Reopening an old year: responding to a Section 148 reassessment notice

Reassessment cannot start with a bolt-from-the-blue demand. The department must first issue a Section 148A show-cause notice, setting out the information that suggests income escaped assessment and giving you an opportunity to respond, with the response window between 7 and 30 days and extendable on request. Only after considering your reply, and with the approval of a specified authority, can the officer decide it is a fit case and issue the Section 148 notice that actually reopens the year for reassessment under Section 147.

That show-cause stage is your first and best opportunity. Many reopenings are based on incomplete data, a property sale where the department sees the sale value but not your cost, a remittance it reads as income. A well-supported reply at the 148A stage, explaining the transaction and attaching the proof, often ends the matter before a 148 notice is ever issued. A notice that skips the 148A procedure is invalid.

The time limits changed materially, and it is where a lot of old guidance is now wrong. Under the Finance Act 2024, effective 1 September 2024, an assessment year can normally be reopened only within 3 years and 3 months from the end of that year. It can be reopened up to 5 years and 3 months only where the officer has evidence that the income escaping assessment is ₹50 lakh or more. This replaced the earlier framework that allowed up to 10 years for large cases, so the outer window is now far shorter.

There is a transitional point. For years where the notice relates to the period before 1 September 2024, the older rules continue to apply, as they have been shaped by the courts. So the first thing to check on any reassessment notice is which regime and which limit govern it, because a notice issued beyond the applicable limit is time-barred and can be challenged on that ground alone.

As a non-resident you have a defensive layer that resident taxpayers do not. Under Section 144C, a non-resident is an eligible assessee, which means that before the officer can pass a final reassessment order that varies your income to your prejudice, they must first send you a draft order.

You then have 30 days either to accept it or to file objections with the Dispute Resolution Panel, a three-member collegium of senior officers, which issues binding directions the assessing officer must follow. Failing to give an eligible non-resident a draft order is a jurisdictional defect that can vitiate the entire final order. So a reassessment against an NRI is not a one-sided process; the draft-order-and-DRP route is a genuine, current lever, and a practising CA runs the 148A reply, the limitation check and, if it goes that far, the DRP objection, all from the Indian side under your authorisation.