Income-Tax Notice Under Section 148: Why You Got It and How to Respond (Post-2024 Rules)
- A section 148 notice reopens a year already closed; since Finance Act 2024 it must normally be preceded by a 148A show-cause, and the window is 3 years from the end of the assessment year, extended to 5 years only where escaped income is ₹50 lakh or more.
- The most common trigger is an AIS or SFT entry — property, cash deposits, share sales, foreign remittance — that does not match a return, or no return at all.
- Respond inside the 148A window with documents, not arguments; a well-answered show-cause often ends the matter before a 148 notice is issued.
A notice under section 148 means the assessing officer believes income chargeable to tax has escaped assessment for an earlier year and wants to reopen that year. It is the most serious routine notice an individual or small business receives, because it can reach back several years and because ignoring it leads to a best-judgement assessment with penalty. Since the Finance Act 2024 rewrote the reassessment scheme, the procedure is more structured and the time limits are shorter — which helps a taxpayer who responds properly and on time.
Why these notices are issued
Almost all 148 notices today originate from information rather than suspicion: the department's risk-management system flags a mismatch between what third parties reported and what you filed.
| Information source | Typical flag |
|---|---|
| SFT / AIS — property registrar | Purchase or sale of immovable property above ₹30 lakh not reflected in a return |
| SFT — banks | Cash deposits above ₹10 lakh in savings accounts, or above ₹50 lakh in current accounts, in a year |
| SFT — depositories and mutual funds | Share or fund sales with no capital gains reported |
| TDS / TCS statements | Income on which TDS was deducted but no return filed |
| GST data | Turnover in GSTR-3B far above receipts in the income-tax return |
| Foreign remittance (Form 15CA/CB, LRS) | Outward remittances inconsistent with declared income |
| Search or survey on a third party | Your name in seized material or the counterparty's books |
The procedure after Finance Act 2024
- Section 148A(1) show-cause notice. The officer must first tell you the information suggesting escaped income and give you an opportunity — not less than 7 days and up to 30 days — to explain why a notice should not be issued. This step is skipped only in search cases.
- Section 148A(3) order. After considering your reply, the officer passes an order deciding whether it is a fit case for reassessment, with prior approval of the specified authority.
- Section 148 notice. If the order goes against you, the notice asks you to furnish a return for that year within the stated period (usually 30 days). You must file the return even if you had filed one originally.
- Reassessment under section 147. Questionnaires, your replies, and a draft order; for most individuals this runs through the faceless assessment system. The final order must be passed within 12 months from the end of the quarter in which the 148 notice was served.
Time limits — the part that has changed
- Normal cases: no notice after 3 years from the end of the relevant assessment year. For AY 2023-24, that is 31 March 2027.
- Escaped income of ₹50 lakh or more (represented by an asset, expenditure or entry in the books): up to 5 years from the end of the assessment year, reduced from the earlier 10 years.
- The 148A show-cause itself must be issued within these limits; time taken by you to reply (up to the allowed period) is excluded when computing the deadline for the 148 notice.
- A notice issued beyond these limits, or without the 148A step where it was required, is without jurisdiction — but you must raise the objection in your reply, not merely ignore the notice.
How to respond — step by step
- Read the information annexed to the 148A notice. It states the exact transaction or entry. Identify the year, the amount and the source.
- Check jurisdiction and timing: is the notice within 3 or 5 years; is the escaped income genuinely ₹50 lakh or more if the 5-year window is invoked; is the approval of the specified authority mentioned.
- Reconcile the transaction to your records. A property purchase funded from a disclosed loan, or share sales already reported as capital gains under a different PAN of a joint holder, closes most cases.
- Reply on the portal within the deadline (e-Proceedings → the 148A notice). Attach bank statements, sale deeds, broker statements, the original return and computation, and a short covering explanation. Ask for an adjournment in writing if you need more time; silence is treated as no explanation.
- If a 148 notice follows, file the return for that year within the time allowed — the same income if you stand by it, or revised figures if the information was correct — and request the reasons recorded if not already furnished.
- Engage professionally from the 148A stage. A reassessment can add tax, interest under 234A/B/C from the original due date, and penalty under 270A of 50% (under-reporting) or 200% (mis-reporting). Decode what the notice is really pointing at using the Notice Decoder, then get the reply drafted with the documents attached in the order the officer will read them.
Common mistakes
- Not replying to the 148A show-cause because "it is only a preliminary notice". It is your best chance to stop the reassessment; most that end early end here.
- Replying with arguments instead of documents. The officer wants the bank trail, the deed, the broker statement — not a paragraph saying the transaction is explained.
- Not filing the return in response to 148 on the ground that the original was filed. The requirement is separate; non-compliance triggers best-judgement assessment under 144.
- Missing the limitation objection. If the notice is time-barred, say so in the first reply and keep it in every later submission.
- Ignoring the ₹50 lakh threshold. Officers sometimes aggregate several years or unrelated items to cross it; challenge the computation if it does not hold year by year.
- Letting the 234A clock run. If some income really was missed, pay the tax with the response — interest stops and the penalty position improves.
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Open Notice Decoder →Frequently asked questions
What is the difference between a 148A notice and a 148 notice?
Section 148A is the show-cause stage: the officer shares the information suggesting escaped income and asks why a reassessment should not be opened. Section 148 is the actual reopening notice that requires you to file a return for that year. Since Finance Act 2024 the 148A step is mandatory except in search cases.
How many years back can a section 148 notice go?
Normally 3 years from the end of the relevant assessment year. If the income alleged to have escaped is ₹50 lakh or more and is represented by an asset, expenditure or book entry, the limit is 5 years. The earlier 10-year window no longer applies to notices issued after 1 September 2024.
I filed my return for that year. Do I have to file again in response to 148?
Yes. A return in response to a section 148 notice is a separate statutory requirement even if you had filed the original on time. You may file the same figures if you stand by them. Not filing invites a best-judgement assessment under section 144.
What penalty applies if the reassessment adds income?
Besides tax and interest under sections 234A, 234B and 234C computed from the original due date, penalty under section 270A is 50% of the tax on under-reported income, rising to 200% where it is treated as mis-reporting (such as suppression of facts or false entries). Paying the tax and interest with a reasoned explanation at the 148A stage improves the penalty position.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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