Income Tax Department to Issue Notices Under Section 148A for Non-filers

The Income Tax Department is gearing up to issue notices under Section 148A to individuals who have not filed their income tax returns despite having significant financial transactions. This proactive approach aims to identify high-risk taxpayers and ensure compliance. Those receiving notices will have the opportunity to respond before any further action is taken. It's crucial for recipients to understand the notice, gather necessary documentation, and seek professional advice if needed. Ignoring the notice could lead to serious consequences, including reassessment and potential legal action. Stay informed about your tax obligations to avoid complications.

By Narendra Chaudhary May 24, 2025, 14:53 IST

Income Tax Return Notices

Income Tax Return: According to Section 148A of the Income Tax Act, the Income Tax Department has the authority to issue notices to individuals who have failed to file their income tax returns (ITR) in previous financial years. Those with significant financial transactions but without an ITR are categorized as high risk by the department. The department is now actively identifying these individuals and may soon send out notices. However, before issuing a notice, they will be given an opportunity to explain their situation.

How Does Section 148A Work?

Section 148A of the Income Tax Act allows the department to inquire about a person's tax information and send notices for non-filing of ITR. The process involves an initial investigation, followed by notifying the individual and providing them a chance to respond. If the response is deemed unsatisfactory, a reassessment process under Section 148 may be initiated.

Who Might Receive Notices?

The Income Tax Department's data analytics system is now identifying individuals who have:

Purchased high-value assets or invested in stocks

Earned significant interest from banks

Reported substantial turnover in business

Received information from other governmental or financial sources indicating taxable income

What to Do If You Receive a Notice?

If you receive a notice, consider the following steps:

Respond to the notice promptly – do not ignore it

Understand the details of the notice – identify which transactions or income are in question

Gather necessary documents – bank statements, proof of income, investment details

Prepare a detailed response – address each point factually

Seek professional advice – consult a chartered accountant for assistance

File your ITR (if not done already) – it’s better to file late than not at all

Consequences of Ignoring the Notice

If you fail to respond to the Section 148A notice from the Income Tax Department in a timely manner or do not provide a satisfactory explanation, the department may initiate reassessment under Section 148. Additionally, the department could conduct a best judgment assessment based on available data without your input, which may not be favorable. In such cases, you could face penalties and interest. If the situation escalates to tax evasion, legal action may also be pursued.