Section 148A — Income-tax Act, 1961

Section 148A of the Income-tax Act, 1961, was introduced to provide a framework for conducting inquiries before issuing a notice under Section 148 for reassessment of income. This section mandates that the Assessing Officer must conduct an inquiry, if required, and provide an opportunity to the assessee to explain why a notice should not be issued. The officer must consider the assessee's response before deciding to proceed with the reassessment. This procedural safeguard aims to ensure that reassessment notices are not issued arbitrarily and that taxpayers have a chance to present their case before any formal proceedings begin. The introduction of Section 148A is significant as it strengthens the taxpayer's rights and ensures transparency and fairness in the reassessment process. The burden of proof initially lies with the Assessing Officer to justify the need for reassessment, making this section a critical component in protecting taxpayers from unwarranted tax demands.

Common Litigation Flashpoints

1. Failure to provide adequate opportunity for the assessee to respond
2. Assessing Officer's non-compliance with procedural requirements
3. Disputes over the sufficiency of inquiry conducted
4. Challenges to the validity of reasons recorded for reassessment

Judgments on Section 148A — Income-tax Act, 1961

• M/s Dilsa Distributers Combines vs ITO-11(1)(1) — ITAT, 2013
  The statement of a third party cannot be used against the assessee without providing an opportunity for cross-examination.
• Voltas Limited vs Assistant Commissioner of Income Tax Circle -8(3) (1), Mumbai — HC, 2022
  Reopening of assessment based solely on a change of opinion is impermissible under the Income Tax Act.
• DCIT (Central Circle-1) vs Shree Ganesh Edibles Pvt. Ltd. — ITAT,
  Once the assessee furnishes identity, creditworthiness, and genuineness of the lender, the onus shifts to the AO to prove otherwise.
• Arya Roadways Company Pvt. Ltd. vs I.T.O., Ward-12(1), Kolkata — ITAT,
  The case was remanded to ensure a fair opportunity for the assessee to substantiate its claims regarding the expenditure.
• Union of India & Ors. vs Rajeev Bansal — SC,
  Reassessment notices issued under the old regime are deemed valid under the new regime due to the application of TOLA and judicial directions.
• Manisha Agarwal vs Income Tax Officer, Ward 59(1), Delhi & Ors. — HC,
  A reassessment notice issued beyond the surviving time limit under the Income Tax Act read with TOLA is time-barred.
• Hexaware Technologies Limited vs Assistant Commissioner of Income Tax — HC,
  Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provisions.
• Chhugamal Rajpal vs S. P. Chaliha & Ors. — SC,
  A notice under Section 148 cannot be issued without the Income-tax Officer having prima facie grounds and the Commissioner's satisfaction based on recorded reasons.
• Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. — HC,
  Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
• T.K.S. Builders Pvt. Ltd. vs Income Tax Officer Ward 25(3) New Delhi — HC,
  Notices under Section 148 must be issued through automated allocation and in a faceless manner as per the Faceless Assessment Scheme.
• Nuclear Power Corporation of India Ltd. vs Deputy Commissioner of Income-tax — HC,
  Reopening of assessment based on a change of opinion without new tangible material is not justified.
• Twylight Infrastructure Pvt Ltd vs Income Tax Officer Ward 25 3 Delhi and Ors. — HC,
  Approval from the specified authority is mandatory for issuing reassessment notices under Section 148.
• Union of India & Ors. vs Rajeev Bansal — SC,
  Reassessment notices issued after 1 April 2021 should be treated as issued under the new regime, with TOLA extending the time limits for compliance.
• Principal Commissioner of Income Tax, Central-3 vs Abhisar Buildwell P. Ltd. — SC,
  In the absence of incriminating material, the AO cannot assess or reassess completed/unabated assessments under Section 153A.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Chhugamal Rajpal vs S. P. Chaliha & Ors. — SC,
  The Income-tax Officer must have prima facie grounds and record reasons before issuing a notice under Section 148, and the Commissioner must apply his mind before granting sanction.
• Anand Education Society vs Asstt. Director of Income Tax(E) — ITAT,
  The AO must substantiate claims of excessive payments to relatives with evidence of unreasonableness compared to market standards.
• Ananta Landmark Pvt. Ltd. vs Deputy Commissioner of Income Tax — HC,
  Reopening of assessment after four years requires both conditions of income escaping assessment and failure to disclose material facts to be satisfied.
• Bhagwati Ferro Metal Pvt. Ltd. vs Assistant Commissioner of Income Tax — HC,
  A notice under Section 148 must be issued by the Faceless Assessing Officer, and failure to do so is a fatal defect.
• Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr — HC,
  The government cannot extend the applicability of statutory provisions through notifications without explicit legislative authority.
• Manju Somani vs Income Tax Officer Ward-70(1) & Ors. — HC,
  A reassessment notice issued post-01 April 2021 must comply with the time limits prescribed by the pre-amendment provisions of Section 149 if the assessment year is prior to 01 April 2021.
• Price Waterhouse Coopers Pvt. Ltd. vs Commissioner of Income Tax, Kolkata-I — SC, 2012
  A bona fide and inadvertent error does not amount to furnishing inaccurate particulars or concealment of income.
• GKN Driveshafts (India) Ltd. vs Income Tax Officer and Ors. — SC,
  When a notice under Section 148 is issued, the noticee should file a return and may seek reasons, which the assessing officer must provide, allowing the noticee to file objections that must be dispose
• ITO, Ward 13 (1) vs M/s. Navodaya Castles Pvt. Ltd. — ITAT,
  The AO must independently apply his mind to the information received before initiating proceedings under Section 147/148.
• Mon Mohan Kohli vs Assistant Commissioner of Income Tax & Anr — HC,
  The Government cannot extend the applicability of legislative provisions beyond the dates specified by the Legislature through notifications.