Question 1

Section 148 (now 280), Reassessment notice: they want to reopen old years

Accepted Answer

148 means the AO believes income escaped assessment in a previously filed and processed return. They want to reopen that assessment year and tax the escaped income. Finance Act 2021 reforms: Major change, AO now requires prior approval from PCIT/CIT before issuing 148 notice. Also must provide an "information" that suggests escapement. The old unlimited fishing expeditions are now restricted. Key defence under Sec 148A (now Sec 281, Income-tax Act 2025): Before issuing 148 notice, AO must issue a Sec 148A(b) (now Sec 281) show cause notice giving you 7-30 days to respond. If your response satisfies the AO, no 148 notice is issued. This is your best opportunity to stop the reassessment before it starts.

Question 2

Voluntary disclosure: declaring income before you get a notice

Accepted Answer

If you realise you missed declaring income, interest income, rental income, freelance income, the smartest move is to declare it before the department comes to you. Voluntary disclosure + revised ITR = tax + interest (Sec 234A/B, now Sec 423/424, Income-tax Act 2025). No penalty. No notice. No scrutiny. Revised ITR can be filed until December 31 of the relevant Assessment Year, before that date, file a revised return and pay the tax with interest. After December 31, options narrow significantly. Even if the revised ITR window is closed, proactively disclosing through the AO (filing a rectification application or writing to the jurisdictional AO with voluntary payment) is treated far more leniently than waiting to be caught.

Question 3

Time limits and limitation: when a notice becomes invalid

Accepted Answer

Every assessment has a time limit. A notice issued beyond the time limit is barred by limitation and legally void, this is a complete defence even if the underlying tax demand is substantively correct. Key limitation periods: • Sec 143(3) (now Sec 270(10), Income-tax Act 2025) assessment: must be completed within 12 months from end of AY (for AY 2023-24 → by March 31, 2025) • 148 reassessment: 3 years from end of AY for income escaped ≤₹50L; 10 years for >₹50L (with specified conditions) • 154 rectification: 4 years from end of AY • CIT(A) appeal: 30 days from date of assessment order. Always check the notice date against the limitation period first, before doing anything else.

Question 4

Section 270(1) (old 143(1)): Intimation and Demand

Accepted Answer

The most common IT notice, sent automatically by the CPC computer. Not a scrutiny notice. Not a raid. But if ignored or mishandled, the demand amount gets locked and interest begins. Most Sec 270(1), Income-tax Act 2025 (old Sec 143(1)) demands can be reduced to zero. What triggers Sec 270(1) (old Sec 143(1)) demand: (1) AIS shows income not declared in ITR, most common. (2) TDS in Form 168 (old Form 26AS) not matching claimed TDS in ITR. (3) Deduction claimed exceeds limit. (4) Arithmetical mistake in ITR. (5) Carried-forward loss claimed without filing return in loss year. Three possible Sec 270(1) (old Sec 143(1)) outcomes: (A) Refund, CPC agrees with your return, issues refund. (B) No demand, no refund, CPC processing matches your return. (C) Demand, CPC finds discrepancy, raises a demand. Do NOT just pay the demand: Sec 270(1) (old Sec 143(1)) demands are often incorrect. In the most common case, FD interest in AIS that taxpayer forgot to declare, the demand is valid but the penalty is avoidable. In the second most common case, TDS credit mismatch due to PAN error by employer, demand is incorrect and should be rectified. Response options: (A) Agree, pay demand.

Old year reopened? Answer the show cause first.

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Old year reopened? Answer the show cause first.