Section 148 deals with Issue of notice where income has escaped assessment. If an assessing officer wishes to make assessment u/s 147 he needs to issue notice u/s 148 before that.
Time limit to issue notice u/s 148 has been prescribed u/s 149 whereby:
No notice under section 148 shall be issued for the relevant assessment year,—
(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c);
(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;
(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.
Thus, in normal scenario notice u/s 148 can be issued maximum for 6 years from end of relevant assessment year.
Further as per section 148 the assessing officer should note reason to believe that income has escaped assessment before beginning the proceedings.
Now with Finance Act, 2021 coming into force the above law has changed. As per amendment by Finance Act, 2021:
1. Now for opening assessment u/s 148 reason to believe is not required but only information has escaped assessment is required which will be a big relief for the Income tax department but not a very good news for the assessee.
2. Time limit for issuance of notice prescribed u/s 149 for section 148 has also changed. Now notice u/s 148 can only be issued upto 3 years from the end of relevant assessment and 10 years in case where assessing officer has information that income which has escaped assessment is Rs. 50 lakh or more.
As we had discussed in our post that on the last day of the Financial year 2020-21 i.e. 31.03.2021 the servers of Income tax department were not working properly and later an update was posted on twitter that due date for notice u/s 148 and linking Aadhar and PAN has been extended.
After looking at that tweet many people were confused as to how can Income tax department extend due date for section 148 notice and will issue notice u/s 148 valid after 01.04.2021 as new law as amended by Finance Act, 2021 would come in force from 01.04.2021 and no notification was issued till that time in this regard.
Further, all the procedural provisions under the Income tax act would work based on the provision of the Income tax act in the Financial year in which notice is issued and not based on the law of the previous year in relation to which notice is being issued.
Since, after 01.04.2021 notice u/s 148 could only be issued for 3 years under normal circumstances people were confused as to how Income tax department would take benefit of this extension and issue notices for AY 2014-15 or AY 2016-17.
However, later that day Income tax department issued notification no. 20/2021 Dt. 31.03.2021 whereby it was mentioned that due date for issuance of notice u/s 148 which were required to be issued till 31.03.2021 stans extended till 30.04.2021 by amendment to Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
Thus, such due dates have been extended by not amending Income tax Act but the relaxation law and hence this is just a relaxation and not and amendment in Income tax act.
Further, it was mentioned that all notices issued under this relaxation needs to be considered based on the law which was present before the commencement of Finance Act, 2021.
“For the removal of doubts, it is hereby clarified that for the purposes of issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act, under this sub-clause, the provisions of section 148, section 149 and section 151 of the Income-tax Act, as the case may be, as they stood as on the 31st day of March 2021, before the commencement of the Finance Act, 2021, shall apply”
Now, Income tax department has very easily extended it’s due dates but no relaxation has been provided to assessee and question which comes to mind is: Is it so simple for government to extend due dates? Can government over rule the Finance Act, 2021 passed by parliament by way of a notification?
Do comment your thoughts below on same.
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