The Income-tax Act sets distinct deadlines for Summary Assessment, Scrutiny Assessment, Best Judgment Assessment, and Income Escaping Assessment. If an assessment isn’t finalized within the specified timeframe, it becomes time-barred. Let’s explore the time limit for issuing a notice under Section 148 of the Act after recent changes in Budget 23 July 2024.
The time limitation for issuance of Income Tax notice under section 148A and section 148 of the Act provided in amended section 149 of the Act as follows:
i)General Cases: No notice shall be issued for any period:
ii)Specific Cases: the income escaping assessment amounts to or is likely to amount to fifty lakh rupees or more, no notice shall be issued for any period:
This have been a radical and beneficial changes in connection to the time lines for issuance of notice under section 148A and section 148 of the Act. This is a beneficial provision via-a-vis the changes made vide Finance Act, 2021, which allowed the revenue to travel upto the period of ten assessment year in specific cases.
With effect from 01.09.2024, search cases are taken out of the preview of Section 148 and a new chapter has been inserted, i.e., Chapter – XIV-B “Special Procedures for Assessment of Search Cases”
If Assessing Officer has information suggesting that any income chargeable to tax has escaped assessment for any assessment year, he may assess/reassess such income. To re-open the assessment, the Assessing Officer has to issue a notice within the following time limit:
| Particulars | Time Limit |
|---|---|
| In General | No notice shall be issued if 3 years have elapsed from the end of the relevant assessment year. |
Where the Assessing Officer has in his possession books of accounts, other documents, or evidence which reveals that the income escaping assessment, represented in the form of following, amounts to or is likely to amount to Rs. 50 lakhs or more:
|
Notice can be issued beyond a period of 3 years but not beyond the period of 10 years from the end of the relevant assessment year. |
In case of search or requisition (For search conducted before 01.09.2024)
Where search or requisition is initiated or made on or after 01-04-2021, the assessment or reassessment or re-computation shall be made under the new provision of Section 147 to 151. Accordingly, the notice shall be issued within the aforesaid time limitation.
However, the time-limit for issuance of notice shall be extended by 15 days if the following conditions are satisfied:
If the above conditions are satisfied, the notice so issued under Section 148 within the extended limitation period of 15 days shall be deemed to have been issued on 31st March of such financial year. The 15 days extension in issuing Section 148 notice shall also be available where information received by the AO emanates from a statement recorded or documents impounded under summons or survey, as the case may be, on or before 31st March of the financial year in consequence of a search initiated, the last warrant executed, or requisition made after 15th March of that financial year.
Where a search or requisition was initiated or made on or before 31-03-2021, the assessment or reassessment or re-computation shall be continued as per the existing provision of Section 153A, 153B, 153C and 153D, and the aforesaid time limitation shall not apply to such cases.
When calculating the limitation period for issuing a notice under the new Section 148, the time or any extended time granted to the assessee for an opportunity of being heard, as well as any period during which proceedings prior to issuing the notice under Section 148 are stayed by a court order or injunction, should be excluded by CA Services in Delhi. If, after excluding such periods, the Assessing Officer has 7 days or fewer remaining to pass an order regarding the suitability of issuing a notice under Section 148, the remaining time will be extended to 7 days.
A notice for re-assessment may be issued at any time to give effect to any finding or direction contained in an order passed by any authority during an appeal, reference, revision, or by a Court. In such instances, the Assessing Officer is allowed to issue a notice even beyond the usual time limits. However, this can only occur if the CBDT acknowledges the case and the information is included in the RMS of all relevant assessees who are to receive a notice under Section 148. Additionally, the Assessing Officer must adhere to the procedures outlined in Section 148A before issuing a notice under Section 150, in conjunction with Section 148.
A notice under Section 148 can be issued after 3 years but before 5 years/10 years if the income escaping assessment is reflected in the form of an asset or expenditure, even if it spans multiple years, and the total escaped income across all these years is Rs. 50 lakhs or more. In such cases, the Assessing Officer has the authority to issue a notice under Section 148 for all those years. It is no longer required that the escaped income of Rs. 50 lakhs must be within a single year. What matters is that the total escaped income amounts to Rs. 50 lakhs or more, allowing the issuance of a notice under Section 148 for all applicable years.
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