Received a notice under Section 148?
Before you panic — check whether the Assessing Officer followed Section 148A properly.

In 2026, the Delhi High Court once again quashed reassessment proceedings where the department failed to conduct a proper inquiry under Section 148A before issuing notice.

Legislative Background – Reassessment Law After 2021 Amendment

Finance Act, 2021 completely revamped reassessment provisions.

Earlier:

Direct 148 notice possible.

Now:
Before issuing notice under Section 148, the department must:

Conduct inquiry (if required)
Issue show cause under Section 148A(b)
Provide material relied upon
Pass speaking order under Section 148A(d)
Take approval under Section 151

This reform was meant to prevent arbitrary reopening.

Lead Case

Sabh Infrastructure Ltd. v. ACIT (2026)

Sabh Infrastructure Ltd. v. ACIT

Issue:

Whether reassessment notice under Section 148 is valid when:

No proper inquiry under Section 148A(b)
No independent application of mind
Mechanical approval under Section 151

Held:

Reassessment quashed.

Key Sections Involved :-

Section 147 – Income escaping assessment, Under IT Act,2025 Section will be 279

Section 148 – Notice for reassessment, Under IT Act,2025 Section will be 280

Section 148A – Mandatory pre-notice procedure, Under IT Act,2025 Section will be 281

Section 151 – Sanction for issue of notice, Under IT Act,2025 Section will be 284

The Supreme Court in:

Union of India v. Ashish Agarwal

held that new reassessment regime must be strictly followed.

Section 147 – Income Escaping Assessment

This is the main power given to the Assessing Officer (AO).

It allows the AO to reopen an assessment if:

Income has escaped assessment, and
There is “information” suggesting such escapement.

👉 Important: This power is not unlimited. It must follow the Section 148A procedure.

In simple words:
Section 147 is the engine, but it cannot run without the keys provided in Section 148A.

The ‘Assessing’ Officer for the purpose of section 148 and 148A shall mean to be an assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in section144B(3) read as 273(3) as per ITax,2025.

Section 148 – Notice for Reassessment

This is the formal notice issued to the taxpayer.

It tells you:

“Your income is proposed to be reassessed.”

Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall, subject to the provisions of Section 148A, issue a notice to the assessee, along with a copy of the order passed under Section 148A(3)

However, after the 2021 amendment, Section 148 notice cannot be issued directly.

It must be preceded by compliance under Section 148A.

Section 148A – Mandatory Pre-Notice Procedure

This is the most important reform introduced by the Finance Act, 2021.

Before issuing Section 148 notice, the AO must:

(a) Conduct inquiry (if required)

The officer must examine whether there is genuine material.

(b) Issue Show Cause Notice

Under Section 148A(b), the assessee must be given opportunity to respond.

(c) Provide material relied upon

All information forming basis of reopening must be shared.

(d) Pass speaking order

Under Section 148A(d), the AO must pass a reasoned order explaining why reassessment is justified.

👉 If any of these steps are skipped, the notice becomes legally vulnerable.

Section 151 – Sanction / Approval

Before issuing notice under Section 148:

Approval of the specified higher authority is required.
The approving authority must apply independent mind.

The specified authority for the purpose of Sections 148 and 148A shall be the Additional Commissioner, or the Additional Director or the Joint Commissioner or the Joint Director,

Courts have repeatedly held:

✔ Mechanical approval is invalid
✔ “Yes, approved” without reasoning is not sufficient

Interpretation by High Courts (Recent Trend)

High Courts across India have consistently held:

✔ Mechanical notices invalid
✔ Borrowed satisfaction not allowed
✔ Information must be shared with assessee
✔ 148A(d) order must be reasoned

Some important precedents:

Touchstone Holdings Pvt Ltd v. ITO (Delhi HC)

Touchstone Holdings Pvt Ltd v. ITO

Held: Non-supply of relied material violates natural justice.

Divya Capital One Pvt Ltd v. ACIT

Held: Approval under Section 151 cannot be mechanical.

Allahabad High Court View

Allahabad High Court has also held that:

Inquiry must be real, not symbolic
148A(d) must deal with objections raised

Core Principles Emerging

Reassessment is serious power.
Section 148A procedure is mandatory.
Speaking order is compulsory.
Approval must show application of mind.
Jurisdictional defect = Notice quashed.

Practical Implications for Directors & Taxpayers

If you receive Section 148 notice:

✔ Ask for copy of information relied upon
✔ File detailed reply under 148A(b)
✔ Check whether 148A(d) order deals with your objections
✔ Examine sanction under Section 151
✔ Challenge mechanical notices

For companies, CFOs must immediately involve tax professionals.

Simple Flow Chart

Information received
Inquiry (if required)
148A(b) show cause notice
Assessee reply
148A(d) speaking order
Approval under 151
Section 148 notice

If steps 2–6 are defective → reassessment may be quashed.

Why Courts Are Strict Now?

Because reopening:

Disturbs completed assessments
Creates financial uncertainty
Impacts businesses and directors

Therefore, courts insist on strict compliance.

Key Takeaway for Readers

If you receive a Section 148 notice:

✔ Don’t panic
✔ Check whether 148A procedure was followed
✔ Ask for material relied upon
✔ Verify approval under Section 151

Procedural lapse can save your case.

Way Forward

Reassessment litigation will continue in 2026–27.

But courts are protecting taxpayers from arbitrary reopening.

Department must ensure:

Proper inquiry
Speaking order
Legal approval

Otherwise, High Courts will intervene.

FAQ Section

Q1. Can Income Tax Officer reopen assessment without inquiry?

No. Section 148A procedure is mandatory.

Q2. Is Section 148A(d) order appealable?

It can be challenged before High Court under writ jurisdiction.

Q3. What if approval under Section 151 is mechanical?

Notice can be quashed.

Q4. Does Ashish Agarwal case still apply?

Yes. It laid the foundation for strict compliance.