Section 148 — Issue of Notice where Income has Escaped Assessment
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live; substituted by the Finance Act, 2021 and amended by the Finance Act, 2024 (w.e.f. 1 September 2024). Before making a reassessment under section 147, the AO must serve a notice under section 148 requiring a return; the notice may be issued only where there is 'information' suggesting escapement and the section 148A procedure (and the specified-authority approval) has been complied with. The Explanation defines 'information'.
FA 2026: The FA 2026 court/appellate-order three-month limit applies to notices issued to give effect to such orders (read with sections 149/150/153).
A. SECTION COMMENTARY
Section 148 is the operative trigger of reassessment: no reassessment can be made without first serving a valid section 148 notice. Post-2021, the issue of the notice is hedged by three conditions — (i) the AO must have 'information which suggests' escapement (the Explanation enumerates the sources, including risk-management-strategy flags, audit objections, treaty/section 90 information, section 135A faceless information, and survey material); (ii) the pre-issue procedure of section 148A must be completed; and (iii) the prior approval of the 'specified authority' under section 151 must be obtained. A notice issued in breach of these conditions is without jurisdiction.
The transition from the old regime to the new produced the largest reassessment litigation in the Act's history. Nearly 90,000 notices issued under the old section 148 between 1 April and 30 June 2021 — after the new regime had come into force — were challenged. The Supreme Court in Ashish Agarwal salvaged them by a one-time deeming fiction, treating them as show-cause notices under the new section 148A(b); Rajeev Bansal then settled how the surviving limitation (read with TOLA) applies to the consequent notices. Separately, the procedural safeguard from GKN Driveshafts — that the AO must furnish the recorded reasons/information and dispose of the assessee's objections by a speaking order before proceeding — continues to govern, and the faceless mandate of section 151A (Hexaware) determines who may issue the notice.
B. STATUTORY POSITION (verbatim text)
Reproduced from the local Act (base text to the Finance Act, 2025), including the Explanation defining 'information'.
148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall, subject to the provisions of section 148A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A, requiring him to furnish, within such period as may be specified in the notice, not exceeding three months from the end of the month in which such notice is issued, a return of his income or income of any other person in respect of whom he is assessable under this Act during the previous year corresponding to the relevant assessment year:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year:
Provided further that where the Assessing Officer has received information under the scheme notified under section 135A, no notice under this section shall be issued without prior approval of the specified authority.
(2) The return of income required under sub-section (1) shall be furnished in such form and verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act shall, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that any return of income required under sub-section (1), furnished after the expiry of the period specified in the notice under the said sub-section, shall not be deemed to be a return under section 139.
(3) For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; or
(ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or
(iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or
(iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or
(v) any information which requires action in consequence of the order of a Tribunal or a Court; or
(vi) any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the said section, on or after the 1st day of September, 2024.
C. AUTHORITIES
The authorities cover the procedural safeguard on objections, the transitional Ashish Agarwal fiction, and the faceless-issue mandate.
1. Reasons/information and disposal of objections
GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC)
Court: Supreme Court of India.
Held: On receipt of a notice under section 148, the assessee is entitled, on request, to be furnished the recorded reasons; the Assessing Officer is bound to furnish them within a reasonable time, and the assessee may file objections, which the AO must dispose of by passing a speaking order before proceeding with the reassessment.
Significance: The enduring procedural code for reassessment objections; in the post-2021 regime it operates alongside the section 148A(b)/(d) show-cause-and-order mechanism, reinforcing the requirement that the assessee be confronted with the information and that objections be reasoned-through.
2. The transitional litigation — old notices and TOLA
Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC)
Court: Supreme Court of India; judgment dated 4 May 2022 (exercising power under Article 142).
Facts: After the Finance Act, 2021 substituted the reassessment regime (w.e.f. 1 April 2021), the Department issued about 90,000 notices under the old section 148 between 1 April and 30 June 2021, relying on TOLA notifications. High Courts (Allahabad and others) quashed them as issued under a repealed regime.
Held: Instead of quashing the notices outright, the Court, to avoid a flood of litigation, deemed the impugned old-regime section 148 notices to be show-cause notices issued under the new section 148A(b); directed the AOs to supply the underlying information/material to the assessees within 30 days, permitted objections, and required the procedure of the substituted sections 147-151 to be followed thereafter. The Court's order was made applicable PAN-India.
Significance: The landmark transitional ruling; it converted the old notices into the first step of the new procedure rather than annulling them, and set the stage for the limitation questions resolved in Rajeev Bansal.
Union of India v. Rajeev Bansal (2024) 2024 INSC 754 (SC) [three-Judge Bench]
Court: Supreme Court of India, three-Judge Bench; judgment dated 3 October 2024.
Held: The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) continues to apply to the Income-tax Act after 1 April 2021 in respect of any action/proceeding falling for completion between 20 March 2020 and 31 March 2021. The reassessment notices issued in pursuance of the deemed (Ashish Agarwal) notices must be issued within the time-limit surviving under the Income-tax Act read with TOLA; the period from the issue of the deemed show-cause notice to the supply of material, and the assessee's response time, is excluded, and only the 'surviving' or balance period is available to the AO. The Court harmonised section 149 with TOLA and gave full effect to the Ashish Agarwal fiction.
Significance: The decisive ruling settling the TOLA/limitation controversy for the transitional notices; it provides the arithmetic of the 'surviving time' and the jurisdictional threshold the Revenue must cross for the AYs in question.
3. Who may issue the notice — faceless mandate
Hexaware Technologies Ltd. v. ACIT (Bombay High Court) — 2024:BHC-OS:13595-DB, W.P. No. 1778 of 2023, judgment dated 3 May 2024
Held: Under the scheme notified by the Central Government under section 151A (dated 29 March 2022), a notice under section 148 must be issued by the National Faceless Assessment Centre in a faceless manner; the Jurisdictional Assessing Officer (JAO) has no concurrent jurisdiction to issue it. A section 148 notice issued by the JAO (and not through the faceless mechanism) is invalid and without jurisdiction; the assessee need not show prejudice.
Significance: Leading High Court authority that the faceless scheme is exclusive for issuing reassessment notices; widely followed (and the subject of contrary views in some High Courts), the question being one of national importance. See section 151A.
2. Issue vs service of notice; jurisdictional character
R.K. Upadhyaya v. Shanabhai P. Patel (1987) 166 ITR 163 (SC)
Held: The 1961 Act draws a clear distinction between 'issue' of notice and 'service' of notice. Service of the section 148 notice is not a condition precedent to the assumption of jurisdiction to reassess; it is a condition precedent to the making of the order of reassessment. For limitation (section 149), the notice need only be issued within time; service may follow, but must precede completion of the reassessment.
Significance: The foundational authority on issue vs service; jurisdiction attaches on valid issue within limitation, while valid service is necessary before the reassessment order is passed.
Relevance: The recorded reasons and the sanction must reflect application of mind; a notice founded on vague reasons or a mechanical sanction is invalid. (See section 151.)
3. Notice is the foundation of jurisdiction; correct year; recorded reasons
Y. Narayana Chetty v. ITO (1959) 35 ITR 388 (SC)
Held: The issue of a valid notice to reassess is the foundation of the Assessing Officer's jurisdiction; if no notice is issued, or the notice issued is invalid, the reassessment proceedings are illegal and void. The notice is a condition precedent to the assumption of jurisdiction, not a mere procedural formality.
Significance: Foundational authority (under the 1922 Act, applied to section 148) that a valid notice is jurisdictional; its absence vitiates the entire reassessment.
CIT v. Kurban Hussain Ibrahimji Mithiborwala (1971) 82 ITR 821 (SC)
Held: The Assessing Officer's jurisdiction to reassess is confined to the assessment year for which the notice is issued; a notice issued for one year cannot found a reassessment of a different year. The validity of the notice, including the year specified, is fundamental.
Significance: Confines reassessment jurisdiction to the precise assessment year of the notice; a mistake in the year is fatal, not curable.
Hindustan Lever Ltd. v. R.B. Wadkar, ACIT (2004) 268 ITR 332 (Bombay)
Held: The reasons recorded for reopening must be read as recorded; they cannot be supplemented, improved or substituted later by affidavit or otherwise. The reasons must, on their face, disclose the AO's satisfaction and the link between the material and the belief that income has escaped assessment; validity is judged on the recorded reasons alone.
Significance: The leading statement that recorded reasons are self-contained and sacrosanct — the Revenue cannot shore up defective reasons after the event (a facet of the Mohinder Singh Gill principle).
Asst. CIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) — cross-reference
Relevance: Where, after the section 148 notice and return, the AO proceeds to assess, the section 143(2) notice within time is mandatory and jurisdictional; its omission is fatal even in reassessment. (See section 143.)
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the local Act (base text amended up to the Finance Act, 2025), with the publisher footnote apparatus and amendment-marker brackets removed; Finance Act, 2026 changes are flagged in the commentary. Citations are stated as reported; Tribunal / AAR / High Court orders are flagged. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XIV — PROCEDURE FOR ASSESSMENT
Section 148 — Issue of Notice where Income has Escaped Assessment
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live; substituted by the Finance Act, 2021 and amended by the Finance Act, 2024 (w.e.f. 1 September 2024). Before making a reassessment under section 147, the AO must serve a notice under section 148 requiring a return; the notice may be issued only where there is 'information' suggesting escapement and the section 148A procedure (and the specified-authority approval) has been complied with. The Explanation defines 'information'.
FA 2026: The FA 2026 court/appellate-order three-month limit applies to notices issued to give effect to such orders (read with sections 149/150/153).
A. SECTION COMMENTARY
Section 148 is the operative trigger of reassessment: no reassessment can be made without first serving a valid section 148 notice. Post-2021, the issue of the notice is hedged by three conditions — (i) the AO must have 'information which suggests' escapement (the Explanation enumerates the sources, including risk-management-strategy flags, audit objections, treaty/section 90 information, section 135A faceless information, and survey material); (ii) the pre-issue procedure of section 148A must be completed; and (iii) the prior approval of the 'specified authority' under section 151 must be obtained. A notice issued in breach of these conditions is without jurisdiction.
The transition from the old regime to the new produced the largest reassessment litigation in the Act's history. Nearly 90,000 notices issued under the old section 148 between 1 April and 30 June 2021 — after the new regime had come into force — were challenged. The Supreme Court in Ashish Agarwal salvaged them by a one-time deeming fiction, treating them as show-cause notices under the new section 148A(b); Rajeev Bansal then settled how the surviving limitation (read with TOLA) applies to the consequent notices. Separately, the procedural safeguard from GKN Driveshafts — that the AO must furnish the recorded reasons/information and dispose of the assessee's objections by a speaking order before proceeding — continues to govern, and the faceless mandate of section 151A (Hexaware) determines who may issue the notice.
B. STATUTORY POSITION (verbatim text)
Reproduced from the local Act (base text to the Finance Act, 2025), including the Explanation defining 'information'.
148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall, subject to the provisions of section 148A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A, requiring him to furnish, within such period as may be specified in the notice, not exceeding three months from the end of the month in which such notice is issued, a return of his income or income of any other person in respect of whom he is assessable under this Act during the previous year corresponding to the relevant assessment year:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year:
Provided further that where the Assessing Officer has received information under the scheme notified under section 135A, no notice under this section shall be issued without prior approval of the specified authority.
(2) The return of income required under sub-section (1) shall be furnished in such form and verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act shall, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that any return of income required under sub-section (1), furnished after the expiry of the period specified in the notice under the said sub-section, shall not be deemed to be a return under section 139.
(3) For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; or
(ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or
(iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or
(iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or
(v) any information which requires action in consequence of the order of a Tribunal or a Court; or
(vi) any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the said section, on or after the 1st day of September, 2024.
C. AUTHORITIES
The authorities cover the procedural safeguard on objections, the transitional Ashish Agarwal fiction, and the faceless-issue mandate.
1. Reasons/information and disposal of objections
GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC)
Court: Supreme Court of India.
Held: On receipt of a notice under section 148, the assessee is entitled, on request, to be furnished the recorded reasons; the Assessing Officer is bound to furnish them within a reasonable time, and the assessee may file objections, which the AO must dispose of by passing a speaking order before proceeding with the reassessment.
Significance: The enduring procedural code for reassessment objections; in the post-2021 regime it operates alongside the section 148A(b)/(d) show-cause-and-order mechanism, reinforcing the requirement that the assessee be confronted with the information and that objections be reasoned-through.
2. The transitional litigation — old notices and TOLA
Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC)
Court: Supreme Court of India; judgment dated 4 May 2022 (exercising power under Article 142).
Facts: After the Finance Act, 2021 substituted the reassessment regime (w.e.f. 1 April 2021), the Department issued about 90,000 notices under the old section 148 between 1 April and 30 June 2021, relying on TOLA notifications. High Courts (Allahabad and others) quashed them as issued under a repealed regime.
Held: Instead of quashing the notices outright, the Court, to avoid a flood of litigation, deemed the impugned old-regime section 148 notices to be show-cause notices issued under the new section 148A(b); directed the AOs to supply the underlying information/material to the assessees within 30 days, permitted objections, and required the procedure of the substituted sections 147-151 to be followed thereafter. The Court's order was made applicable PAN-India.
Significance: The landmark transitional ruling; it converted the old notices into the first step of the new procedure rather than annulling them, and set the stage for the limitation questions resolved in Rajeev Bansal.
Union of India v. Rajeev Bansal (2024) 2024 INSC 754 (SC) [three-Judge Bench]
Court: Supreme Court of India, three-Judge Bench; judgment dated 3 October 2024.
Held: The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) continues to apply to the Income-tax Act after 1 April 2021 in respect of any action/proceeding falling for completion between 20 March 2020 and 31 March 2021. The reassessment notices issued in pursuance of the deemed (Ashish Agarwal) notices must be issued within the time-limit surviving under the Income-tax Act read with TOLA; the period from the issue of the deemed show-cause notice to the supply of material, and the assessee's response time, is excluded, and only the 'surviving' or balance period is available to the AO. The Court harmonised section 149 with TOLA and gave full effect to the Ashish Agarwal fiction.
Significance: The decisive ruling settling the TOLA/limitation controversy for the transitional notices; it provides the arithmetic of the 'surviving time' and the jurisdictional threshold the Revenue must cross for the AYs in question.
3. Who may issue the notice — faceless mandate
Hexaware Technologies Ltd. v. ACIT (Bombay High Court) — 2024:BHC-OS:13595-DB, W.P. No. 1778 of 2023, judgment dated 3 May 2024
Held: Under the scheme notified by the Central Government under section 151A (dated 29 March 2022), a notice under section 148 must be issued by the National Faceless Assessment Centre in a faceless manner; the Jurisdictional Assessing Officer (JAO) has no concurrent jurisdiction to issue it. A section 148 notice issued by the JAO (and not through the faceless mechanism) is invalid and without jurisdiction; the assessee need not show prejudice.
Significance: Leading High Court authority that the faceless scheme is exclusive for issuing reassessment notices; widely followed (and the subject of contrary views in some High Courts), the question being one of national importance. See section 151A.
2. Issue vs service of notice; jurisdictional character
R.K. Upadhyaya v. Shanabhai P. Patel (1987) 166 ITR 163 (SC)
Held: The 1961 Act draws a clear distinction between 'issue' of notice and 'service' of notice. Service of the section 148 notice is not a condition precedent to the assumption of jurisdiction to reassess; it is a condition precedent to the making of the order of reassessment. For limitation (section 149), the notice need only be issued within time; service may follow, but must precede completion of the reassessment.
Significance: The foundational authority on issue vs service; jurisdiction attaches on valid issue within limitation, while valid service is necessary before the reassessment order is passed.
Chhugamal Rajpal v. S.P. Chaliha (1971) 79 ITR 603 (SC) — cross-reference
Relevance: The recorded reasons and the sanction must reflect application of mind; a notice founded on vague reasons or a mechanical sanction is invalid. (See section 151.)
3. Notice is the foundation of jurisdiction; correct year; recorded reasons
Y. Narayana Chetty v. ITO (1959) 35 ITR 388 (SC)
Held: The issue of a valid notice to reassess is the foundation of the Assessing Officer's jurisdiction; if no notice is issued, or the notice issued is invalid, the reassessment proceedings are illegal and void. The notice is a condition precedent to the assumption of jurisdiction, not a mere procedural formality.
Significance: Foundational authority (under the 1922 Act, applied to section 148) that a valid notice is jurisdictional; its absence vitiates the entire reassessment.
CIT v. Kurban Hussain Ibrahimji Mithiborwala (1971) 82 ITR 821 (SC)
Held: The Assessing Officer's jurisdiction to reassess is confined to the assessment year for which the notice is issued; a notice issued for one year cannot found a reassessment of a different year. The validity of the notice, including the year specified, is fundamental.
Significance: Confines reassessment jurisdiction to the precise assessment year of the notice; a mistake in the year is fatal, not curable.
Hindustan Lever Ltd. v. R.B. Wadkar, ACIT (2004) 268 ITR 332 (Bombay)
Held: The reasons recorded for reopening must be read as recorded; they cannot be supplemented, improved or substituted later by affidavit or otherwise. The reasons must, on their face, disclose the AO's satisfaction and the link between the material and the belief that income has escaped assessment; validity is judged on the recorded reasons alone.
Significance: The leading statement that recorded reasons are self-contained and sacrosanct — the Revenue cannot shore up defective reasons after the event (a facet of the Mohinder Singh Gill principle).
Asst. CIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) — cross-reference
Relevance: Where, after the section 148 notice and return, the AO proceeds to assess, the section 143(2) notice within time is mandatory and jurisdictional; its omission is fatal even in reassessment. (See section 143.)
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the local Act (base text amended up to the Finance Act, 2025), with the publisher footnote apparatus and amendment-marker brackets removed; Finance Act, 2026 changes are flagged in the commentary. Citations are stated as reported; Tribunal / AAR / High Court orders are flagged. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.