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February 18, 2020
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Assessments u/s 147 of The Income Tax Act, 1961.

Important Provisions.

Section 147 of the act

  • On the basis of Reasons to believe
  • Assess or reassess Income escaped assessment (other than which are subject matter of appeal)
  • or any other income come to notice during proceeding
  • In case already assessment made, then no notice after 4 years unless there is a failure on the part of assessee to truly and fully disclose all material facts necessary for assessment. This is not applicable in case the income related to foreign assets has escaped assessment.
  • Only the issues which are discussed in original assessment and on which AO has formed his opinion will be treated as where the assessee has furnished true and full disclosure.

Notice is issued u/s 148 of Act

  • Notice can be issued only after recording reasons to believe
  • After taking approval from competent authority as required u/s 151 of the Act on the reasons to believe.
  • Service of notice u/s 148 of the Act is mandatory before the completion of assessment proceedings.
  • Notice u/s 148 can be issued only before the end of 4 assessment years from the end relevant assessment years where the escapement of income is below Rs.1,00,000 and 6 assessment years in other cases. Further, where the income escaped related to any financial assets located outside India 16 years.

Approval u/s 151

  • No notice u/s 148 shall be issued unless approval is obtained from the competent authority as required u/s 151 of the Act.
  • The sanction accorded by the competent authority should be properly recorded showing independent application of mind.

Notice drop u/s 152(2) of the Act

  • Where the income alleged to escaped assessment is already include by the assessee in its return of income and/or proper tax has been paid on such income, then proceedings shall be dropped.


Important tips in assessment u/s 148.

  • Respond to notice u/s 133(6) of the act if issued and received before issue of notice u/s 148 of the Act.
  • Make efforts to File return in response to notice u/s 148 of the before the end of assessment year i.e. before 31st March this will ensure that notice u/s 143(2) is issued before the end of six months i.e. before 30th If notice not issued within six months then the proceeding are invalid.
  • Ask for reasons recorded for reopening along with copy of approval from competent authority and file objection against issue of notice u/s 148 of the Act and reasons to believe, if there is any. Also keep in mind that if the reasons are not recorded properly or there is no independent application of mind or if original assessment is already made considering the same issue as mentioned in reassessment, then this may invalidate the entire proceeding during the course of appeal. Raise these issued in the objection filed.
  • File response to notices issued u/s 142(1) of the Act timely and according to questionnaire pointwise.
  • Make sure that all the replies are filed electronically as e-assessment is mandatory.
  • Make sure that all notice for proceedings pending as on 30th September 2019 are issued electronically after 1st October, 2019 and bearing a DIN (document identification number), otherwise same are invalid. Including notice u/s 143(2) of the Act.
  • Make sure to file reply against show cause notices timely before closing of online submission window which is 1 week before the time barring date.
  • If the assessment order passed is against the assessee and demand is disputed, then make sure that appeal is filed before the CIT(A) within 30 days from date of receipt of order.


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