Section 147 Income Escaping Assessment

Section 147 empowers the Assessing Officer to reassess a completed assessment if they have 'reason to believe' that any income chargeable to tax has escaped assessment. It can be used when new information comes to light — such as data from AIR/SFT reports, search operations, or audit objections — suggesting that income was not properly declared in the original return.

Common triggers include: large cash transactions reported by banks or registrars that were not declared; income identified in a search or survey of another party; audit objections by the C&AG or internal audit; mismatch between Form 26AS/AIS and the return; or specific intelligence about undisclosed income or assets.

Under the current law (post Finance Act 2021), reassessment can generally be initiated within three years from the end of the relevant assessment year. In cases where the escaped income exceeds Rs 50 lakh and there is evidence of serious non-disclosure, the time limit extends to ten years. The time limits and approval requirements are strictly prescribed.

Yes. You can file objections before the AO within the prescribed time after receiving the 148 notice. If the AO overrules the objections, you can challenge the reopening before the High Court by way of a writ petition. Grounds for challenge include: no tangible material, change of opinion, time-barred reopening, and lack of proper approval.

Section 147 defines the power to assess or reassess escaped income (the substantive provision), while Section 148 specifies the procedure — the AO must issue a formal notice before initiating reassessment. The notice under 148 triggers the reassessment proceedings under 147. Both sections must be read together.

Reason to believe is a legal threshold requiring the AO to have specific, tangible material — not mere suspicion or change of opinion — that income has escaped assessment. If the original assessment considered the same material and accepted your position, reopening on the same grounds is not permissible. We assess whether this standard has been met in your case.

First, request the reasons recorded for reopening within 30 days of the notice. You then have 30 days to file objections to the reopening. Simultaneously, respond to the 148 notice by filing a return if required. Do not ignore the notice — contact us immediately so we can assess the validity and file timely objections.

Contact N D Savla & Associates in Panaji, Goa as soon as the Section 148 notice arrives. We review the reasons recorded, advise on validity, draft and file legal objections, and represent you through the entire reassessment proceedings or challenge before the High Court if appropriate.