Starting September 1, 2024, certain changes in the reassessment regime come into force pursuant to the amendments made by the Finance (No. 2) Act, 2024. One of the most critical updates pertains to Section 148A of the Income-tax Act. Under the revised provisions, tax authorities can now issue reassessment notices under Section 148 without first issuing a pre-show cause notice to the taxpayer in certain cases. As a general process, taxpayers are confronted with the information available with the Assessing Officer, given an opportunity to furnish their reply, and then issued a speaking order alongside the reassessment notice. However, this process has been modified in cases where information is received by the Assessing Officer under the scheme notified under Section 135A of the Act.
The tax framework grants extensive powers to tax authorities to seek information not only from taxpayers but also from third parties under Sections 133, 133B, 133C, 134, and 135 of the Income-tax Act. The “e-Verification Scheme, 2021,” which was notified by the Central Government under Section 135A and came into effect on December 13, 2021, serves as a key mechanism for collecting and verifying information obtained through these provisions electronically without a direct interface with the party. This collected data can then be used for further actions in accordance with the Act.
For taxpayers, this change heightens the importance of responding promptly and accurately to any requests for verification of information from tax authorities. Proper documentation and thorough explanations are now more crucial than ever. A failure to provide satisfactory responses could result in the direct issuance of reassessment notices under Section 148, without the taxpayer being given any further opportunities to clarify or rectify details in absence of any pre-notice proceedings. Taxpayers must stay vigilant and proactive in addressing notices received for verification of information, failure of which could lead to direct issuance of notice under Section 148 initiating reassessment.
