged even prior to the conclusion or completion of the assessment or re-assessment.
    • The assessee can still file a writ petition with the relevant High Court, wherein the legal traits and lawfulness of the notice issued under Section 148 can be challenged even after the assessment has been completed and the matter is under appeal.
    • The assessee will be required to provide proof that he or she has
      • Requested for a copy of the reasons stated by the Assessing Officer for the issuance of notice under Section 148
      • Filed an objection to the reasons stated by the Assessing Officer
      • Requested the Assessing Officer to provide reasons for the dismissal of the assessee’s objections
      • Challenged the lawfulness of the issuance of the notice.
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