Income escaping assessment under Section 147

What this section is

Section 147 (post-Finance Act 2021 framework) allows the AO to reassess income that has escaped assessment. The procedure is now strictly governed by Section 148A, which requires a preliminary inquiry and a show-cause to the assessee before any reassessment notice under Section 148 is issued.

When it is issued

After a 148A(b) show cause and a 148A(d) order. Limitation is staggered based on the quantum of escaped income.

What you should do

1. 1Examine whether the AO had 'information suggesting income has escaped' — this is now an objective standard, not 'reason to believe'.
2. 2Check the limitation: 3 years for ordinary cases, 10 years where escaped income is ₹50 lakh or more.
3. 3File detailed objections at the 148A(b) stage. Once the 148 notice is issued, the procedural defences narrow.
4. 4Where the procedure under 148A is not followed, the entire reassessment can be quashed.

Documents typically needed

• The information / annexure supplied with the 148A(b) notice
• Original return, computation, and assessment order (if any)
• Evidence rebutting the alleged escapement

Common mistakes

• Confusing pre-2021 and post-2021 frameworks. The Supreme Court in Ashish Agarwal (2022) clarified that all old 148 notices issued after 1 April 2021 are to be treated as 148A(b) notices.
• Filing only a procedural objection without rebutting the merits.
• Missing the limitation argument — it is the strongest defence in many cases.