Short answer: a Section 148 notice reopens an assessment year you thought was closed. Before it can issue, the Assessing Officer must go through the Section 148A show-cause stage. And before arguing the merits at all, three jurisdictional questions decide a large proportion of these cases: was the notice within limitation, was the ₹50 lakh gate crossed where the extended period is being used, and did sanction come from the correct authority.
What reassessment is
An assessment year is normally closed once processing or assessment is complete. Section 147 allows it to be reopened where income chargeable to tax has escaped assessment. Section 148 is the notice that starts it, requiring you to file a return for that year, after which the officer proceeds to assess.
Reopening is not a general power to revisit an old year because a different view now seems preferable. It requires information suggesting escaped income, and it is constrained by limitation, by a monetary gate for older years, and by a sanction requirement. Those constraints are where most successful challenges live.
The 148A gateway
Since the reassessment scheme was recast, a notice under Section 148 cannot simply issue. The Assessing Officer must first proceed under Section 148A — putting the information suggesting escaped income to you by way of a show-cause notice, and considering your reply before deciding whether to issue the reassessment notice.
This stage matters more than taxpayers usually realise. It is the point at which a reopening can be prevented rather than fought afterwards. A reply that engages with the specific information — showing the transaction was disclosed, that it is not income, that it relates to a different year, or that the material does not say what the officer has read it to say — can end the matter without a 148 notice ever issuing.
Two practical points. Ask for the material relied on if it has not been supplied; a show-cause you cannot meaningfully answer is itself a ground. And answer within the time given, seeking an extension on the record if the period is genuinely too short.
Time limits — the version matters
This is the single most important thing to get right, because the provisions have been recast more than once and the applicable version depends on the assessment year and the date of the notice.
As recast with effect from 1 September 2024:
| Situation | Period from end of the relevant assessment year |
|---|---|
| Normal cases | 3 years 3 months |
| Where escaped income is ₹50 lakh or more | 5 years 3 months |
Before that recast, under the scheme introduced in 2021, the normal period was 3 years, extending to 10 years where the officer held books, documents or evidence revealing escaped income of ₹50 lakh or more represented as an asset, expenditure or entry.
The reduction of the outer limit from ten years to five years and three months is substantial. For any notice, the first step is to identify which version governs and compute the limitation on that basis — a notice good under the older scheme may be time-barred under the current one, and vice versa.
The ₹50 lakh gate is jurisdictional
Where the extended period is invoked, the monetary threshold is not a description of the case — it is a precondition for the officer having the power at all.
Absent material establishing escaped income of ₹50 lakh or more, in the form the section requires, extended-period reopening is void. High Court decisions since 2022 have consistently quashed beyond-period notices lacking that foundation. The line of authority is developing but consistent.
Practically, that means examining what the officer actually holds rather than what the notice asserts. A notice stating that escaped income exceeds ₹50 lakh, without material showing it in the form the section contemplates, is open to challenge on jurisdiction — before the merits of the underlying transaction are reached.
Sanction under Section 151
Reassessment requires prior approval from a specified authority, and which authority is correct depends on how much time has elapsed since the end of the assessment year.
Two defects recur:
- The wrong authority approved it. Frequently fatal, and frequently overlooked, because it requires checking the elapsed period against the correct sanctioning tier rather than simply noting that an approval exists.
- The approval was mechanical. An undated endorsement, a rubber stamp, or a bare "Yes, I am satisfied" with nothing showing the authority applied its mind. A consistent line of decisions treats sanction as a jurisdictional precondition, so an approval given without application of mind invalidates the reopening.
Because these go to jurisdiction, they can end a matter without the merits being reached at all — which is why they are checked first, and checked even where the substantive answer looks strong.
Notices from the COVID-extension period
A large tranche of reassessment notices issued around the transition between the old and new schemes, during the period covered by the Relaxation Act, was resolved by the Supreme Court in Union of India vs Rajeev Bansal, decided by a five-judge bench in October 2024.
In summary: the Relaxation Act applies to the Income-tax Act for the extended period; the interval between issuance and reply arising from the earlier remand is excluded when computing the Section 149 limitation; and each notice must still independently satisfy the time limit, with sanction from the correct authority. A large number of notices were upheld on that basis, and those failing the recomputed limitation were quashed.
If your notice belongs to that period, the answer turns on the specific dates and the sanctioning authority — it is not resolved by the general proposition either way.
How to approach a reply
Working through the layers in order, rather than starting with the facts:
- Is the notice valid? Limitation on the correct version of Section 149; the ₹50 lakh foundation where the extended period is used; sanction from the correct authority with visible application of mind; a Document Identification Number; correct addressee; proper service.
- Does the information actually show escaped income? Often it shows a transaction, not income — a sale whose cost is not reflected in the officer's material, a receipt already disclosed, an amount belonging to a different year, or a figure taken from a report without reconciliation.
- If some addition survives, what reduces it? Correct computation, cost of acquisition, exemption or deduction available on the same facts, and the penalty position, including immunity under Section 270AA where its conditions are met.
Raise these cumulatively rather than choosing between them. The officer needs only one ground to sustain the reopening; a reply resting on a single argument leaves nothing if it is rejected.
On whether to file the return the notice asks for: filing under protest, with objections to jurisdiction expressly recorded, is usually safer than refusing. Not filing does not preserve a limitation point, and it can invite a best-judgement assessment which is a worse position to argue from.
Under the Income-tax Act 2025
Notices for assessment years up to AY 2026-27 continue under the 1961 Act. For tax year 2026-27 onward:
| Concept | 1961 Act | 2025 Act |
|---|---|---|
| Income escaping assessment | 147 | 279 |
| Reassessment notice | 148 | 280 |
| Show-cause before reassessment | 148A | 281 |
| Time limits | 149 | 282 |
| Sanction | 151 | 284 |
| Completion limitation | 153 | 286 |
| Penalty — under/mis-reporting | 270A | 439 |
The 2025 Act carries its own reassessment timeline, and old-Act notices for pre-2026 years remain possible, so the governing period should be identified before limitation is computed under either. The section mapping guide covers the wider renumbering.
Reassessment is among the more heavily litigated areas of Indian tax law, and the position depends closely on the assessment year, the date of the notice and the material relied on. This note sets out the general framework; it is not a substitute for checking the current provisions and the status of the authorities against the facts of a particular case.