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Section 147 of India’s Income-tax Act, 1961 gives the Assessing Officer power to assess, reassess or recompute income that escaped assessment. Section 148 is the notice requiring a return. Since 1 April 2026, however, the first question is not simply “What does section 148 mean?” It is which Act governs the tax period and proceeding: the 1961 Act or the Income-tax Act, 2025. The notice stage, response procedure, approval route and deadlines differ.
This guide explains both regimes, the transition rule, what to do when a notice arrives, and the procedural rights you should preserve. It is general information, not advice on the validity of a particular notice.
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Start by identifying the governing Act
The Income-tax Department says the Income-tax Act, 2025’s reassessment provisions (sections 279–286) apply to Tax Year 2026–27 and later. Proceedings for tax years beginning before 1 April 2026, including qualifying matters already pending when the new Act commenced, can continue under the 1961 Act. The repeal of the 1961 Act therefore does not automatically move every later-dated notice into the new regime. See the Department’s Objective and scope of the New Act FAQs and Reassessment Proceedings FAQs.
| Question | 1961 Act proceeding | 2025 Act proceeding |
|---|---|---|
| Relevant period | Generally an assessment year governed by the 1961 Act, including qualifying earlier-year or pending proceedings after 1 April 2026. | Tax Year 2026–27 and later, as described by the Department. |
| Pre-notice stage | Section 148A inquiry, information, show-cause notice, reply and reasoned decision where the statutory process applies. | Section 281 show-cause notice, reply, consideration and reasoned section 281(3) decision in the ordinary case. |
| Reassessment notice | Section 148 notice. | Section 280 notice. |
| Return deadline | The period stated in the section 148 notice, capped at no more than three months from the end of the month in which the notice was issued. | Follow the period stated in the notice; the Department’s cited completion rule is separate from the return-filing deadline. |
| Completion rule | Check the applicable version of section 149 and all relevant dates; there is no single safe cutoff for every old-Act case. | Generally one year from the end of the financial year in which the section 280 notice was served, subject to specified extensions and exclusions. |
Keep the tax period, notice date and procedural stage together before applying any section number. Carrying a deadline from one column into the other can produce the wrong answer.
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How reassessment works under the Income-tax Act, 1961
1. Section 147 supplies the reassessment power
Section 147 authorises the Assessing Officer to assess, reassess or recompute income chargeable to tax that has escaped assessment for a particular assessment year. The provision is the substantive power; it does not itself tell you that a notice has been validly issued or that every procedural step has been met. The Finance Bill 2026 explanatory memorandum describes this function in its reassessment discussion (official PDF).
2. Section 148A is the ordinary pre-notice gateway
The 2021 framework inserted section 148A to place a decision stage before a section 148 notice where that process is required. The official explanation describes the sequence:
- Inquiry, if required: the Assessing Officer may make an inquiry, with the prescribed prior approval.
- Disclosure: the taxpayer receives information suggesting that income has escaped assessment.
- Show-cause opportunity: the taxpayer is invited to explain why a section 148 notice should not be issued.
- Consideration: the Assessing Officer must consider the reply and material on record.
- Reasoned decision: an order under section 148A(3) decides whether a section 148 notice should follow, with approval of the specified authority.
A show-cause notice under section 148A is therefore not the same document as a section 148 reassessment notice. It is an opportunity to challenge the proposed reopening before the notice stage.
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3. Section 148 requires the return
When a section 148 notice is issued, it requires the assessee to furnish a return for the relevant assessment year. The Department states that the return must be filed within the period written in the notice, and that period cannot exceed three months from the end of the month in which the notice was issued. For example, if the notice is issued in July, the statutory cap described by the Department would run from 31 July, subject to the exact period stated in the notice and the facts of the case. Do not substitute a self-calculated date for the date printed in the notice.
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4. Limitation and approval must be checked separately
Section 149 is the old Act’s limitation provision. Its application depends on the statutory version governing the assessment year, the issue and service dates, the information relied on and other facts. The Department cautions that old proceedings continuing after 1 April 2026 remain subject to section 149. Section 151 approval requirements also remain relevant to earlier-year proceedings governed by the 1961 Act. A conclusion that a notice is “too old” cannot safely be made from the calendar year alone.
How reassessment works under the Income-tax Act, 2025
Ordinary sequence: sections 281, 280 and 279
For a Tax Year 2026–27 or later proceeding, the Department describes this ordinary sequence:
- Section 281 show-cause notice: the Assessing Officer communicates information suggesting escaped income and asks for a response.
- Taxpayer reply: the taxpayer explains the facts, supplies supporting material and addresses why reassessment should not proceed.
- Section 281(3) decision: the response is considered and a reasoned order is passed.
- Section 280 notice: if the decision supports reassessment, the statutory notice is issued.
- Section 279 reassessment order: the reassessment is completed under the new Act’s order provisions.
The new Act’s general completion rule is that the reassessment order is due within one year from the end of the financial year in which the section 280 notice was served. The Department identifies extensions and exclusions for specified circumstances, including certain transfer-pricing references and periods covered by court or tribunal stays. The one-year rule is therefore a starting framework, not a universal last day for every file.
When the section 281 step can be skipped
The Department lists statutory situations in which the ordinary section 281 show-cause process does not apply. Its examples include specified information from faceless collection mechanisms, directions of a specified Approving Panel, and findings or directions in certain orders of authorities, tribunals or courts. A taxpayer should compare the notice’s stated basis with the applicable exception rather than assume that every new-Act case must contain a pre-notice show-cause.
The transition on 1 April 2026
The 2025 Act repealed the 1961 Act from 1 April 2026, but transition provisions preserve the old Act for proceedings pending on that date and for proceedings relating to tax years beginning before it, along with rights and obligations that arose under the old law. The Department gives a practical example: a section 148A(1) show-cause notice issued before 1 April 2026 may be followed after that date by an old-Act section 148A(3) order and section 148 notice, subject to section 149. The old section 151 approval hierarchy can continue to govern such an earlier-year proceeding.
Consequently, a notice issued after 1 April 2026 is not, by date alone, proof that sections 281 and 280 apply. Establish the tax period, whether a proceeding was already pending, and the section cited in each document.
What to do when a reassessment notice arrives
- Save the complete record. Download the notice, annexures, information statement, service details and any order from the e-filing portal. Preserve the email or portal timestamp showing when it was served.
- Identify the regime. Note the assessment year or tax year, the Act named, every section cited, the issue date and the service date. Check whether an earlier show-cause or order exists.
- Calendar the stated deadline. For an old-Act section 148 notice, use the period printed in the notice and check it against the Department’s three-month cap. For a show-cause notice, the response date is the immediate deadline even if you intend to challenge jurisdiction.
- Reconcile the allegation. Compare the information suggesting escaped income with your return, books, bank records, tax statements, contracts and prior correspondence. Identify factual errors, duplicated income, already-disclosed transactions and issues outside the relevant period.
- Prepare a point-by-point reply. Answer each allegation under a clear heading, attach indexed evidence and explain any calculation. If records are unavailable, say what was searched and why, rather than leaving an allegation unanswered.
- File through the required channel. Use the portal or method specified in the notice, complete any verification, and save the acknowledgement number, uploaded files and final submitted copy.
- Track the next order. Keep the show-cause, reply, acknowledgement and subsequent reasoned order together. A later section 148 or section 280 notice should be read against the earlier decision and the approval described in the governing regime.
Taxpayer rights worth protecting
Notice of the case against you
In the ordinary old-Act section 148A sequence, the taxpayer is to receive the information suggesting escapement and an opportunity to be heard before the reasoned decision. The ordinary new-Act section 281 sequence similarly provides a show-cause and response opportunity, subject to the listed exceptions. If the material is missing, incomplete or unintelligible, record that defect and request the information needed to give a meaningful response.
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The statutory descriptions require the decision-maker to consider the response. A submission should therefore connect each factual assertion to an attachment and explain the legal consequence sought. Keep proof of filing so you can demonstrate what was before the officer.
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A reasoned order and proper approval
The old Act’s section 148A(3) decision and the new Act’s section 281(3) decision are described as reasoned orders. Check that the order addresses the principal points raised and identifies the approval route required by the applicable law. For old-Act matters, the Department specifically preserves the relevance of section 151 approvals for earlier-year proceedings.
Time to respond, not silence
Disagreement with jurisdiction or limitation does not make a notice disappear. File a timely response while preserving every objection. Missing the response window can leave the record without your explanation and evidence.
Common mistakes and how to avoid them
- Using “assessment year” and “tax year” interchangeably: write down the exact period shown in the notice.
- Treating a show-cause notice as the final reassessment: section 148A and section 281 are decision stages; section 148 and section 280 are the subsequent notice stages in their respective regimes.
- Assuming the 2025 Act applies because the letter is post-1 April 2026: transition rules can preserve the 1961 Act for earlier periods and pending proceedings.
- Relying on a generic limitation chart: old section 149 analysis depends on the governing text and dates; new-Act extensions and exclusions can affect the one-year completion framework.
- Submitting a narrative without an index: label every document, cite it in the reply and retain the exact uploaded version.
- Ignoring service evidence: a portal download date, email header and notice metadata can matter when calculating a response or challenging sequence.
Questions taxpayers commonly ask
Is reassessment the same as a routine scrutiny assessment?
No. Reassessment addresses income the department considers to have escaped assessment for a period. It begins with the statutory reopening sequence and notices described above, rather than the ordinary workflow for an assessment selected for scrutiny.
What if the notice cites section 148 but I never received section 148A material?
Do not ignore the section 148 deadline. Check the notice date, the relevant year, whether a statutory exception is claimed, and whether an earlier order or communication was served. Raise the missing-step objection in the response and obtain professional advice on the facts.
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What documents should accompany a reply?
Use documents that answer the allegation: filed returns, computation, ledgers, invoices, contracts, bank statements, tax-withholding statements, reconciliations and earlier submissions. Include only relevant records and explain the link between each attachment and your response.
Should I handle a live notice without professional help?
Limitation, approval, service and transition questions can turn on small factual differences. A chartered accountant or tax lawyer who can review the complete notice history is appropriate when the amount, procedural objection or potential penalty is material.
Authoritative references
For the current administrative explanation, read the Income Tax Department’s Reassessment Proceedings FAQs. The statutory background to the 1961 Act provisions appears in the Government of India’s Finance Bill 2026 explanatory memorandum. Transition principles are addressed in the Department’s Objective and scope of the New Act FAQs. Check the page and document versions applicable when your notice was issued.
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Can I challenge jurisdiction and still file a reply?
Yes. Preserve the objection in a timely response and provide the factual explanation and documents requested. A jurisdictional challenge is not a reason to miss the deadline stated in the notice.
What should I retain after filing my response?
Keep the notice, service proof, submitted form or letter, attachment index, uploaded files, acknowledgement number and every subsequent order in one dated record.
Does a reassessment notice automatically mean additional tax is payable?
No. It starts a statutory process. The final liability depends on the information considered, your evidence, the applicable law and the resulting order.
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