Income Tax

Section 148 Notice: Income Escaping Assessment — What It Means & How to Respond

CA Nikhil Gupta·June 2026·8 min readTAX NOTICES

Reviewed by CA Nikhil Gupta · Last reviewed 17 June 2026

A Section 148 notice is far more serious than a routine intimation — it means the tax department believes some of your income 'escaped assessment' in a prior year and wants to reopen that year's case. Since the 2021 amendment, there's now a mandatory pre-notice procedure under Section 148A that gives you a chance to respond before a formal notice is even issued. A reassessment notice must also now be read through a 2026 transition gate: for AY 2026–27 and earlier years, reassessment continues under the Income-tax Act, 1961 (including proceedings started after 1 April 2026 for those earlier years, subject to savings provisions), while the Income-tax Act, 2025 reassessment provisions (sections 279 to 286) apply to Tax Year 2026–27 and later. This guide covers the 1961-Act framework applicable to AY 2026–27 and earlier years. Here's how the reassessment process works and what your options are.

What Is 'Income Escaping Assessment'?

Section 147 deals with situations where the Assessing Officer has 'reason to believe' (the legal standard, now reframed as 'information suggesting' after the 2021 amendments) that income chargeable to tax has escaped assessment for a particular year — i.e., it wasn't taxed when it should have been. Section 148 is the notice issued to reopen that assessment.

Section 148A: The Mandatory Pre-Notice Procedure (Since 2021)

Before issuing a Section 148 notice, the Assessing Officer must now follow the procedure under Section 148A:

Conduct an inquiry (if required) with prior approval, regarding the information suggesting income has escaped assessment
Provide the taxpayer an opportunity to respond — a show-cause notice is issued, giving the taxpayer a minimum of 7 days (extendable up to 30 days) to explain why a notice under Section 148 should not be issued
Consider the taxpayer's reply and pass an order under Section 148A(d) deciding whether it is a fit case to issue a Section 148 notice
If yes, the Section 148 notice is then issued along with the order and the information/material relied upon

⚠ Section 148A doesn't apply in certain cases: The pre-notice procedure under 148A can be dispensed with in cases involving search/seizure operations, or where the information suggests escapement linked to specific categories (e.g., certain asset-based information shared by other authorities). In such cases, a Section 148 notice may be issued more directly.

Time Limits for Reopening

Escaped Income Amount	Maximum Time Limit for Notice
Below ₹50 lakh	Section 148A show-cause: up to 3 years; Section 148 notice: up to 3 years 3 months from end of relevant assessment year
₹50 lakh or more	Section 148A show-cause: up to 5 years; Section 148 notice: up to 5 years 3 months from end of relevant assessment year

(These limits have been revised by successive Finance Acts — always check the limit applicable to the relevant assessment year, as transitional provisions may apply to notices issued around the time of amendments.)

What Triggers a Section 148 Notice?

High-value transactions reported in AIS/SFT (Statement of Financial Transactions) that don't match the ITR filed (or no ITR filed at all)
Information received from other government agencies (e.g., GST data, registrar of properties, banks)
Information from search and seizure operations on third parties (e.g., your name appears in someone else's seized documents)
Foreign asset/income information received through international information-sharing agreements

How to Respond to a Section 148 Notice

Don't Ignore It

Failing to respond to a Section 148 notice can result in the Assessing Officer completing the reassessment based on the information available (a 'best judgment assessment' under Section 144), which is typically far less favorable than if you had participated and explained the transaction.

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Recompute the disputed year's tax liabilityIf you've received a Section 148 notice for a prior year, recompute that year's tax position carefully.

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Frequently Asked Questions

What is the difference between a Section 143(1) intimation and a Section 148 notice? ▼

A Section 143(1) intimation is a routine, automated communication sent after processing nearly every ITR, covering only limited arithmetical/consistency adjustments for the current return. A Section 148 notice is far more serious — it's issued to reopen a PRIOR YEAR's assessment because the tax department believes income chargeable to tax 'escaped assessment' in that year. It involves a formal reassessment proceeding, requires the mandatory Section 148A pre-notice procedure (in most cases), and is subject to specific time limits based on the quantum of escaped income.

How long can the tax department go back to issue a Section 148 notice? ▼

Under the 1961-Act limits applicable from 1 September 2024, the Section 148A show-cause window is up to 3 years from the end of the relevant assessment year for escaped income below ₹50 lakh, and up to 5 years where the escaped income is ₹50 lakh or more; the corresponding Section 148 notice windows are 3 years 3 months and 5 years 3 months respectively. These limits have been revised across Finance Acts, so the limit applicable depends on the specific assessment year involved and the year in which the notice is issued — verify the current position for your case.

Do I get a chance to respond before a Section 148 notice is formally issued? ▼

In most cases, yes. Since the 2021 amendments, the Assessing Officer must follow the Section 148A procedure before issuing a Section 148 notice — this includes conducting any necessary inquiry, issuing a show-cause notice giving you the period specified in the show-cause notice to explain why a reassessment notice should not be issued, and then passing a reasoned order under Section 148A(d) before deciding whether to proceed with a Section 148 notice. However, this pre-notice procedure can be bypassed in certain cases, such as those arising from search and seizure operations.

Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: Income Tax
Official starting point: www.incometax.gov.in

Page source links

Primary sources & related provisions

Statutory provisions referenced in this guide: