How to Respond to Section 148 Notice issued Under Income Tax Act.

How to Respond to Section 148 Notice under Income Tax 

Before making a re-assessment u/s 147, notice has to be issued u/s 148 requiring an assessee to file the return of income.

Consequently the primary issues in regard to a reassessment are

a) Formation of reason to believe by the assessing officer

b) Recording of those reasons by the assessing officer

c) Issue of notice under section 148 by the assessing officer

d) Completion of assessment under section 147 read with section 143 (3)

As far as the formation of belief by the assessing officer the issue of whether the reopening is valid or not will depend on a Plethora of facts. These are predominantly legal issues and will have to be dealt with differently in different situations.

The issue of a notice under section 148 of the Income-tax Act,  (‘the Act’) calling upon the Taxpayer to file a return of income for the year specified in the notice  is the starting point of the Re-assessment (Re-audit) proceedings.

A Re-assessment proceeding – also referred as “re-opening” of the assessment – is initiated by the “assessing officer” when he has “reasons to believe” that income of a Taxpayer has “escaped” assessment for any year.

A notice can be issued even if a Return has already been filed for the year and the same has also been scrutinized/audited. However, the notice has to be in accordance with the parameters laid down under the law –within the prescribed time-limit and supported by ‘valid reasons’.

A Taxpayer who feels aggrieved by the issuance of a notice and believes that the proceedings are unwarranted has a right to object to the same by challenging the issue of Notice.

Recording of the reasons for the issuance of the notice and a Tax payer’s right to know what those reasons are, is an important part of the procedural law relating to re-assessments.

There is some difference in the practice followed in this respect – while some officers would supply a copy of the reasons along with the Notice, others would not.

Whether or not the reasons have been communicated, the Taxpayer always has the right to obtain a copy of the reasons recorded in the files and object to the issue of Notice if no reasons have been recorded or if he can demonstrate that Notice is not based on ‘valid reasons’.

The procedural aspect of the law to be followed by a Taxpayer objecting to a notice issued under section 148 in his case – in essence, objecting the initiation of a Re-assessment / audit, has been laid down by the Honorable Supreme Court in judicial rulings.

The typical list of next steps to be followed is set out below.

  1.  At the first instance, the Taxpayer has to comply with the Notice and file a Return of Income. Avoid the tendency to make the most common mistake in responding to a 148 notice.
  2. After having filed the Return of Income, the Taxpayer can ask for a copy of the reasons recorded for issuing the notice and place on record his objections for initiating the proceeding. There is no prescribed format for filing of the objections – a brief guide on the essential points to cover in the communication challenging the notice can be found on above link.
  3. The assessing officer has to supply the reasons for the re-opening within a reasonable time of the request being made by the Taxpayer. What is “reasonable time” – the Honourable Gujarat High Court has spelled out an indicative time-frame in this regard.
  4. After receiving a copy of the reasons recorded, the Taxpayer can supplement his objections filed earlier with specific reference to the reasons recorded to show why the reasons do not support a valid inference of escapement of income.
  5. Assessing Officer has to pass an order disposing of the objections raised by the Taxpayer -and only then can he proceed further with the assessment/audit

The Taxpayer has the following two choices for pursuingthe furtherchallenge to the notice:

a)He can file a writ petition before the jurisdictional High Court challenging the order of the assessing officer.

b)He can participate in the proceedings and continue to agitate the ground relating to the jurisdiction in further appeals.

As to which of the above two actions would be better suited would depend to a large degree on a qualitative evaluation of each case.

Reopening should be challenged.

if feasible the reopening should be challenged. The manner of challenge would really depend on facts and therefore no hard and fast principles can be laid down. However, by and large, the following should be borne in mind.

i) If consistently over a period of time a particular factual position has been accepted by the department in orders under section 143 (3), it cannot be departed from unless new facts come to light.

ii) A mere suspicion is not sufficient to reopen an assessment.

iii) The opinion of any other person cannot be a substitute for a reason to believe. For e.g objection of audit party.

iv) No reopening can be made on the basis of a mere change of opinion.

v) Even if reassessment is made the reopening should be challenged in appeal proceedings particularly if the original order is an order under section 143(3).


As some useful tips to participants, I am enlisting certain precautions that one should take to ensure that the clients’ interest is well protected.

(1) All returns, reports, and documents should be thoroughly scanned before they are submitted to ensure that there is no contradiction between them.

(2) Notices and communications from the department should be promptly replied to even if some of the submissions are repetitive, it is necessary to reproduce the submission made on an earlier occasion if the prior submission is not before the person reading the second communication.

(3) If an Assessing Officer or other assessing authority is not present or available on the appointed day, record should be maintained in the file of the Chartered Accountant noting this fact.

(4) If it is felt that the assessing authority is of an adversarial attitude all oral submissions should be reproduced in writing. All submissions relating to facts, undertakings, and declarations should be signed only by an assessee unless otherwise specifically required to be signed by the representative. Alternative pleas and claims to be made promptly.

(5) If a particular addition is agreed to buy peace that fact should be explicitly brought out in the submission.

(6) Even if all the requirements of the department’s notice cannot be complied with, the assessee must try to comply with a majority of them.

(7) If there is any delay or infringement then the default should be explained, both on merits and on technical grounds.


Specimen of letter to AO
Respected Madam / Sir,
We are in receipt of the above quoted notice dated ……… received on ……….. In connection with the aforesaid subject matter we would like to state that—
We has filed the return of income for the Assessment Year ………. on ………. Vide acknowledgement number …………….   The Original return filed on …………. should be considered as return Us 148.
We request your good self to kindly provide us the reasons recorded for re-opening the assessment which would enable us to file proper objection/ details in this respect.
Thanking You
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