If you want to gather knowledge about what is the assessment or reassessment notice of the Income Tax Act, then this guide is filled with all the answers to your questions.
According to Section 147 of the Income Tax Act 1961, the Income Tax Department can assess the income of an individual who has previously filed tax returns.
The Assessing Officer may choose your tax return for assessment reassessment. It will be on the basis of predefined guidelines by sending an email under section 148, a provision for the income-escaped assessment.
Notice of Assessment or Reassessment of Income Tax Act
Assessment of income tax is the method of reviewing and collecting the information that the assessors provide on their tax returns for income. At the close of each fiscal year, all individuals and organizations must file their income tax returns by self-calculating the amount of income earned and paying taxes due.
A reassessment is the periodic review of the property’s worth to determine tax benefits. Local and state governments calculate property taxes based on two factors that include property value and tax rates.
Local laws differ. However, reassessment generally occurs every five years or on the property transfer. Certain municipalities also conduct reassessments when they take part in refinancing.
What’s Section 147 of the Income Tax Act?
This Section serves the purpose of stopping any under-assessment of assessees’ earnings. It outlines the conditions under which an Assessing Officer may revise any Income Tax Return by delivering a notification to taxpayers under Section 148 of the Income Tax Act within a stipulated time frame.
In accordance with Section 147 of the Income Tax Act, 1961, the Income Tax Department has the authority to reassess an individual’s previously filed income tax returns. Your income tax return can be selected for reassessment if the Assessing Officer sends you a notice under section 148 regarding income escaping assessment under certain conditions.
However, it is important that the AO must obtain prior approval or consent of a superior authority before making any announcement. The period for issuing notices for reassessment procedures is either 4 or 6 years. It will be on the basis of the amount of income you escape.
The Scope for Assessment of Section 147 of the Income Tax Act
- If the assessee’s income exceeds the exemption threshold and the assessee doesn’t file an ITR
- If the assessee has submitted income tax returns, but the Income Tax Department has not conducted any assessments regarding the same
- If one has claimed exorbitant deductions, losses, or depreciation in calculating the total earnings
The Steps to Follow in Issuing a Notice Are by Section 148.
An individual may be served with an email following section 148(1) of the Income Tax Act 1961. It will be when the Assessing Official (AO) thinks that the income of an individual subject to tax may have evaded assessment.
The AO does not have the authority to request a re-investigation unless there is an argument or evidence. The AO will record his reasoning in writing. AO can’t issue an email to the assessee to reassess the same information he/she provided while filing tax returns.
Certain new facts or documents that clearly show that the income is not subject to assessment must be considered. This is to take action under sections 147 and 148.
- The AO may issue a notice under section 148 before the period of three years following the conclusion of the applicable Assessment Year (AY) in the case in question. However, the Principal Chief Commissioner /Chief Commissioner needs satisfaction with the reasons that the AO records. The case needs judgment as suitable for issuing a notice
- The Assessing Officer, who is above the Assistant or Deputy Commissioner rank, may issue an order. This is by the regulations of Section 151. This applies to the assessment conducted in the year of assessment that is important under Section 143(3) and Section 147. The assessment must have the joint commissioner’s approval. He must agree with the reason given to the AO. The reasons given are valid enough to warrant the issuance of the notices to the assessee
In any other case, an Assessing Officer is capable of issuing an assessment notice by Section 148, if:
- The four-year period that followed the completion of the pertinent examination has ended
- The position or rank is less than the rank of a Joint Commissioner
What is the procedure to carry out an assessment under Section 147 of the Income Tax Act?
Here are the steps to carry out the assessment process following Section 147 of the Income Tax Act, India:
- If the (Assessing officer) AO believes that some income is not being assessed, he/she sends notice to taxpayers concerning the possibility of reassessment
- Taxpayers are offered the chance to be heard and argue their arguments
- When the AO is not content with the explanation of the assessee, the AO can proceed with a reassessment of the income
- The Assessing Officer may calculate deductions, depreciation, or loss-related benefits mentioned in return in whatever circumstances dictate
It’s important to note that income earned under appeal or revision is not re-assessable in the section. It’ll only happen if a Normal Assessee
Responding to Notices by Section 148 of the Income Tax Act
The most important thing to remember is not to take this notice for granted. If you receive a notice as per section 148, you should follow these guidelines:
- First, look over the notice for any reasons that the officer documented and is responsible for giving the notice as per section 148. If the notice does not contain its reasons, you can ask the assessing officer. It will help you supply copies of the recorded reasons
- If you’re satisfied with the evidence you have that was taken into account by the assessor, make sure to submit the return as soon as possible. If the case has already been submitted, forward the return to the assessor
- Are you preparing the tax return for income in response to a notice pursuant to section 148 of the tax code? Be sure to ensure that when you submit it, follow the proper due diligence to declare all of your earnings and expenses carefully. If you fail to report the correct amount of income, it can result in an unneeded penalty
- Suppose you feel that notice wasn’t properly served or the reasons given by the assessing officer to justify the opening assessment under section147 aren’t valid. In that case, you may contest the validity of the notice in front of the assessing officer or other higher authorities
- If you prevail in your appeal In case you prevail, the Court will stop the assessment process. If the decision isn’t in your favor, the assessor could decide to reassess the case
Timing Limit to Issue Notice by Section 148 of the IT Act
The tax authorities must issue a reassessment notification within a specific time. The deadlines are in the following order:
- If the amount of income escaped in assessment amounts to less than ₹1 lakh, the period for issuance of notice is four years
- When the income being omitted from assessment exceeds more than ₹1 lakh, the period to allow AO to issue notices runs six years
- If the income escaped is linked to property located outside India, the time frame for issuance of notice is 16 years
Thus, it is possible that the IT Department can issue a notification under section 148 of the income tax act. In this notification, an income is exempt from calculation or re-computation.
The assessing officer must be able to prove that the person who is being assessed has evaded tax assessment. However, it must be in the relevant year of assessment. Click to – Income Tax Assessments
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