How to respond to Notice under 148A and 148 of the Income Tax Act

Notice u/s 148A is about assessing the taxpayer’s income for previous years which might have escaped the taxes. Before getting into this topic, It is better to understand the basics of return filing through illustrations. 

What happens after I file my Income Tax Return?  

Step 1 – Mr Kannan files his Income Tax Return for the year ending March 2022 (FY 2021-22) on 31st July 2022.

Scenario # 1

For more than 99% of taxpayers, this is the final step in IT filing and reporting. No more questions are asked by the tax department.

Scenario # 2

For 1% of the taxpayers, the tax department sends Notice u/s 143(2) asking for further information. Such notice can be issued by the department on or before 30th June 2023. So, Mr Kannan has to wait till then to know whether he is part of 99% or 1%.

Suppose, he is not getting any notice, can he relax? Or is there anything else he has to look for?

Scenario # 3

The tax department, through its deep data analytics, can identify high-value transactions done by the taxpayers and if there is a mismatch or disproportionate with the reported income, they will notice u/s 148A

In the case of Kannan, if he has failed to report an Interest income of Rs.2,00,000 while filing the return and for his bad luck the departments identify such income, then he will get a notice u/s 148A on or before 31st March 2026

This means he has to wait for 4 years from the end of the financial year to know whether the department will send any notices.

To take the example further, suppose the department has information that Mr Kannan has not reported Rs.60,00,000 of a capital gain on the sale of property (I am referring to all the unreported cases over income escaped Rs.50 lakhs or more which can be taken up for assessment up to 10 years from the end of Assessment Year), then the department can send the notice on or before 31st March 2033

This means, 11 years from the end of the financial year!

Many of our NRI and OCI clients and friends are currently getting SMS or emails from the tax departments stating that non-reporting or non-compliance of reporting high-value transactions for the previous years. They are also getting Notices u/s 148A

One such example - Mr Karthik, an NRI living in the USA for the last 10 years has received a Notice u/s 148A stating that he has purchased a property for Rs.1,30,00,000 in Oct 2018 and during that year no income tax return was filed by him. So, the department wants to know why this amount can’t be considered as escaped income and tax him?

In this case, Mr Karthik purchased the property out of the income earned abroad, transferred it to the NRE account, and purchased the property. He had no taxable income during that year, so no Return was filed. Was he wrong?

Absolutely no. Mr Karthik was right. However, the tax department, as they were not having complete information about the source, issued the Notice.

When such Notices u/s 148A are received, the taxpayers needn’t panic. If they are right, all they have to do is to file the response within the prescribed timelines.

What if the department doesn’t agree with the reply?

They may pass an adverse Order u/s 148. Such Orders are to be challenged through appeals.

Those who have received the notices are required to attend to them without fail. The NRI or OCIs have a remedy; just that you have to follow the process correctly and timely. 

Should you need any assistance in responding to notice under 148A/148 of the Income Tax Act or to file an appeal against the order u/s 148, you may kindly reach out to This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.

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