Insights · Regulatory Defence
Section 148A Notice: How to Reply Before Your Assessment Is Reopened
A section 148A notice is the show cause stage before reassessment. What to check, how to reply, and how the time limits work.
A notice under section 148A of the Income-tax Act, 1961 is a show cause notice, not a reassessment. The Assessing Officer shares information suggesting that income has escaped assessment and asks why a reassessment notice under section 148 should not be issued. A good reply can end the matter here.
First steps
- Note the assessment year, the date of the notice and the date by which you must reply
- Read the information attached to the notice: it must be supplied with the notice
- Check the time limit for that year before anything else
- Match the information against your return, AIS, bank statements and books
- Reply on the e-filing portal by the date, or ask for more time before the date
How the process works
The procedure in force for notices issued from 1 September 2024 has four steps.
- Show cause. Under section 148A(1) the officer serves the notice with the information relied on.
- Your reply. Under section 148A(2) you may reply within the period stated in the notice.
- The order. Under section 148A(3) the officer considers the reply and passes an order, with the prior approval of the specified authority under section 151, on whether it is a fit case for a section 148 notice.
- Reassessment. Only if the order goes against you does a section 148 notice follow, requiring a return for that year. The reassessment order is then due within 12 months from the end of the financial year in which that notice was served.
Section 148A(4) disapplies this procedure where the information was received under a scheme notified under section 135A.
Check the time limit first
A notice issued after the limit is invalid whatever its merits, so this is the first thing to work out. The limits run from the end of the assessment year.
| Case | Show cause under section 148A | Notice under section 148 |
|---|---|---|
| General | 3 years | 3 years and 3 months |
| Officer has material showing escaped income of Rs 50 lakh or more | 5 years | 5 years and 3 months |
For example, assessment year 2023-24 ended on 31 March 2024, so the general limit for the show cause notice is 31 March 2027 and for the section 148 notice 30 June 2027. Where a notice for an older year claims the Rs 50 lakh limit, ask what material supports that figure. The limits above come from section 149 as substituted from 1 September 2024; notices issued earlier need checking against the law at that date.
What usually triggers the notice
- High-value bank deposits, property purchases or share transactions reported by third parties and missing from the return
- Income shown in the AIS or Form 26AS but not in the return, or no return filed for the year
- Information passed on from a search or survey of someone else, such as a supplier or a broker
- Foreign assets or income reported through exchange-of-information channels
How to structure the reply
- Preliminary points. Time limit, jurisdiction, and whether the information was actually supplied. If it was incomplete, say so and ask for the rest.
- The information, item by item. Take each transaction the notice lists and state what it was, whether it was in the return, and where it appears in the books.
- Evidence. Bank statements, purchase deeds, contract notes, confirmations and the return as filed, indexed and referred to by page.
- Why income has not escaped. Already taxed, not income, exempt, belongs to someone else, or wrongly reported by the third party.
- Request. That the case be held not fit for a section 148 notice, and for a hearing if an adverse view is proposed.
Keep the reply factual. What you say here will be read in the reassessment and on appeal, so an admission or a loose explanation now is hard to undo later.
If the order goes against you
You will then receive a section 148 notice and must file a return for the year within the period stated, normally without prejudice to your objections. The objections go forward into the reassessment and the appeal to the Commissioner (Appeals). A notice issued without jurisdiction, after the time limit or without the required approval can also be challenged by a writ petition in the High Court, which an advocate files. Penalty for under-reporting may follow an addition, at 50% of the tax, or 200% for misreporting.
Which law applies
Years before tax year 2026-27 stay under the 1961 Act, under the saving provision in section 536 of the Income-tax Act, 2025, so most notices you receive today will cite section 148A. From tax year 2026-27 the equivalents are sections 281 and 280, with longer limits of 4 and 6 years in section 282.
The other notices are set out in income tax and GST notices explained. Our income tax litigation practice prepares section 148A replies and carries the matter through reassessment and appeal.