If you've never filed your Income Tax Return (ITR) but have conducted high-value transactions, the Income Tax Department may soon send you a notice under Section 148A of the Income Tax Act. The department is now actively identifying high-risk non-filers using data analytics, and notices will be issued accordingly. However, you will be given a chance to respond and explain your financial activities before further action is taken.
Section 148A of the Income Tax Act allows the department to issue a notice to individuals suspected of tax evasion or non-compliance. The process involves:
Preliminary inquiry by the assessing officer.
Issuance of a show-cause notice, offering the person an opportunity to explain their position.
Based on the reply, the officer decides whether a reassessment under Section 148 should be initiated.
This provision is part of a broader reform introduced to ensure transparency and fairness in tax proceedings.
Using AI-driven data analytics, the Income Tax Department is tracking individuals who:
Have purchased high-value assets (e.g., property, cars, luxury goods).
Made large investments in stocks or mutual funds.
Earned significant bank interest.
Showed substantial turnover in business or profession.
Have reportable transactions as per third-party data from banks, registrars, and other government agencies.
If such financial behavior is identified without corresponding ITR filings, you may be flagged as a high-risk non-filer.
Do NOT ignore the notice — respond within the specified time.
Read the notice carefully — understand which transaction or source of income is under scrutiny.
Gather supporting documents — such as bank statements, investment proofs, property papers, etc.
Prepare a detailed, factual reply — explain your income sources and transaction justifications.
Consult a tax professional — ideally a Chartered Accountant (CA) to guide your response.
File your ITR immediately — even if belated, it's better than remaining non-compliant.
Failing to respond to a 148A notice can result in:
Reassessment proceedings under Section 148.
A "Best Judgement Assessment", where tax liability is determined based on available data — usually unfavorable to you.
Penalties and interest for non-compliance or concealment.
In serious cases, prosecution for tax evasion.
Even if you've never filed ITR before, but your income exceeds the basic exemption limit or you've engaged in significant transactions, it’s crucial to start filing now. Proactively declaring your income helps avoid legal complications and penalties.
The Income Tax Department is ramping up efforts to ensure tax compliance through technology-driven tracking. If you fall under the radar due to unexplained high-value transactions, you could soon receive a Section 148A notice. Handle it seriously, consult professionals, and make sure your tax records are in order to stay compliant and penalty-free.
