A message arrives on your registered email saying the Income Tax Department wants to reopen an old tax year. The notice mentions Section 148A and a property transaction that happened three years ago. You know the property was sold, but the sale proceeds were not entirely profit. Does this mean you owe additional tax?
Not necessarily. A reassessment notice is not a final tax demand. It means the department has information suggesting that some taxable income may have escaped assessment and wants to examine the earlier year. Your first job is to identify the relevant year, verify the notice, examine the information attached to it and respond with records that explain the transaction.
This guide explains what a notice under Section 148 or 148A means, how to respond online, the statutory time limits, and what changed after the Income-tax Act, 2025 came into effect on 1 April 2026. It is intended for taxpayers, proprietors, companies and accountants working on reassessment notices in India.
Received a notice today? Read the section, assessment year/tax year, date of issue and response deadline printed on the notice. Verify its DIN on the official e-Filing portal Official ↗. Then download the attached information and prepare a transaction-wise response. Do not ignore the notice or assume that a large bank deposit automatically represents taxable income.
What is income tax reassessment?
An ordinary income tax return is examined using the department's regular processing and assessment system. Reassessment is different: it concerns a previous year and a possible omission of income that should have been taxed.
For example, the department may possess details of a property sale, share transaction or bank receipt that appear inconsistent with your filed return. The information can justify asking questions, but it does not establish that the entire transaction amount is taxable. The cost of an asset, exemptions, earlier disclosures, ownership and the actual character of each receipt all matter.
The legal power to reassess escaped income is provided by Section 147 of the Income-tax Act, 1961 for earlier assessment years and Section 279 of the Income-tax Act, 2025 for Tax Year 2026–27 onward.
Official references: Section 147, Income-tax Act, 1961 Official ↗ and Section 279, Income-tax Act, 2025 Official ↗.
Section 148A vs Section 148: what is the difference?
These two notices serve different purposes.
| Notice or stage | What it means | What you should do |
|---|---|---|
Section 148A(1) show-cause | The department is considering reopening an earlier assessment year and provides information suggesting escaped income | Explain why reopening is not justified; attach records before the specified deadline |
Section 148A(3) order | The Assessing Officer decides whether the case is fit for a Section 148 notice, subject to prescribed approval | Read the reasoning, check whether your reply and evidence were considered |
Section 148 notice | The department formally requires a return for the relevant assessment year for reassessment | File the required return within the notice period and participate in the proceeding |
Section 147 reassessment | The Assessing Officer examines the escaped-income issue and, where permitted, other relevant issues | Answer further notices and reconcile supporting records |
Most taxpayers first see a Section 148A show-cause notice. There are, however, statutory exceptions to the usual pre-notice procedure. Under the 2025 Act, Section 281(4) identifies particular information, directions and court-order situations in which the ordinary show-cause procedure may be bypassed. Never assume a notice is invalid solely because you cannot find an earlier show-cause notice; inspect the precise law and documents.
The ₹50 lakh test relates to income believed to have escaped assessment, not automatically to the full value of a property, deposit, sale or investment. A transaction exceeding ₹50 lakh does not by itself prove that ₹50 lakh of taxable income escaped assessment.
Which law applies to your notice in 2026?
This is the biggest update missing from many older online guides. The Income-tax Act, 2025 took effect on 1 April 2026, but it did not replace the legal framework governing reassessment of previous assessment years.
| Income period | Applicable law | Relevant sections |
|---|---|---|
AY 2026–27 and all earlier assessment years (including FY 2025–26 income) | Income-tax Act, 1961 | 147, 148, 148A, 149, 151 and 153 |
Tax Year 2026–27 and subsequent tax years (income beginning 1 April 2026) | Income-tax Act, 2025 | 279, 280, 281, 282, 285 and 286 |
For clarity, AY 2026–27 concerns income earned from 1 April 2025 to 31 March 2026. Tax Year 2026–27 concerns income earned from 1 April 2026 to 31 March 2027. Those similarly named periods are not the same year.
Even if the department initiates a fresh reassessment after 1 April 2026 for AY 2023–24, the 1961 Act remains applicable. The Income Tax Department explicitly confirms this in its Reassessment Proceedings FAQs Official ↗.
Old law and new law: quick section reference
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
Reassessment power | 147 | 279 |
Notice requiring reassessment return | 148 | 280 |
Pre-notice show-cause procedure | 148A | 281 |
Time limits | 149 | 282 |
Sanction for notice | 151 | 284 |
Reassessment completion rules | 153 | 286 |
How many years back can the Income Tax Department reopen a case?
For AY 2026–27 and earlier: Sections 148A and 148
For the post-1 September 2024 reopening framework under Section 149 of the old Act:
| Notice | Normal limit from end of relevant AY | Extended limit where applicable escaped income is ₹50 lakh or more |
|---|---|---|
Section 148A show-cause | 3 years | 5 years |
Section 148 reassessment notice | 3 years and 3 months | 5 years and 3 months |
The extended window has specific evidentiary and procedural requirements; it does not automatically apply because a transaction or bank account exceeded ₹50 lakh. Exceptions, exclusions, court directions and transitional issues can affect individual cases.
Worked example: AY 2023–24 ended on 31 March 2024. Ignoring statutory exclusions or special cases, the normal Section 148A limit is 31 March 2027 and the corresponding Section 148 limit is 30 June 2027. If the ₹50 lakh extended conditions are actually satisfied, the outer periods become 31 March 2029 and 30 June 2029 respectively.
For Tax Year 2026–27 onward: Sections 281 and 280
Section 282 of the 2025 Act gives a different set of limits:
| Notice | Normal limit from end of relevant Tax Year | Extended limit in qualifying ₹50 lakh cases |
|---|---|---|
Section 281 show-cause | 4 years | 6 years |
Section 280 reassessment notice | 4 years and 3 months | 6 years and 3 months |
There is also a restriction on issuing these notices within one year from the end of the tax year. Other statutory provisions can qualify the calculation.
Illustration: Tax Year 2026–27 ends on 31 March 2027. On the ordinary timeline, the normal Section 281 outer limit is 31 March 2031 and the Section 280 outer limit is 30 June 2031. An eligible extended case may use the later six-year and six-year-three-month periods. This example is intended to show the date calculation, not to decide whether a particular reopening is lawful.
Official references: Section 149, old Act Official ↗, Section 282, new Act Official ↗ and the Income Tax Department's transition FAQs Official ↗.
Why might you receive a notice under Section 148A?
An information mismatch can lead the department to examine whether tax escaped assessment. Common examples include:
- Property transfers: a registered sale deed, buyer's TDS statement or high-value reporting that does not reconcile with your return.
- Cash deposits: credits in bank accounts without a clear explanation in reported business income, cash books or source records.
- Shares and mutual funds: capital gains or investment transactions that appear inconsistent with return schedules.
- TDS and business receipts: Form 26AS/AIS transactions that suggest receipts missing from declared turnover or income.
- Foreign income or assets: information received under international information-sharing arrangements.
- Other proceedings: findings from a tax audit, survey, court or another taxpayer's case, where the statutory information criteria are met.
A notice does not mean you have committed tax evasion. A property sale might generate only a limited capital gain; a bank receipt may represent a genuine loan, returned capital or transfer between your own accounts. The purpose of your response is to show the correct facts with traceable records.
First 24 hours after receiving a reassessment notice
What to do first
-
Verify authenticity
Open the e-Filing portal and authenticate the notice using its DIN or the PAN/document details.
-
Read the notice
Note the section, AY or Tax Year, issue date, response deadline and income amount alleged.
-
Download enclosures
Save the information relied on, order if any, notices and available proceedings history.
-
Reconcile transactions
Match each disputed item with ITR, AIS, Form 26AS, bank, books and agreements.
-
File a supported reply
Respond within the notice-specific period and preserve its acknowledgement.
1. Verify the notice and DIN
Go to the official e-Filing website Official ↗ and choose Authenticate Notice / Order issued by ITD. You can generally authenticate using the DIN and mobile OTP or permitted document/PAN details. The service is available before login.
If authentication fails, review the details and seek clarification promptly. There are limited statutory and administrative exceptions to ordinary DIN procedures; do not ignore a notice without obtaining appropriate confirmation. Official guide: Authenticate Notice/Order — User Manual Official ↗.
2. Find it in e-Proceedings
Log in and go to Dashboard → Pending Actions → e-Proceedings. Open the relevant proceeding and download the notice and documents. The portal may allow you to submit a full or partial response and request an adjournment, subject to the case's available options.
The department confirms that submitted responses cannot be edited afterward. Check the figures and attachments before the final submission. Guide: e-Proceedings User Manual Official ↗.
3. Check your time limit without making assumptions
Use the deadline on your actual notice. Section 148A(2), as currently published for the old Act, refers to the period specified in the notice; do not assume every new notice universally provides the older 7-to-30-day period. If the time is insufficient, request an extension or adjournment with clear reasons before expiry and keep proof of the request. The authority must decide whether to allow it.
How to prepare a strong Section 148A reply
A useful response is specific, dated and supported by evidence. General statements such as “All my income was already disclosed” are much less helpful than an item-by-item explanation.
Step 1: Identify the exact allegation
Separate each amount mentioned in the notice. Check the taxpayer's PAN, relevant year, nature of transaction, source of information and the amount the officer believes represents escaped income.
Step 2: Reconcile records
Compare the ITR and computation, AIS, Form 26AS, bank statements, books of account, sale deeds, invoices, capital-gain calculations, loan confirmations, gift deeds or other documents relevant to the case. Explain differences rather than hiding them.
Step 3: Test the law and timeline
Review the applicable Act and Section 149 or 282, as the case may be. If the officer relies on an extended limitation period, check whether the escaped-income amount and prescribed evidence conditions are satisfied. Where necessary, get a qualified tax professional to review sanction, service, jurisdiction and statutory exceptions.
Step 4: Write a point-wise explanation
A practical response usually includes the notice reference and DIN, the assessment/tax year, a short factual timeline, a table reconciling each disputed figure, legal submissions where relevant, an indexed list of attachments and the precise relief requested.
Step 5: Submit online and retain proof
Upload the explanation and attachments through the relevant e-Proceedings function. Keep the transaction ID, acknowledgement, submitted response and supporting files together. You may need these if a further notice or appeal follows.
A successful upload is proof that a response was submitted, not confirmation that the tax authority accepted your explanation. Review future portal communications until the proceeding is formally resolved.
Example: property sale reported as escaped income
Suppose an individual sold a property for ₹82 lakh. The registered document appears in the department's information, but the ITR does not show the transaction in the expected manner.
The officer questions the ₹82 lakh. The taxpayer produces the sale deed, acquisition records, eligible cost details, tax computation and evidence of how the sale proceeds were received. The resulting taxable capital gain, if any, may be much lower than ₹82 lakh and depends on the applicable law for that year.
The key point is that sale consideration is not automatically escaped taxable income. Equally, a taxpayer cannot dismiss a notice merely because tax was deducted by the buyer. The transaction must be reconciled and the correct income treatment demonstrated.
Example: cash deposits that are not all income
Imagine a business bank account records deposits of ₹38 lakh during the year. The business also has recorded cash sales, prior cash withdrawals and a genuine owner-capital introduction. A notice questions the deposits.
A helpful response would reconcile each category:
| Deposit category (illustrative) | Amount | Supporting proof |
|---|---|---|
Recorded cash sales | ₹19,00,000 | Sales register, invoices and cash book |
Redeposited business withdrawals | ₹7,00,000 | Withdrawal dates, cash ledger and redeposit trail |
Owner capital introduced | ₹12,00,000 | Capital account and source-of-funds evidence |
Total deposits | ₹38,00,000 | Reconciliation with the bank statement |
These entries are illustrative, not a claim that each type is necessarily exempt from tax. Whether the explanation succeeds depends on the actual documentary evidence and applicable provisions. A bank deposit alone is not a substitute for evaluating its nature and tax treatment.
What happens after you submit the show-cause reply?
The Assessing Officer considers the records and passes an order under Section 148A(3) for earlier assessment years, or Section 281(3) for the new tax years, determining whether a reassessment notice should be issued. Approval requirements apply.
If reopening is not justified, the matter can end at this stage. If the officer proceeds, you ordinarily receive a Section 148 notice (or Section 280 under the new Act) and the applicable order. This does not itself fix additional tax; it begins the next stage of the proceeding.
If you receive a Section 148 notice
- Read the order and Section 148 notice together; note the year and exact time given for filing the required return.
- Prepare the return for that year under the applicable Act. Check the form, all income schedules, reliefs, TDS and taxes paid.
- Submit and verify the return through the designated portal workflow within the period stated. Under the old Act, the stated period must not exceed three months from the end of the month of issue; the 2025 Act has a comparable rule under Section 280.
- Answer later notices and document requests, keeping a complete audit trail.
- Review the eventual order, demand or further remedy with your adviser. Reassessment can result in no additional tax, an addition, interest or penalties, depending on the findings.
A notice requiring a return should not be treated as satisfied merely by an earlier written reply. The formal return-filing instruction must be handled separately.
Can you challenge an invalid reassessment notice?
Yes, where the facts and law support a challenge. Common review points include limitation, the existence and adequacy of statutory information, applicable approvals, proper service, procedural exceptions, whether relevant evidence was considered and whether the correct Act and year were used.
The remedy depends on the stage: a detailed reply, objection, statutory appeal, or other legal proceedings may be appropriate. Not every procedural error automatically cancels a notice, and some issues must be raised within strict deadlines. Obtain professional advice promptly if you believe the notice is unlawful.
Section 148 notice vs other income tax communications
| Communication | General purpose |
|---|---|
| 143(1) intimation | Processing of a filed return, adjustments and computation |
| 143(2) scrutiny notice | Examination of a return during regular assessment |
| 148A show-cause | Opportunity to explain why an old assessment should not be reopened |
| 148 notice | Formal return requirement for reassessment under the old Act |
| Outstanding-demand notice | Collection or adjustment of an assessed demand |
The correct action depends on the section printed on the communication, not simply the words “income tax notice”. See TaxQue's income tax notice guide for a broader comparison.
Documents to keep ready before responding
- ○ Notice, annexures, DIN details and relevant orders
- ○ Filed ITR, acknowledgement, computation and tax-payment challans
- ○ AIS, TIS and Form 26AS for the relevant assessment year
- ○ Bank statements, cash books, ledgers and financial statements
- ○ Property sale deed, purchase deed and capital-gains working, if applicable
- ○ Loan confirmations, gift documents or source-of-funds evidence, if relevant
- ○ Invoices, GST records, stock registers or business turnover reconciliation
- ○ Previous replies, portal acknowledgements and authority communications
The correct list depends on the allegation. Avoid uploading unrelated sensitive records where they do not help establish the facts.
Mistakes that make reassessment proceedings harder
Ignoring the notice. Deadlines continue to run, and non-response can lead to an adverse decision or further assessment steps.
Treating transaction value as taxable income. A purchase, deposit or sale amount needs analysis before any escaped-income figure can be accepted or disputed.
Using the wrong Act. A notice for AY 2024–25 issued in 2026 can still be governed by the 1961 Act, not the new one.
Submitting unverified numbers. A reply that conflicts with your own bank records, books or previously filed ITR can undermine otherwise valid arguments.
Assuming an extension is automatic. Ask before the deadline, explain why more time is necessary, and watch for the department's decision.
Failing to save acknowledgement details. Preserve the final response, uploaded evidence and transaction ID for later review.
Getting professional help with a Section 148 or 148A notice
TaxQue can help organise transaction records, prepare a reconciliation, review the applicable notice and assist with documented replies and return-filing requirements. For support, explore TaxQue's income tax notice resolution service.
For related situations, see the property-purchase income tax notice guide or the complete income tax notice guide.
Official sources and references
- Income Tax Department — Reassessment Proceedings FAQs (1961/2025 transition) Official ↗
- Section 148A, Income-tax Act, 1961 Official ↗
- Section 148, Income-tax Act, 1961 Official ↗
- Section 149, Income-tax Act, 1961 — limitation Official ↗
- Section 280, Income-tax Act, 2025 Official ↗
- Section 281, Income-tax Act, 2025 Official ↗
- Section 282, Income-tax Act, 2025 — limitation Official ↗
- Income Tax Department — e-Proceedings Manual Official ↗
- Income Tax Department — Authenticate Notice/Order Official ↗
Reviewed for TaxQue on 19 October 2026. This educational guide describes the general legal framework; individual deadlines, exceptions and procedural remedies must be checked against the notice and governing law before filing.
