Section 147 of Income Tax Act "Income escaping assessment"
147. If the Assessing Officer has reason to believe that
any income chargeable to tax has escaped assessment for any
assessment year, he may, subject to the provisions of
sections 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 recompute
the loss or the depreciation allowance or any other
allowance, as the case may be, for the assessment year
concerned (hereafter in this section and in sections 148 to
153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of
section 143 or this section has been made for the relevant
assessment year, no action shall be taken under this section
after the expiry of four years from the end of the relevant
assessment year, unless any income chargeable to tax has
escaped assessment for such assessment year by reason of the
failure on the part of the assessee to make a return under
section 139 or in response to a notice issued under
sub-section (1) of section 142 or section 148 or to disclose
fully and truly all material facts necessary for his
assessment, for that assessment year:
Provided further that nothing contained in the first
proviso shall apply in a case where any income in relation
to any asset (including financial interest in any entity)
located outside India, chargeable to tax, has escaped
assessment for any assessment year:
Provided also that the Assessing Officer may assess or
reassess such income, other than the income involving
matters which are the subject matters of any appeal,
reference or revision, which is chargeable to tax and has
escaped assessment.
Explanation 1.-Production before the Assessing Officer of
account books or other evidence from which material evidence
could with due diligence have been discovered by the
Assessing Officer will not necessarily amount to disclosure
within the meaning of the foregoing proviso.
Explanation 2.-For the purposes of this section, the
following shall also be deemed to be cases where income
chargeable to tax has escaped assessment, namely :-
(a) where no return of income has been furnished by the
assessee although his total income or the total income of
any other person in respect of which he is assessable under
this Act during the previous year exceeded the maximum
amount which is not chargeable to income-tax ;
(b) where a return of income has been furnished by the
assessee but no assessment has been made and it is noticed
by the Assessing Officer that the assessee has understated
the income or has claimed excessive loss, deduction,
allowance or relief in the return ;
(ba) where the assessee has failed to furnish a report in
respect of any international transaction which he was so
required under section 92E;
(c) where an assessment has been made, but-
(i) income chargeable to tax has been underassessed ; or
(ii) such income has been assessed at too low a rate ; or
(iii) such income has been made the subject of excessive
relief under this Act ; or
(iv) excessive loss or depreciation allowance or any other
allowance under this Act has been computed;
(ca) where a return of income has not been furnished by the
assessee or a return of income has been furnished by him and
on the basis of information or document received from the
prescribed income-tax authority, under sub-section (2) of
section 133C, it is noticed by the Assessing Officer that
the income of the assessee exceeds the maximum amount not
chargeable to tax, or as the case may be, the assessee has
understated the income or has claimed excessive loss,
deduction, allowance or relief in the return;
(d) where a person is found to have any asset (including
financial interest in any entity) located outside India.
Explanation 3.-For the purpose of assessment or reassessment
under this section, the Assessing Officer may assess or
reassess the income in respect of any issue, which has
escaped assessment, and such issue comes to his notice
subsequently in the course of the proceedings under this
section, notwithstanding that the reasons for such issue
have not been included in the reasons recorded under
sub-section (2) of section 148.
Explanation 4.-For the removal of doubts, it is hereby
clarified that the provisions of this section, as amended by
the Finance Act, 2012, shall also be applicable for any
assessment year beginning on or before the 1st day of April,
2012.
148. Before making the assessment, reassessment or
recomputation under section 147, and subject to the
provisions of section 148A, the Assessing Officer shall
serve on the assessee a notice, along with a copy of the
order passed, if required, under clause (d) of section 148A,
requiring him to furnish within such period, as may be
specified in such notice, a return of his income or the
income of any other person in respect of which he is
assessable under this Act during the previous year
corresponding to the relevant assessment year, in the
prescribed form and verified in the prescribed manner and
setting forth such other particulars as may be prescribed;
and the provisions of this Act shall, so far as may be,
apply accordingly as if such return were a return required
to be furnished under section 139:
Provided that no notice under this section shall be issued
unless there is information with the Assessing Officer which
suggests that the income chargeable to tax has escaped
assessment in the case of the assessee for the relevant
assessment year and the Assessing Officer has obtained prior
approval of the specified authority to issue such notice.
Explanation 1.-For the purposes of this section and section
148A, the information with the Assessing Officer which
suggests that the income chargeable to tax has escaped
assessment means,-
(i) any information flagged in the case of the assessee for
the relevant assessment year in accordance with the risk
management strategy formulated by the Board from time to
time;
(ii) any final objection raised by the Comptroller and
Auditor General of India to the effect that the assessment
in the case of the assessee for the relevant assessment year
has not been made in accordance with the provisions of this
Act.
Explanation 2.-For the purposes of this section, where,-
(i) a search is initiated under section 132 or books of
account, other documents or any assets are requisitioned
under section 132A, on or after the 1st day of April, 2021,
in the case of the assessee; or
(ii) a survey is conducted under section 133A, other than
under sub-section (2A) or sub-section (5) of that section,
on or after the 1st day of April, 2021, in the case of the
assessee; or
(iii) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or Commissioner, that
any money, bullion, jewellery or other valuable article or
thing, seized or requisitioned under section 132 or section
132A in case of any other person on or after the 1st day of
April, 2021, belongs to the assessee; or
(iv) the Assessing Officer is satisfied, with the prior
approval of Principal Commissioner or Commissioner, that any
books of account or documents, seized or requisitioned under
section 132 or section 132A in case of any other person on
or after the 1st day of April, 2021, pertains or pertain to,
or any information contained therein, relate to, the
assessee,
the Assessing Officer shall be deemed to have information
which suggests that the income chargeable to tax has escaped
assessment in the case of the assessee for the three
assessment years immediately preceding the assessment year
relevant to the previous year in which the search is
initiated or books of account, other documents or any assets
are requisitioned or survey is conducted in the case of the
assessee or money, bullion, jewellery or other valuable
article or thing or books of account or documents are seized
or requisitioned in case of any other person.
Explanation 3.-For the purposes of this section, specified
authority means the specified authority referred to in
section 151.]
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Sub. by the Act No. 13 of 2021, w.e.f. 1-4-2021.
Section 148A** of Income Tax Act "Conducting inquiry, providing opportunity before issue of notice under section 148."
Section 148A. The Assessing Officer shall, before issuing
any notice under section 148,-
(a) conduct any enquiry, if required, with the prior
approval of specified authority, with respect to the
information which suggests that the income chargeable to tax
has escaped assessment;
(b) provide an opportunity of being heard to the assessee,
with the prior approval of specified authority, by serving
upon him a notice to show cause within such time, as may be
specified in the notice, being not less than seven days and
but not exceeding thirty days from the date on which such
notice is issued, or such time, as may be extended by him on
the basis of an application in this behalf, as to why a
notice under section 148 should not be issued on the basis
of information which suggests that income chargeable to tax
has escaped assessment in his case for the relevant
assessment year and results of enquiry conducted, if any, as
per clause (a);
(c) consider the reply of assessee furnished, if any, in
response to the show-cause notice referred to in clause (b);
(d) decide, on the basis of material available on record
including reply of the assessee, whether or not it is a fit
case to issue a notice under section 148, by passing an
order, with the prior approval of specified authority,
within one month from the end of the month in which the
reply referred to in clause (c) is received by him, or where
no such reply is furnished, within one month from the end of
the month in which time or extended time allowed to furnish
a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply
in a case where,-
(a) a search is initiated under section 132 or books of
account, other documents or any assets are requisitioned
under section 132A in the case of the assessee on or after
the 1st day of April, 2021; or
(b) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or Commissioner that
any money, bullion, jewellery or other valuable article or
thing, seized in a search under section 132 or requisitioned
under section 132A, in the case of any other person on or
after the 1st day of April, 2021, belongs to the assessee;
or
(c) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or Commissioner that
any books of account or documents, seized in a search under
section 132 or requisitioned under section 132A, in case of
any other person on or after the 1st day of April, 2021,
pertains or pertain to, or any information contained
therein, relate to, the assessee.
Explanation.-For the purposes of this section, specified
authority means the specified authority referred to in
section 151.]
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** 1. Ins. by the Act No. 13 of 2021, w.e.f. 1-4-2021.
What is Disclosure of information respecting assessees? Section 138 of Income Tax Act 1961
What is Return of income? Section 139 of Income Tax Act 1961
What is Permanent account number? Section 139A of Income Tax Act 1961
What is Assessment? What is Best judgment assessment? Section 143 and 144 of Income Tax Act 1961
What is Reference to dispute resolution panel? Section 144C of Income Tax Act 1961