Section 148: Comparing Existing vs. New Provisions in Finance Bill 2024-25

Issue of notice where income has escaped assessment

New Version

'148. (1) Before making the assessment, reassessment or re-computation 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 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 subsection (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.

The existing version of Section 148 reads as under:

Issue of notice where income has escaped assessment

148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within 15[a period of three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application made in this regard by the assessee], a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:

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 and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:

16 [Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section:]

17 [Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall not be deemed to be a return under section 139.]

Explanation 1.-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 18[***] 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

19 [(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.]

Explanation 2.-For the purposes of this section, where,-

(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or

(ii) a survey is conducted under section 133A, other than under sub-section (2A) 20[***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or

(iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

(iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee,

the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee 21[where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.

Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in section 151.]

Now let's make a comparative study of the two versions and discuss the variances and implications thereof.

Before embarking on to the comparative study it is important to note that the substituted version of the section will come into force with effect from 1st day of September 2024 as stated in the Finance Bill.

Sub-sections:

The new version of the section contains two sub-sections whereas the existing version does not contain any sub-sections.

Issue of notice and time limit to furnish the return of income by the assessee:

• Both under the new version and the existing version the Assessing Officer shall issue the notice subject to the provisions of Section 148A of the Act.

Time Limit for furnishing the return

Under New Version

• Under the new version the time limit is, as specified in the notice, not exceeding three months, from end of the month in which the notice is issued.

Under Existing Version

• Under the existing version the time limit is within a period of three months from the end of the month in which the notice is issued or such further period as may be allowed by the Assessing Officer on the basis of an application made by the assessee.

The denial of affording further period beyond three months from the end of the month in which the notice is issued, indicates the intention of the legislature that expeditious completion of the proceedings and collection of taxes on the escaped income.

Conditions for issue of notice

Under New Version

• Before issuing any notice under the section the Assessing Officer is obliged to adhere to the procedure laid down under section 148A of the Act.
• As provided in new version of the section no notice can be issued by the Assessing officer unless there is information with him that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year.
• It is further provided in the new version of the section that no notice can be issued by the Assessing Officer, without the prior approval of the specified authority, in case the Assessing Officer received the information under section s135A

Under Existing Version

• It is provided in the existing version that the Assessing Officer shall have to obtain the prior permission of the specified authority even in the case that he is having information with him that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year.
• It is further provided that no such prior permission is required in the case an order under clause (d) of the section 148A is passed by the Assessing Officer with the prior approval of the specified authority.

Treatment of the return filed

Both under the new version and existing version of the section the return is deemed to be furnished under section 139 of the Act, if the return is filed within the time limit specified in the notice in the new version or within the time allowed by the Assessing Officer, in such form and verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act such return shall be deemed to be a return filed under section 139 of the Act.

Both under the new version and the existing version, if the return is not filed within the limit specified/allowed under the section, the return shall not be deemed to be a return filed under section 139 of the Act.

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, -

On comparison of the circumstances as listed above under the New Version information with regard to Search Proceedings under section 132 and requisition proceedings under section 132A of the Act are not considered as information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment.

The reason for the omission of the said circumstance is that the circumstances as mentioned in clause (iii) of Explanation II of Existing Version and the circumstances as mentioned in clause (iv) Explanation II of Existing Version are taken care of under sections 158BA and 158BD of the Act as proposed under newly inserted Chapter XIVB of the Act in the Finance Bill.