Hon’ble Supreme court has passed judgement in relation to controversy around notice issued u/s 148 after 01.04.2021 under the old provision of law as existed before Finance Act, 2021.
To read the judgement CLICK HERE: Supreme court Judgement on controversial issue of notice u/s 148 issued after 01.04.2021 passed in favor of Revenue | Detailed analysis of full judgement – Taxontips
The judgement has raised various questions in the minds of assessee as well as the Income Tax officers as to how they need to move ahead with issuing the reassessment proceedings under section 148 and thus a clarification from CBDT was must to clarify the issues.
CBDT has issued instruction no. 01/2022 vide letter Dt. 11.05.2022 wherein few questions have been clarified however this further raises few questions so let’s go one by one with the instructions.
1. Scope of Judgement:
This judgement will be applicable to all cases where extended reassessment notices have been issued irrespective of whether such notices were challenged or not.
2. Years for which notice can be issued u/s 148 after the judgement of Hon’ble Supreme court:
CBDT has issued this instructions while reading it with the extension provided in TOLA and stating that this will extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point.
Based on above the instructions have been issued as under:
For AY 2013-14, 2014-15 and 2015-16: Fresh notice u/s 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by Finance Act, 2021. Specified authority under section 151 of the new law shall be the authority prescribed under clause (ii) of that section.
Thus, based on above instructions notices for these 3 years can be issued upto 10 years if 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 irrespective of the relief granted in section 149 as CBDT is considering benefit provided in TOLA.
However, even after considering the relief under TOLA if we consider the proviso to section 149 of Income Tax Act, after amended by Finance Act, 2021, in our opinion CBDT cannot issue notices in relation to above mentioned years for 10 years.
For AY 2016-17 and 2017-18: Fresh notice should be issued in this cases with the approval of the specified authority under clause (a) of sub-section (1) of section 149 as amended by Finance Act, 2021, since they are within period of 3 years from the end of relevant assessment year.
In this case of also we believe that limitation of 3 years have lapsed and considering the benefits of TOLA to increase the time limit should not harm the assessee or it cannot be against the Finance Act, 2021.
Relief by CBDT:
If the reassessment relates to AY 2013-14 to 2015-16 and if the income escaping assessment does not exceed Rs. 50 lakh then no information or material relief upon needs to be provided by the AO.
Other than this in the instructions CBDT has mentioned instructions which AO needs to follow while conducting reassessment proceedings.
Looking at the instructions issued by the CBDT it can be said that if the CBDT does not issue another clarification for the years AY 2013-14 to 2015-16 without considering the benefit of TOLA it could lead to AO conducting enquiry and assessment and not allowing benefit of first proviso of section 149 which could again lead to a round of litigation in courts. Thus, we need to wait and watch now as to whether CBDT shall release any other clarification or instructions or not.
To download the Instructions CLICK ME.
Guidance on above article by:
CA Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with a renowned firm in Jaipur having experience in dealing Assessments, Tax Audit, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo
Disclaimer: The views presented in the above article are personal views of our team and the expert (based on information available on public domain) and has no legal binding. For any legal opinion consult a tax professional.
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