Section 148A Show Cause vs Section 148 Order: Reply Format and Time Limits (Post-2021)
3 years is the default reassessment limit (for escaped income < ₹50 lakh) after a s.148A(b) show-cause and s.148A(d) order — extended to 10 years where escaped income is ₹50 lakh or more (s.149(1)(b)), and up to 16 years where the escaped income is represented by a foreign asset (s.149(1A)). You get at least 7 days to reply to the show-cause before any s.148 notice.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Since the Finance Act 2021 overhaul, no s.148 reassessment notice can be issued until the Assessing Officer first issues a s.148A(b) show-cause notice, gives you at least 7 days to reply (extendable), and passes a s.148A(d) order recording why income escaped — and the whole reassessment is time-barred after 3 years from the end of the assessment year, or 10 years where the escaped income is ₹50 lakh or more. The 148A stage is your only guaranteed chance to kill the case on facts and limitation before the heavier s.148 machinery starts. Reply properly and on time — a s.148A(b) notice ignored becomes a s.148 order by default.
The post-2021 sequence
The two notices are routinely confused: the s.148A(b) notice is the show-cause that precedes any reassessment; the s.148 notice is what begins the reassessment. If you receive a s.148 notice with no s.148A(d) order behind it, that is a procedural defect worth raising — the Ashish Agarwal line of cases turned exactly on the department skipping this sequence. on the current forms and timelines for your case.
Time limits (s.149, as substituted by FA 2021)
The clock runs from the end of the relevant AY. An alleged escapement for AY 2020-21 can generally be reopened only up to 31 March 2024 (3-year rule) unless the escapement is ₹50 lakh-plus (10-year rule → 31 March 2031). Limitation is your first and cheapest objection — if the notice is outside the permitted period, that alone defeats it.
Changed FY 2025-26: The s.148A procedure is unchanged — it has applied since 1 April 2021 following Finance Act 2021 and the Ashish Agarwal decision. What to watch this year is volume: reassessment notices have risen as the department works through SFT/AIS data, so the 148A show-cause stage is where more taxpayers are first contacted. Reply on time, every time.
How to reply to a s.148A(b) show cause
A good reply does four things, in order:
- Factual denial — address the specific income the notice says escaped, item by item, with the facts that show it did not (it was reported, or it was not taxable, or it belongs to another person/PAN).
- Document list — attach the return, bank/property/sale records, and the AIS/26AS extracts that support your position.
- Legal objection — raise limitation (s.149), the scope of the show-cause information, and any procedural defects.
- Request a hearing — ask to be heard personally before any s.148A(d) order is passed.
Keep the reply under the "Response to the show-cause" facility on the e-filing portal, and preserve the acknowledgment.
Worked example: Farah's property-sale show cause
Persona: Farah, resident, receives a s.148A(b) notice in FY 2025-26 alleging ₹60,00,000 of income escaped assessment for AY 2021-22 — a property sale the department says she did not report.
Step 1 — Check limitation. AY 2021-22 ends 31 March 2022. The notice in FY 2025-26 is within 10 years (escapement above ₹50 lakh → 31 March 2032). Limitation does not kill this one — she must contest on facts.
Step 2 — Factual reply. Farah's position: the property was sold in FY 2020-21 (relevant to the AY 2021-22 notice), the full sale consideration was reported, and the indexed long-term capital gain (s.48) was declared in her AY 2021-22 return. She attaches the sale deed, the return's Schedule CG, and the Form 26AS showing the buyer's TDS under s.194-IA.
Step 3 — Legal objection. The notice's "information" that income escaped is premised on the gross sale consideration appearing in the SFT/AIS — but the Act taxes the gain, not the sale price; the gain was declared. She argues the show-cause material does not establish escaped income.
Step 4 — Hearing request. She asks for a personal hearing before any s.148A(d) order.
Possible outcomes:
- The AO drops the case (no s.148 notice) — Farah's reply worked.
- The AO passes an adverse s.148A(d) order and issues a s.148 notice — Farah then responds to the reassessment, and if needed carries the procedural/factual objections up the appeal chain.
The s.148A(b) reply is where the case is usually won or lost on paper — it is the only step where the department must confront your evidence before committing to reassessment.
Frequently asked questions
1. What is the difference between s.148A and s.148?
s.148A is the pre-notice show-cause procedure (enquiry → show cause → order); s.148 is the reassessment notice issued only after an adverse s.148A(d) order.2. How much time do I get to reply to a s.148A(b) notice?
At least 7 days, extendable on request. Reply on time — an unanswered show cause becomes a s.148 notice by default.3. What is the time limit for reassessment?
3 years from the end of the AY where escaped income is ≤ ₹50 lakh; 10 years where it is ₹50 lakh or more (post-FA 2021).4. What should my reply to a show-cause contain?
A factual denial, supporting documents, a legal objection on limitation/scope, and a request for a hearing — in that order.5. Do I get a hearing before a s.148 notice?
You get an opportunity to reply under s.148A(b); a personal hearing is not automatic but should be requested. If denied, note it as a procedural objection.6. What if I receive a s.148 notice without any s.148A order?
Raise it — the post-2021 scheme makes the 148A procedure mandatory, and the department's failure to follow it is a procedural defect. [VERIFY]7. Were pre-2021 reassessments quashed?
Yes — in Union of India v. Ashish Agarwal the Supreme Court held reassessment notices issued after 1 April 2021 without the s.148A procedure were invalid where the old limitation had expired. The 148A sequence is now the baseline.---
Last verified: 2026-08-08 (FY 2025-26 / AY 2026-27)
Sources: s.148A(a)–(d), s.148, s.149 (time limits, substituted by Finance Act 2021), Income-tax Act, 1961; Union of India v. Ashish Agarwal (SC, 2022). Show-cause reply period and foreign-asset extension flagged [VERIFY]. For a personalised read on a notice, use the Notice Explainer.
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