The Finance Bill 2024 includes changes to Section 148A of the Income-Tax (I-T) Act, which relates to the time limits for issuing notices to reopen assessments. Currently, the Income-Tax Department can reopen assessments under Section 148A for up to 10 years (equivalent to 11 financial years) if the income exceeds Rs 50 lakh. In contrast, for incomes below Rs 50 lakh, the limit is three years (or four financial years).
In the 2024 Budget, a significant change has been proposed to reduce the time limit for cases where the income exceeds Rs 50 lakh from 10 years to five years (or six financial years).
However, the time limit remains the same for cases with income below Rs 50 lakh. For the AY 2018-19, if the income escaping assessment is Rs 50 lakh or more, the due date for issuing a notice u/s 148 or an order under Section 148A has been set as August 31, 2024.
What is Income Tax Section 148A?
Section 148 of the Income Tax Act permits income tax officers to begin the reassessment proceedings if they discover that an assessee might have concealed income in any assessment year.
How Much Tax Do You Need to Pay Under I-T Section 148A?
Section 148A cited that the income tax officer must furnish the assessee with an opportunity to elaborate on their matter before issuing the notice. Alternatively the same furnishes the assessee with a chance to be heard.
The assessing officer could grant a minimum of 7 days and a maximum of 30 days to the taxpayer to provide his/her explanation. If the income tax department suspects tax evasion, it directs a notice u/s 148, intimating the assessee for reopening the matter.
Provisions of I-T Section 148A
In compliance with the provisions shown under section 148A of the Income Tax Act as introduced in the budget of 2021, it is obligated that in cases where an assessing officer has intelligence related to the income that has not been shown, a specified protocol is to be followed.
Before the issuance of the notice u/s 148, it is incumbent on the said officer to provide an assessee a chance to show their opinion. By serving a show cause notice it has been accomplished by seeking the taxpayer to provide the reasons mitigating the provision of the problem of a notice u/s 148.
Upon receiving such notification, the taxpayer is responsible for providing a comprehensive response within the given timeframe. Additionally, individuals who are the subject of such inquiries have the right to raise initial objections against the proposed reopening of their case for an evaluation related to potential underreported income.
It is the responsibility of the tax authorities to carefully consider and address these objections methodically through the issuance of a detailed and well-substantiated speaking order.
Latest Amendments in I-T Section 148A
The amendments to section 148A of the Income Tax Act, have been proposed by the Finance Bill 2024, establishing the new time limits to issue the notices. As per the tax experts for income escaping assessment of Rs 50 lakh or more, the Section 148A notice ought to be issued within 5 years from the end of the assessment year.
Notices u/s 148, following a Section 148A notice, have a maximum time limit of five years and three months from the assessment year-end. With effect from September 1, 2024, such changes will come into force.
Major Things to Remember in Section 148A
- Assessments for AY 2018-19 will be limited to time beginning from September 1.
- On getting a notification u/s 148A the receiver must validate if the notice was issued within the said time.
- For the case of an income that does not get under assessment of Rs 50 lakh or more for AY 2018-19, the mentioned due date for the issuance of the notice u/s 148 or an order u/s 148A is 31st August 2024.
- The notification should comprise of the related incriminating proof or details that served as the grounds for its issuance. Also, it must derive from the National Faceless Appeal Centre (NFAC) instead of the jurisdictional assessing officer.
