Got a show-cause notice under section 148A for AY 2021-22 about cash deposits. Is it still within time, and how should I respond?

Asked by A business owner in Pune 2 Sep 2026 1 answer 2 min read

The question

I received a notice under section 148A(1) asking why income for AY 2021-22 should not be reassessed on the basis of ₹32 lakh of cash deposits in my current account. I ran a hardware shop that year and the deposits are sales. Is the notice valid this late, and what do I reply?
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1 answer

ERPCA
ERPCA Expert Desk Verified answer

Practising chartered accountants at ERPCA · 2 Sep 2026

In short

Check the time limit first; it may decide the matter before you argue the merits.

Since 1 September 2024 a reassessment notice under section 148 can be issued within three years and three months from the end of the assessment year, or up to five years and three months if the income that escaped is ₹50 lakh or more. For AY 2021-22 the three-year window closed on 30 June 2025. A notice in 2026 is therefore valid only if the officer alleges escaped income of at least ₹50 lakh, and it needs the sanction of the Principal Commissioner under section 151. If the show-cause mentions only the ₹32 lakh, say so in your reply and ask for the notice to be dropped as time-barred; cite the amount and the date.

On merits, reply within the time given (the law requires at least seven days) through e-Proceedings with: the cash book and sales register for the year showing the deposits as sales, the GST returns (GSTR-1 and 3B) for FY 2020-21 reconciling turnover with the deposits, bank statements, the return you filed for AY 2021-22 and the computation. Cash deposits that match declared turnover are explained money, not unexplained cash under section 69A.

The officer must pass an order under section 148A(3) within a month of your reply, with the Commissioner's approval, before any notice under section 148 can be issued. Do not ignore the show-cause; silence lets the officer record that no explanation was offered.

Next step

Reply on both grounds, limitation first and merits second, attach the reconciliation, and keep the acknowledgement.

General guidance on the facts given, not an engagement. Law as on the date of the answer.

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