Reassessment is a sequence of separate statutory steps, and a defect at any one of them can be fatal to the notice, so the first task on a new file is to map the sequence.
A client forwards a notice late on a Friday. It is under section 148A(b) for a year he had stopped thinking about, it refers to information in the possession of the Assessing Officer, it attaches an annexure of three lines, and it gives him a short time to reply.
Before you draft anything, you need to know where in the sequence this notice sits and what should already have happened. Reassessment is a chain of steps, each with its own content requirement and its own authority, which the Department must have completed in order.
Most successful challenges here are not about the merits of the escaped income. They are arguments that a step is missing, or was taken by the wrong authority, or without the material the statute requires.
What the provisions actually require
The power to reassess income escaping assessment sits in section 147 of the Income-tax Act, 1961 (section 279 of the Income-tax Act, 2025). The notice issues under section 148 (section 280). The procedure before it is section 148A, answered by section 281. The time limit is section 149 (section 282) and the sanction section 151 (section 284).
Which Act applies is decided by the year. Every reassessment now in appeal, and every notice for the older assessment years, runs on the Act of 1961. Notices for current tax years run on the Act of 2025. Below, the 1961 numbers are used alone.
The architecture of section 148A is the important thing. Before it, the officer recorded reasons and issued the notice, and the assessee learned the reasons afterwards by asking. Under 148A he is told something before the notice issues and given a chance to answer. The older jurisprudence on the formation of belief has not gone away, because a belief must still be formed, but it is now fitted into this frame.
The sequence, stage by stage
- Information suggesting that income chargeable to tax has escaped assessment. A defined trigger, not an open one. It must be of the kind the statute contemplates and must suggest escapement in the particular year and for the particular person. Information about a transaction, with nothing connecting it to escaped income, is not enough.
- Inquiry, where the officer thinks it necessary. Optional and subject to approval. Where an inquiry was conducted, its result is material in the officer’s possession and you may know what it showed. Where none was conducted on information that plainly called for one, that is itself a point.
- The notice under section 148A(b). The show-cause stage. It must say a notice under section 148 is proposed, set out the information relied on, and supply the material relied upon, with a period to reply within the range prescribed.
- The assessee’s reply. Where the file is made or lost, because every objection you want later is strongest if taken here. Ask for material not supplied, take the jurisdictional and limitation objections, answer the merits as far as you safely can.
- The order under section 148A(d). The officer must decide, by order and on the material including the reply, whether it is a fit case. One that recites the information, records that the reply was considered, then concludes without engaging with anything said is the most challenged document in the sequence.
- Prior approval of the specified authority. The 148A(d) order and the section 148 notice both require sanction under section 151. Which authority is specified depends on how far the year is from the end of the relevant assessment year.
- The notice under section 148. Only now does the notice issue, accompanied by the 148A(d) order. It has to be served, and issued within the limitation period computed under section 149.
- The reassessment proceeding itself. What the officer can bring to tax is a separate question, constrained by what the recorded information actually was.
The rulings on this point sit in the Counselvise Direct Tax library — search 148A(d) order challenge, reassessment jurisdiction to pull the current position for your bench.
The search exception and where 148A does not apply
Section 148A does not apply to every reassessment. Where the case arises out of a search, a requisition of books, or a survey, the statute dispenses with the procedure and the notice may issue directly. The same is true where material is received in consequence of action against another person in those circumstances.
Check whether the exception has been correctly invoked, because the Department sometimes treats material gathered in a third-party proceeding as falling within it when it does not. It is drawn by reference to specific statutory actions, not to the general idea that the information came from an investigation. Where it does apply, the 148A arguments fall away but the substantive requirements do not: the officer still needs information suggesting escapement, still needs the sanction, and is still bound by limitation.
The defects most often available
Work through these on every file, in this order, before you look at the merits. The first is limitation. Compute the period yourself from the bare section rather than accepting the Department’s view, because this line has been amended more than once and the computation depends on what, if anything, is excluded. If the notice is barred, nothing else matters.
The second is the sanction. Identify which authority had to approve on your facts and compare it with the authority that did. Approval by any other authority goes to jurisdiction, and approval granted without any indication of application of mind is separately attackable.
The third is the content of the information. Read the annexure and ask whether it identifies a transaction, an amount, a year and the assessee. Information vague as to any of those, or relating to a different year, or already examined, is open to challenge. Closely related is the material relied upon: where you asked for it and it was not supplied, the opportunity given was not real.
The fourth is the quality of the 148A(d) order, tested by comparing your objections with it paragraph by paragraph. The fifth is change of opinion, available where the point was examined originally and the new information adds nothing.
What usually decides it
Three things decide most reassessment challenges. The first is whether the objections were taken at the 148A(b) stage. A limitation point taken in the reply, then ignored in the 148A(d) order, is far stronger than the same point raised first in appeal. The Department’s answer to a late objection is always that the assessee did not say so when he had the chance.
The second is whether you obtained the documents: the 148A(b) notice, its annexure, the material relied upon, the reply with its acknowledgment, the 148A(d) order, the sanction, and the section 148 notice with its dates of issue and service. A challenge cannot be made out unless the sequence is on the record, and the sanction must be asked for.
The third is the forum. A jurisdictional defect can be taken before the appellate authority, and in some situations by writ before the reassessment is completed. The choice turns on how clear the defect is and how much time remains. One habit helps throughout: before drafting, list the eight stages with the date and document for each, leaving the ones you do not have blank. The blanks are your case.
Where to look next
Search the Direct Tax library for 148A(d) order challenge and reassessment jurisdiction, then narrow by your own High Court, because the writ jurisprudence on this sequence has developed differently in different jurisdictions. Then search on whichever of the eight stages is weakest on your file, using the stage itself as the term. A general search on reassessment returns too much to be useful.
Briefcase will take the results and tell you how the courts have treated your particular defect, including whether it has been held curable. That question decides whether a defect is worth leading on, and it is tedious to answer one order at a time.
Frequently asked questions
Does the 148A(d) order have to deal with every objection in my reply?
The order must be passed on the material available, which includes the reply, so one that does not engage with the objections is open to challenge for non-consideration. Courts have taken the view that a formulaic recital of having considered the reply is not consideration.
Can I challenge the notice by writ, or must I wait for the assessment?
Both routes are used. A writ is usual where the defect is jurisdictional and apparent on the documents, such as limitation or approval by the wrong authority. Where it requires examination of facts, the appellate route is safer.
When does section 148A not apply at all?
The procedure is dispensed with where the case arises out of a search, a requisition of books or a survey, including material from action against another person. Check that the exception is correctly invoked, since information from an investigation does not by itself bring a case within it.
Which Act governs a reassessment notice I have just received?
Notices for current tax years run on the Income-tax Act, 2025, sections 279 to 284. Every reassessment now in appeal, and every notice for the older assessment years, runs on the Act of 1961 and its sections 147 to 151.
Is the earlier case law on reasons recorded still relevant?
Yes, in substance. A belief must still be formed on information suggesting escapement, so the reasoning on borrowed satisfaction, non-application of mind and change of opinion continues to apply. Only the procedural frame has changed.
Map the eight stages on your own file first, then pull the orders on the stage that is missing. The Counselvise Direct Tax library is organised by section, so the reassessment material reads in sequence rather than being hunted one notice at a time.
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