Reassessment: Notices under Sections 148A and 148

A reassessment notice reopens a year the taxpayer thought was closed. The law on reopening has been rewritten three times in five years: by the Finance Act, 2021, by the Finance (No. 2) Act, 2024, and by the Income-tax Act, 2025. The Supreme Court has had to reconcile the old and new regimes twice, and a retrospective amendment of 2026 is now itself under challenge. The reader’s first difficulty is identifying which version of the law governs the notice in hand. Only then can the time limit, the procedure and the sanction be checked.

Which Act, and which version, governs the notice

Tax year 2026-27 onwards: sections 279 to 286 of the Income-tax Act, 2025 apply.

Every earlier year: section 536(2)© keeps the Income-tax Act, 1961 in force for any proceeding “in respect of any tax year beginning before the 1st April, 2026”, expressly including “notices … reassessment”. A notice issued today for assessment year 2023-24 is therefore a 1961 Act notice. Within the 1961 Act, section 152(3) and (4) decide which version applies:

Situation	Version of ss.147–151 that governs
Notice under s.148 issued, or order under s.148A(d) passed, before 1 September 2024	The Finance Act, 2021 version (s.152(4))
Search, requisition or survey on or after 1 April 2021 but before 1 September 2024	The Finance Act, 2021 version (s.152(3))
All other cases from 1 September 2024	The version substituted by the Finance (No. 2) Act, 2024
Notices issued before 1 April 2021	The pre-2021 “reason to believe” regime

Point	1961 Act (from 1.9.2024)	2025 Act
Power to reassess	s.147	s.279
Notice requiring a return	s.148	s.280
Show cause and “fit case” order	s.148A	s.281
Time limits for notices	s.149	s.282
Sanction	s.151	s.284
Time limit for the order	s.153(2)	s.286, Table entry 4

The present procedure: show cause, then order, then notice

Step 1: show-cause notice. Section 148A(1), as substituted from 1 September 2024, requires the Assessing Officer, where he “has information which suggests that income chargeable to tax has escaped assessment”, to serve a notice “to show cause as to why a notice under section 148 should not be issued”. The notice “shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment”.

“Information” is a closed list in section 148(3):

• risk-management flags;
• audit objections;
• information received under a tax treaty;
• information under the section 135A scheme;
• information requiring action on a Tribunal or court order;
• for surveys on or after 1 September 2024, survey material.

Step 2: reply. The assessee “may furnish his reply within such period, as may be specified in the notice” (section 148A(2)).

Step 3: section 148A(3) order. The Assessing Officer passes an order, “with the prior approval of the specified authority”, deciding “whether or not it is a fit case to issue notice under section 148”. He must do so “taking into account the reply of the assessee”. The 2024 substitution removed the earlier separate enquiry stage, clause (a) of the 2021 text.

Step 4: section 148 notice. It is issued with a copy of the section 148A(3) order. It requires a return within the period specified, “not exceeding three months from the end of the month in which such notice is issued” (section 148(1)). The Finance Act, 2026 added the words “not being less than thirty days from the date of such notice but” to section 148(1), with effect from 30 March 2026. Section 280(1)© of the 2025 Act, as substituted by the same Act, has the same thirty-day floor.

Two procedural features are worth noting:

• Section 135A information: the show-cause stage does not apply where the information came under the section 135A scheme (section 148A(4)). In such a case the section 148 notice needs prior approval instead (second proviso to section 148(1)).
• Sanction: the “specified authority” is now uniformly the Additional or Joint Commissioner, or the Additional or Joint Director (section 151; section 284). Before 1 September 2024 the authority depended on how many years had passed.

Time limits: three years and five years

Section 149, as substituted from 1 September 2024, sets separate limits for the two notices:

• Show-cause notice under section 148A: not after three years from the end of the relevant assessment year. Between three and five years it may issue only if the escaped income “amounts to or is likely to amount to fifty lakh rupees or more” (section 149(2)).
• Notice under section 148: not after three years and three months. Between three years and three months and five years and three months it may issue only if the Assessing Officer “has in his possession books of account or other documents or evidence” showing escaped income of Rs 50 lakh or more (section 149(1)).

On 19 October 2026 this means:

• for assessment year 2023-24 (three years expire on 31 March 2027), a show-cause notice can still be issued whatever the amount;
• for assessment years 2021-22 and 2022-23, it needs the Rs 50 lakh threshold;
• for assessment year 2020-21, five years ended on 31 March 2026, so no show-cause notice can now be issued under the ordinary limits.

Section 150 still allows a notice “at any time” to give effect to an appellate or court finding, subject to its own exception. Section 11 of the Finance Act, 2026 substituted section 150 with effect from 1 February 2026. The substituted section adds that such a notice “shall be issued within a period of three months from the end of the quarter in which the certified copy of the order … is received by the jurisdictional Principal Commissioner or Commissioner” (section 150(3)). Section 283(3) of the 2025 Act is to the same effect.

The 2025 Act measures from the end of the tax year rather than the assessment year, so its periods are one year longer in form: four years and four years three months, rising to six years and six years three months for Rs 50 lakh or more (section 282(1) and (2)). Because a tax year ends a year before the corresponding assessment year, the effective span is the same. Section 282(3) adds that no notice may be issued “within one year from the end of any tax year”.

Under the Finance Act, 2021 version (notices or section 148A(d) orders before 1 September 2024), the limits were three years, extended to ten years for escaped income of Rs 50 lakh or more. A first proviso barred any notice for a year already time-barred under the pre-2021 law.

Once a valid section 148 notice is served, the reassessment order must be made within twelve months from the end of the financial year in which the notice was served (section 153(2) and its proviso). Under the 2025 Act the limit is “one year” from the end of the financial year in which the section 280 notice was served (section 286, Table entry 4).

The transitional notices: Ashish Agarwal and Rajeev Bansal

Between 1 April and 30 June 2021 the department issued about 90,000 notices under the old section 148. It relied on notifications under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), although the 2021 regime was by then in force.

In Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), decided on 4 May 2022, the Supreme Court did not quash those notices. Instead it treated them as show-cause notices under the new section 148A(b).

That left the question of time. In Union of India v. Rajeev Bansal, 2024 INSC 754, decided on 3 October 2024 by a bench of three judges (Chandrachud CJ, Pardiwala and Misra JJ), the Revenue appealed against High Court decisions, led by the Allahabad High Court in Rajeev Bansal’s case, that had quashed the fresh section 148 notices issued in mid-2022 as time-barred. The notices concerned assessment years 2013-14 to 2017-18. The Court held that:

• “TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding … falls for completion between 20 March 2020 and 31 March 2021”;
• section 3(1) of TOLA overrides section 149 “only to the extent of relaxing the time limit for issuance of a reassessment notice”;
• the period from the deemed notice until the information was supplied, together with the two weeks allowed for reply, is excluded from limitation;
• the Assessing Officer then had only “the time limit surviving under the Income Tax Act read with TOLA”, and “All notices issued beyond the surviving period are time barred and liable to be set aside” (paragraph 114(h)).

The Court’s own illustration: for a deemed notice dated 1 May 2021, the officer had sixty-one days (1 May to 30 June 2021) counted from receipt of the assessee’s reply. If the reply came on 18 June 2022, the deadline was 18 August 2022 (paragraph 112). The Revenue also conceded that for assessment year 2015-16 all notices issued on or after 1 April 2021 had to be dropped.

Rajeev Bansal is the final word on these transitional notices. It does not apply to notices issued wholly under the 2024 regime.

Who may issue the notice: section 147A and the faceless question

The e-Assessment of Income Escaping Assessment Scheme, 2022, made under section 151A, provides for reassessment notices to be issued through automated allocation in a faceless manner. Several High Courts, led by the Bombay High Court in Hexaware Technologies Ltd. v. ACIT (3 May 2024), held that notices issued by the jurisdictional Assessing Officer were therefore invalid. Others held that the jurisdictional officer and the faceless officer had concurrent jurisdiction.

The Finance Act, 2026 (No. 4 of 2026, assented to on 30 March 2026) responded in section 9. That section inserts section 147A after section 147 of the 1961 Act, “deemed to have been inserted with effect from the 1st day of April, 2021”. Section 147A, headed “Assessing Officer for purposes of sections 148 and 148A”, reads:

“Notwithstanding anything contained in any judgment, order or decree of any court or in section 151A or in any scheme framed thereunder, for the removal of doubts, it is hereby clarified that the Assessing Officer for the purposes of sections 148 and 148A shall mean and shall always be deemed to have meant to be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in sub-section (3) of section 144B.”

The 2025 Act has the same rule, prospectively, in section 279(3), which the Finance Act, 2026 inserted with effect from 1 April 2026.

The validity of section 147A is now in litigation:

• The Punjab and Haryana High Court, in Jyoti Sareen v. Union of India (CWP No. 15791 of 2024, 10 September 2026), held section 147A unconstitutional and quashed the jurisdictional officer’s section 148 notice for assessment year 2020-21.
• The Andhra Pradesh High Court reached the same result in W.P. No. 28520 of 2023 and batch on 12 October 2026.

These two decisions are described here as reported in published digests; the judgments themselves have not been read for this guide. Reports also refer to proceedings in the Supreme Court on section 147A, but its position is not settled. Until it is, who issued a notice remains a contested question for 1961 Act years.

What to have ready on receiving a show-cause notice

• The notice and every document annexed to it. If the information is not attached, the omission is itself a point to raise.
• The return, intimation or assessment order for the year, from the portal.
• Evidence answering the information: bank statements, purchase or sale deeds, ledger extracts, confirmations.
• A computation of the escaped income alleged, where the Rs 50 lakh threshold decides the time limit.
• The date of issue of each notice, checked against section 149 or 282.

Responding on the portal

Notices under sections 148A and 148 appear under Pending Actions > e-Proceedings as notices “issued by Assessing Officer or any other Income Tax Authority”. According to the portal’s user manual, the response is uploaded through Submit Response, with a written reply and categorised attachments, and Seek/View Adjournment is used to ask for time. Where the notice requires a return, the manual says “a message will be displayed for filing the ITR”. The return in response to section 148 is filed and verified like any return. A return filed after the period stated in the notice “shall not be deemed to be a return under section 139” (proviso to section 148(2); section 280(3)).

The Finance Act, 2026 also allows an updated return to be furnished in response to a reassessment notice, within the period stated in the notice. The assessee is then “precluded from filing return in pursuance of the said notice in any other manner”. Under the 1961 Act this is a new proviso to section 139(8A), inserted by section 5 of the Finance Act, 2026 with effect from 1 March 2026. The additional income-tax under section 140B(3) is then “increased by a further sum of ten per cent. of the aggregate of tax and interest payable” (section 140B(3A), deemed inserted from 1 March 2026). The 2025 Act’s counterpart is section 263(6), read with section 267(5).

Summary

1. Fix the year and the date of the first notice. Use section 536 and section 152(3) and (4) to identify which version of the law applies.
2. Check the show-cause notice against the three-year or five-year limit, and whether the Rs 50 lakh threshold is genuinely met. Check also that the information is annexed.
3. Reply within the period stated, and keep proof of the date of the reply.
4. On receiving the section 148A(3) order and section 148 notice, check the sanction, the limit of three years and three months (or five years and three months) and, for 1961 Act years, the issuing officer.
5. File the return within the period stated in the notice. Then follow the case as a faceless reassessment, and check the twelve-month limit for the order.

The next guide in this set covers penalty notices and immunity under section 270AA.