By S&S Co. Advocates & Solicitors · Published 22 September 2026 · Informational content, not legal advice: see our disclaimer
The Framework Since April 2021
Reassessment of income that has escaped assessment is governed by Sections 147, 148 and 148A of the Income Tax Act, substantially rewritten with effect from 1 April 2021 to introduce a mandatory pre-notice enquiry stage. Before issuing a formal notice under Section 148, the Assessing Officer must generally follow the procedure under Section 148A, giving the taxpayer an opportunity to show cause why a notice should not be issued, based on the information and material the officer proposes to rely upon.
The Section 148A Show Cause Step
Under Section 148A, the Assessing Officer conducts any enquiry considered necessary, provides the taxpayer an opportunity to respond to a show cause notice (typically within 7 to 30 days), considers the reply, and then passes an order under Section 148A(d) deciding whether it is a fit case for issuing a notice under Section 148. This order must be a reasoned one: a mechanical recital that the response was 'considered and not found acceptable' without addressing the specific points raised is a recognised ground for challenge.
Two Limitation Windows: Three Years and Beyond
As a general rule, no notice can be issued if three years have elapsed from the end of the relevant assessment year. A notice can be issued beyond three years, but within the outer limit the statute prescribes, only where the escaped income represented as an asset is likely to be Rs 50 lakh or more, and even then requires the approval of a more senior specified authority than is needed for the ordinary three-year window. Both the quantification of the Rs 50 lakh threshold and the correct level of approval must be independently satisfied for a notice beyond three years to be valid.
Common Grounds to Challenge a Reassessment Notice
Frequently litigated grounds include: the Section 148A(d) order failing to specifically address the taxpayer's reply; reopening based on a mere 'change of opinion' on material already considered and disclosed during the original assessment; failure to obtain, or obtaining from the wrong level of, the specified authority's approval; and reopening beyond three years without a reasoned, quantified finding that the Rs 50 lakh threshold is met.
Practical Steps on Receiving a Notice
A taxpayer should first check the assessment year and count back to see whether the notice falls within or beyond the three-year window, then verify whether the Section 148A procedure was followed and whether the approval obtained matches the correct authority for that window. These are jurisdictional questions best raised at the earliest opportunity, since they can dispose of the reassessment at the threshold without needing to contest the substantive addition.
Frequently Asked Questions
Is the Section 148A show cause step mandatory before every reassessment notice?
Yes, as a general rule, except in categories of cases the statute specifically exempts (such as certain search-related assessments), the Assessing Officer must follow the Section 148A procedure before issuing a Section 148 notice.
What happens if a reassessment notice is issued more than three years after the assessment year without quantifying escaped income at Rs 50 lakh?
Such a notice is generally without jurisdiction and can be quashed on that basis alone, since courts have held the threshold must be established at the Section 148A(d) stage, not inferred later.
Can reassessment be reopened merely because the Assessing Officer takes a different view of the same facts already disclosed earlier?
Generally no: reopening based on a mere change of opinion on material already disclosed and considered in the original assessment is a well-established ground to challenge a reassessment notice.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Income Tax Act, 1961: Sections 147, 148 and 148A, as amended with effect from 1 April 2021.