Notice u/s 148

This query is : Resolved

Radhakrishnan K.V. (Querist)
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03 May 2013 Notice u/s 148 relates to reopen/ reassessment. ITAT Cochin in Kadachira Service co-operative bank v/s CIT observes that without assessment there cannot be a reassessemny u/s 147.
My client did not file return of income tax for AY-2007-2008. They have not received any notice from Income Tax department so far.Now they are in receipt of notice u/s 148. Whether the AO is correct in believing that failure in filing return results in "escaped income" and is he right in making assessment u/s 147? Shall AO make assessment for a time barred AY invoking sec.147?

CA. RICHI SAXENA

CA. RICHI SAXENA (Expert)
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04 May 2013 Assessing Officer CAN issue a notice u/s 148 if he has Reason to beleive that any income , chargeable to tax, has escaped assessment. Your case is falling under section 147 as the time limit and sanction for issue of notice (refer section 149) has not passed yet.
Sec 147 includes both the assessment and reassessment cases.

Regards,
CA.Richi Saxena

Radhakrishnan K.V.

Radhakrishnan K.V. (Querist)
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10 May 2013 So, what could be the reason for ITAT, Cochin observed that "Unless and until, the assessment proceedings initiated by the assessing officer by issuing notice u/s 142(1) culminated either by an assessment order or otherwise by operation of law, we may not be able to say that any part of income chargeable to tax has escaped assessment. Therefore, the assessing officer had no jurisdiction at all to issue notice u/s 148 for assessing the income of the taxpayer"?
ITA No.251, 253, 254&255, 267 & 268/Coch2012
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN in a batch of petitions- Re: Kadachira Service co-operative Bank

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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04 August 2024 The issue you’re referring to involves the applicability of Section 148 of the Income Tax Act, which is used for reopening of assessment when income has escaped assessment. The observation made by the ITAT Cochin in the case of **Kadachira Service Co-operative Bank** relates to the procedural and substantive requirements for reopening an assessment under Section 147/148.

### **Key Points on Reopening of Assessment:**

1. **Section 148 Notice:**
- **Reopening of Assessment:** Section 148 is used to initiate reopening of an assessment when the assessing officer believes that income has escaped assessment. This could be due to non-filing of a return or other reasons.
- **Requirements:** For reopening of an assessment, the assessing officer must have valid reasons to believe that income has escaped assessment. This belief is usually based on new information or evidence.

2. **Assessment Procedures:**
- **Initial Notice (Sec 142(1)):** Before issuing a notice under Section 148, the assessing officer must typically issue a notice under Section 142(1) to call for information or documents from the assessee. The ITAT observation suggests that this initial step is crucial.
- **Assessment Order:** The assessment proceedings must be initiated and concluded, either by passing an assessment order or through another legal operation.

3. **Time-Barred Assessments:**
- **Limitations:** Section 149 specifies the time limits for reopening assessments. Generally, an assessment can be reopened for up to 6 years from the end of the relevant assessment year. However, if the income escaping assessment exceeds ₹1 lakh, the limit extends to 16 years.

4. **Case Law Interpretation:**
- **Kadachira Service Co-operative Bank Case:** The ITAT Cochin’s observation highlights that merely not filing a return does not automatically justify reopening of an assessment under Section 147. The assessing officer must follow due process, including issuing a notice under Section 142(1), and there must be some evidence of income escaping assessment.

### **Your Situation:**

1. **Failure to File Return:**
- **Escaped Income:** Non-filing of a return does not automatically mean that income has escaped assessment. The AO must have reasons to believe that income has escaped assessment, and this belief must be based on concrete information.

2. **Time-Barred Assessment:**
- **Assessment Year 2007-2008:** If the notice u/s 148 is issued for a time-barred assessment year, it may not be valid unless specific conditions are met. For instance, the AO must ensure that the reopening is within the time limits specified in the Act.

3. **Procedural Compliance:**
- **Notice under Section 142(1):** Ensure that the AO followed the correct procedure. If the AO has not issued a notice under Section 142(1) or has not provided a reason for reopening, the reopening might be invalid.

4. **Legal Recourse:**
- **Challenge the Notice:** If you believe that the AO’s action is not valid, you can challenge the notice. You may file a petition with the appropriate authorities or the ITAT if needed.

### **What You Can Do:**

1. **Review the Notice:**
- Check the validity of the notice, including whether it was issued within the permissible time limits and whether the AO provided a valid reason for reopening.

2. **File a Response:**
- Respond to the notice under Section 148 and provide any necessary documentation to the AO to address the issue.

3. **Seek Professional Advice:**
- Consult a tax professional or lawyer to assess the situation in detail and to help in drafting a response or appeal if needed.

4. **Check ITAT Rulings:**
- Refer to ITAT or High Court rulings relevant to the case to understand how similar cases have been handled.

By following these steps, you can address the issue related to the notice under Section 148 and ensure that the assessment proceedings are conducted appropriately.