An Overview About Re-assessment under Income Tax Act,1961. Relevant Provisions are from Section 147 to 153 of the Act.

1. Hello!! Nitish Ji...
Hello!! Jain sab... Kya haal Chal..(My typical way to greet my clients)
Sir, I got this notice from Income Tax Department yesterday Morning. Kindly check and tell
what should be the next course of action from our side.
hmm ..lemme see the notice !!
The Notice Dated xx/xx/2017 was issued U/s 148 of Income Tax Act, 1961 Stating that the
Assessing office has reason to believe that certain income of the assessee has escaped assessment
for the Assessment Year 2011-12 hence requiring assessee to file the return of income for the
assessment year 2011-12 with in the specified period and attend in person or by authorized
representative, the office of the respective income tax officer on the given date.
ok! Jain sab give me the Power of attorney to attend this matter on your behalf...Let me attend
the office on the given date and see what the matter is.
And kindly bring copy of your return filled u/s 139 for the financial year 2010-11 (layman does
not understand the concept of previous year and assessment generally) with your bank statement
for the same period and records and documents you had maintained for such period also so that
we could file your return in response to the notice.
Ok!! Nitish Ji, I will provide you these documents in 2-3 days.
( 2-3 Days of clients generally means 15-20 days in my case)
Now let us see what section 148 is
Section 148 of the Income Tax Act provides That Before making the assessment or re
assessment or re computation u/s 147, the Assessing officer shall serve notice requiring the
assessee to furnish a return of income for the relevant assessment year with the prescribed
period. It will be treated as if the return was filled u/s 139.
Here it is stated that “before making assessment u/s 147”. So let’s see what section 147 Provides.
Section 147 Provides That if the Assessing officer has reason to believe that certain income
chargeable to tax has escaped assessment for any assessment year then he may, subject to
provision of section 148 to 153 , assess or reassess such income and also any other income
chargeable to tax which has escaped assessment and which comes to his notice subsequently in
the course of the proceedings under this section, or recomputed the loss or the depreciation
allowance or any other allowance, as the case may be, for the assessment year concerned.
Therefore it is clear that there may be some income of the assessee pertaining to Assessment year
2011-12 which came to the notice of the assessing office and which has escaped assessment.
The Notice my client has received pertains to Assessment year 2011-12.let’s see the Time limit
to issue such Notice. The Time Limit to issue Notice u/s 148 has been provided in section 149 of
the act. Section 149 provides that –
a) No Notice u/s 148 can be issued after the expiry of 4 years from the end of relevant
assessment year subject to clause (b) and ( c) below

2. b) No Notice u/s 148 can be issued after the expiry of 6 years from the end of relevant
assessment year unless the income escaped assessment amounts to Rs. 1 lakh or more.
c) No Notice u/s 148 can be issued after the expiry of 16 years from the end of relevant
assessment year unless the income in relation and asset including financial interest in any
entity outside India has escaped assessment.
My client has received the Notice for the assessment year 2011-12 in the Year 2017-18 hence it
may fall under the clause (b) above. It can be inferred that there must be some income likely to
be amounting Rs. 1 lakh or more which has escaped assessment.
Further Section 151 provides that the assessing office cannot issue notice u/s 148 beyond the
period of 4 years unless the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a
fitcase forthe issue of suchnotice.
Hence when I attend the proceedings on my client’s behalf I should ask whether the assessing office has
obtainedthe approval of commissionerorprincipal commissioneretc.
Oh! There was some words “reason to believe” under section 147. Let me check its interpretation
accordingto the courts.
Honorable Supreme courtincase of Parashuram Pottery Works Co. Ltd V/s CIT HeldThat:
“1. Two conditions have to be satisfied before an Income Tax Officer acquires jurisdiction to issue notice
under section 148 beyond theperiod of 4 yearsbut within the period of 8 years:
(i) The Income Tax Officer must have reason to believe that income chargeable to tax has escaped
assessment;
(ii) He must have reason to believe that such income has escaped assessment by reason of the
omission or failure on the partof the assessee to disclose fully and truly material facts necessary for his
assessmentforthatyear.”
Hence It is a mandatory precondition for making assessment or reassessment u/s 147 that the assessing
officer must have reason to believe that some income chargeable to tax has escaped assessment and
also he must have reason to believe that such income has escaped assessment by the reason of failure
or omissiononthe assessee’spart.
Now I will wait for the client to bring the documents .After examining the documents we shall decide
furtheraction.
To Be Continued……….
(This article contains only an over view of the relevant sections and not the technical part of the
provisions. )
( preparedBy- NitishJoshi)