Reassessment Under Income Tax Act – Meaning, Provisions & Process

📌 What is Reassessment?

Reassessment refers to the process where the Assessing Officer (AO) re-examines an already completed assessment if they believe that income has escaped assessment. This is done under Section 147 of the Income Tax Act, 1961.

🔹 Key Provisions of Reassessment (Section 147)

1️⃣ Reason to Believe:

• The AO must have a valid reason to believe that some income was not assessed or was under-reported.
• Mere change of opinion is not a valid ground for reassessment.

2️⃣ Time Limits for Reassessment Notices (Section 148):

• If the escaped income is ₹50 lakh or less → Notice can be issued within 3 years from the end of the relevant assessment year.
• If the escaped income is more than ₹50 lakh → Notice can be issued within 10 years from the end of the relevant assessment year.

3️⃣ Approval Requirement:

• The AO needs prior approval from the specified authority before issuing a reassessment notice.

🔹 Process of Reassessment Under Section 147 & 148

✅ Step 1: Notice under Section 148 is issued to the taxpayer.
✅ Step 2: The taxpayer is required to file an Income Tax Return (ITR) in response to the notice.
✅ Step 3: The AO examines the response and issues a show-cause notice explaining why reassessment should not be done.
✅ Step 4: If valid reasons exist, reassessment proceedings begin, and a fresh assessment order is passed.
✅ Step 5: Taxpayer can challenge the reassessment if they find it unjustified.

🔹 When is Reassessment Not Allowed?

🚫 If the same issue was examined in the original assessment and no new information is available.
🚫 If more than 3 or 10 years have passed (depending on income threshold).
🚫 If AO does not have concrete evidence of income escaping assessment.

⚖️ Legal Safeguards for Taxpayers

• Taxpayers have the right to challenge reassessment before the Commissioner of Income Tax (Appeals) or the Income Tax Tribunal.
• If reassessment is without proper justification, courts can quash the notice.

📢 Final Thoughts

Reassessment is a tool for tax authorities to bring escaped income into the tax net, but it must be conducted lawfully. If you receive a notice under Section 148, consult a tax expert before responding.

Read: What are the time limits of issuing of Notices under Income Tax Act?