Tax authorities can reassess a person or a company in case they have reason to believe that there is unreported income. If new information reveals that income has eluded taxation, tax officers are empowered to serve a notice of reassessment under Section 148 of the Income Tax Act. The function of an income tax reassessment 148 consultant becomes important in such a situation, ensuring compliance and advising taxpayers on the reassessment process.
Reassessment due to undisclosed income
Undisclosed income is income that has not been disclosed in tax returns. This may be because of unreported transactions, unreported bank deposits, or false representation of accounts. If the tax department detects any discrepancies, it can issue a notice under Section 148, asking the taxpayer to clarify or correct their income figures.
Some common triggers for reassessment include:
- Large cash deposits– Unexplained large deposits in bank accounts may lead to a reassessment.
- Property Transactions– Any property deal which is executed without proper documentation can raise suspicion.
- Foreign assets– Scrutiny can be initiated from the relevant tax reassessment authorities if it is found that the taxpayer has foreign assets or income that has not been reported.
- Mismatch in returns– When the tax return does not match income records from financial institutions, the tax department may initiate reassessment.
- Third-party information– Information from banks, employers, or financial agencies may indicate unreported income.
An income tax reassessment 148 consultant helps in responding to reassessment notices, ensuring that all relevant documents are submitted and the case is handled correctly.
What happens when you don’t disclose income?
Failure to disclose income has serious implications. One must not ignore a reassessment notice or provide inaccurate information can lead to penalties, interest charges, or even legal action. Here’s what can happen if income is not disclosed:
Tax penalties and interest
If reassessment confirms undisclosed income, tax authorities may impose additional tax along with interest. The longer the delay, the higher the interest amount.
Hefty fines
Apart from the additional tax liability, a penalty of up to 200% of the undisclosed income can be levied in cases of willful concealment.
Legal consequences
In extreme cases, non-disclosure may result in prosecution. Tax evasion can lead to imprisonment ranging from three months to seven years, depending on the amount of undisclosed income.
Frozen bank accounts or seized assets
To recoup unpaid taxes, authorities might take assets or restrict bank accounts. This can cause financial difficulties for businesses and individuals.
Audit scrutiny for future transactions
If a taxpayer fails to disclose income once, they may be subject to regular audits in the future, increasing compliance burdens.
An income tax reassessment 148 consultant can help avoid such situations by ensuring proper documentation and guiding taxpayers in responding to notices appropriately.
How Income Tax Reassessment 148 consultant helps?
A consultant plays an important role in managing the reassessment process. Their expertise helps taxpayers address compliance issues, respond to tax authorities effectively, and minimize penalties. Here’s how they assist:
Review of tax reviews
A consultant carefully goes through the reassessment notice to comprehend the reasons for which scrutiny was initiated and also to chalk out plans on the best course of action.
Compilation of documents
Vital documents such as financial records, bank statements, and supporting documents have a lot of bearing on the outcome of tax reassessment. A consultant ensures that all necessary information is presented accurately.
Legal representation
For further inquiries, a consultant represents the taxpayer before tax authorities to prevent any miscommunication and to remain compliant.
Negotiation and settlement
In case any discrepancies are found, consultants negotiate with tax officers to settle the case, which stays fair to the taxpayer and also prevents excessive penalties.
Preventive tax planning
More than assessment, consultants help in proper tax planning to prevent future scrutiny and ensure that a timely reporting of income is done.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.