Issuance of Reassessment Notices u/s 148 of Income Tax Act: CBDT issues Guidelines [Read Notification]

The Central Board of Direct Taxes ( CBDT ) under the Ministry of Finance has issued new guidelines for issuing notices under Section 148 of the Income Tax Act, 1961.

These guidelines lay down the process for reassessing income that may have escaped initial assessment.

The Assessing Officer (AO) can only issue a notice under Section 148 if they have credible information suggesting income escaped assessment in a particular year. This information can come from various sources, including risk management strategies, audit objections, information exchange agreements, whistleblower schemes, or court orders.

For cases beyond three years from the relevant assessment year, a specified authority (depending on the timeframe) needs to grant approval before issuing the notice. This ensures proper scrutiny and prevents frivolous reassessments.

The guidelines also gives the Guidelines for Enclosures to be attached with the notice, along with a format of the notice to be issued under Section 148 of the Income Tax Act.

The AO should enclose a copy of all the relevant information (as per definition in Explanation 1 and Explanation 2 of Section 148) available on which reliance is being placed, along with supporting documents (if any).

In the cases where information is received from the Investigation Wing or any other law enforcement agency, details of letter, brief summary of information along with relevant portion of such report and details of relied upon documents may be enclosed. Such a portion as does not bear reference to the assessee concerned may be appropriately redacted.

Details of enquiry conducted, if any, may be shared if reliance is being placed by the AO on it.

Name and designation of the AO should be mandatorily mentioned in the notices to be sent to the assessee along with Judicial order (i.e. case laws) on which reliance is being placed, if any.

Before issuing a final reassessment notice, the AO must provide the assessee with a show cause notice (under Section 148A) explaining the reasons for reassessment and an opportunity to respond.

The guidelines clarify the time limits for issuing reassessment notices. Generally, the AO has three years from the end of the relevant assessment year to issue a notice. However, this can be extended to ten years if the escaped income exceeds Rs. 50 lakh.

The new guidelines ensure that reassessment notices are issued based on credible information and due process is followed. This will protect taxpayers from arbitrary reassessments.

The emphasis on a Rs. 50 lakh threshold for reassessment beyond three years ensures that the department focuses only on cases with significant tax implications.

To Read the full text of the Notification CLICK HERE

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