In budget, 2021 which is now Finance Act, 2021, there was nothing much for the normal taxpayers but various procedures were changed under the Income tax and various amendments were made to over rule various court judgements.
One important change made by Finance Act, 2021 is regarding re-assessment proceedings u/s 147 and 148.
Section 147 deals with re-assessment proceedings and if the department wishes to start re-assessment proceedings it needs to send notice u/s 148 to the assessee.
Further the time limit to issue notice u/s 148 is mentioned under section 149 of the Income tax act.
Till now i.e. before Finance Act, 2021, reassessment proceedings could be initiated for past 4 years and if the income escaping assessment is above Rs. 1 lakh then in that case assessment could be opened for upto 6 years.
For eg: Assessment for AY 2013-14 could be opened till 31.03.2020 i.e. 6 years from the end of assessment year.
However, with Finance act, 2021 this time limits have been changed which will come in effect from 01.04.2021 and according to section 149 notice u/s 148 can only be issued for last 3 years and it may extend upto 10 years only in case where the income escaping assessment is above Rs. 50 lakh for that year.
Relevant extract for the same is as under:
“(1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:”
Thus, earlier the time limits were 4 years, 6 year and 16 years in case where assessee has any foreign asset but now there are only 2 time limits i.e. 3 years and 10 years.
Further, as per the above above proviso the 10 years time limit shall not apply to cases of assessment year before 01.04.2021 if their assessment is time barred under clause (b) of sub section 1 of section 149 before amendment by Finance Act, 2021.
Thus, cases of only those assessment year can be opened under new provision for whom 6 years have not elapsed. However, for all assessment year after 01.04.2021 10 year limit shall apply.
Thus, in normal circumstances now assessing officer can open cases for only AY 2018-19 or later after 01.04.2021 and hence based on our research and conversation with Income tax officer, they are occupied in preparing re-assessment proceeding for assessee from AY 2014-15 till AY 2017-18.
Hence, get ready to receive notices for different years together for you or your client.
Time limit to complete the assessment proceedings u/s 148 as mentioned u/s 153 is 12 months from the end of financial year in which notice u/s 148 is issued.
Now with faceless scrutiny proceedings and with different teams being formed for conducting assessment proceedings it is going to be a fast procedure to start and complete assessment proceedings. As there is faceless assessment you are not required to go and meet assessing officer and you are not even aware as to who is assessing officer and in such you are not required to hire a local Chartered Accountant.
You can try our expert’s service and book a consultation with our expert who will guide you as to how you can reply to the notice u/s 148 or 142(1) and can even get a second opinion regarding your notice and your reply and if you like the service you can further hire them to reply your notices.
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