Section 148 / 148A reassessment, what to do in the first 7 days.

Finance Act 2021 restructured reassessment under Sections 147-153. The current framework:

Step 1 - Information with the AO: AO must have information (from risk-based selection, SFT, foreign tax authority exchange, search operations, or specified sources) suggesting income has escaped assessment.

Step 2 - Section 148A(a) Enquiry: AO may conduct enquiry regarding the information (not mandatory in all cases).

Step 3 - Section 148A(b) Show-cause Notice: AO issues show-cause notice to the taxpayer with the information + proposed grounds for reopening. Taxpayer gets opportunity to respond.

Step 4 - Section 148A(d) Order: AO passes order deciding whether to issue Section 148 notice. Order considers taxpayer's response. If AO proceeds, formal Section 148 notice is issued.

Step 5 - Section 148 Formal Notice: taxpayer must file return within time specified in notice (typically 30 days).

Step 6 - Assessment under Section 147: regular reassessment proceedings follow (akin to Section 143(3) scrutiny).

Standard limit: 4 years from the end of the relevant AY. Example: for AY 2021-22, standard reopening possible until 31 March 2026.

Extended limit: 10 years — applies only where:

• AO has evidence (books, documents, bank entries) suggesting income escaping assessment is INR 50 lakh or more.
• Income escaping is represented in the form of an ASSET (immovable property, financial asset like shares/MF, bullion, jewellery, foreign asset, etc.).

Example: AO finds the taxpayer owns a USD 1M US property not disclosed on prior ITRs. Since escaped income is embodied in asset form and value > INR 50 lakh, 10-year window applies — AY 2016-17 can still be reopened in AY 2026-27.

Section 148A(b) show-cause gives you an opportunity to argue BEFORE formal Section 148 notice. If you successfully convince the AO that no income has escaped assessment, no Section 148 is issued. If you don't respond or respond weakly, Section 148 follows and you move into full reassessment.

Response window: typically 7-30 days as specified in the show-cause notice.

Response strategy:

• Request the complete 'information' the AO relied on (RTI if needed) — often third-party reports have classification errors.
• If the information is wrong (e.g., SFT misreported, same transaction counted twice, PAN mismatch), submit documentary refutation.
• If the information is correct but income was actually declared (just under a different head), produce the ITR extract showing it.
• If the income exists but is below taxable threshold or exempt (gift from relative under 56(2)(x), inheritance, capital gain reinvested under Section 54), produce supporting docs.
• If limitation period has expired or 10-year carve-out doesn't apply (because escaped income not asset-form or below INR 50L), argue jurisdictional point.

Many 148A notices are quashed at this stage with properly drafted response.

If AO's Section 148A(d) order proceeds and Section 148 formal notice follows:

1. File return within time specified (typically 30 days). You can file the same return or revise it based on your position.
2. Reassessment under Section 147: AO proceeds like a Section 143(3) scrutiny — document calls, personal hearing (physical or faceless), additions proposed, order under Section 147.
3. Time limit for completion: 12 months from end of FY in which Section 148 notice was served. Extended for complex cases.
4. Appeal: Section 147 order appealable to CIT(A) within 30 days.

Penalty under Section 270A: if additional income is confirmed, 50% penalty (under-reporting) or 200% penalty (misreporting) applies.

Last updated: 2026-10-12.