Preface
Reopening of a concluded assessment commonly called as "Reassessment" is an important tool in the hands of the Revenue to bring to tax such incomes which have not been disclosed by the assessees. Such incomes might come to notice of the Revenue post the completion of summary assessment or regular assessment and thus a statutory tool is required to assess such incomes. In addition, there may be cases of under assessment of income due to excessive allowances, deductions, etc. and to reassess such under-assessed incomes, a statutory power is required.
Reassessment provisions, while providing such powers to the assessing officers, however, put fetters on exercise of such power and as a measure of natural justice, also put a time limitation within which such powers can be exercised.
Reassessment provisions can be traced back to the section 34 of the Indian Income Tax Act, 1922 (1922 Act). In the Income Tax Act ,1961 (1961 Act) since the word go reassessment provisions were contained in sections 147 to 153, section 153 deals with time limitation for completion of assessments and reassessments both. But sections 147 to 152 are specifically related to reassessment and may be called reassessment specific provisions. Section 147 of the 1961 Act was replica of section 34 of the 1922 Act.
From 1-4-1989 section 147 of the Act was substituted. Since 1989 reason to believe escapement and failure to make full and true disclosure became the main ingredients for reopening of assessment apart from the settled concept of change of opinion. Then there came the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO 2003 TaxPub(DT) 734 (SC) : (2003) 259 ITR 19 (SC) wherein the Supreme Court held that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order.
The Finance Act, 2021 has revamped the scheme for reassessment and substituted sections 147, 148, 149, 151 and introduced a new section 148A. Newly inserted section 148A has incorporated the principles of Supreme Court judgment in GKN Driveshafts (India) Ltd. v. ITO (supra) and thus given statutory recognition to the directions given by the Supreme Court in that case.
Later the Finance Act, 2022 fine-tuned the afore-stated provisions by incorporating various amendments therein and has also introduced a new section 148B.
Under the new law relating to reassessment the following concepts have been given go-by (i) Reason to believe; and (ii) Full and true disclosure. And further it has been provided that reopening has to be based on information suggesting escapement. What will constitute information suggesting escapement is well specified in the law.
Moreover, a detailed procedure has been prescribed via new section 148A, which shall be followed by the assessing officers before issuing any notice under section 148 in all cases except search and requisition cases. Even though carrying out survey is deemed as information suggesting escapement but procedure under section 148A is to be followed in such cases also.
Further, the time limitation within which the power to reopen may be exercised has also been amended and for this purpose section 149 of the Act has been substituted. Now, two time limits of upto three years from the end of the relevant assessment year and in specific cases beyond three years but upto ten years from the end of the relevant assessment year are provided.
A lot of issues arise in the context of new scheme of reassessment particularly when juxtaposed with the old law that existed upto 31-3-2021. This book aims to discuss the law relating to reassessment in its entire compass with equal emphasis on old as well as new law. The reason being that law that existed upto 31-3-2021 is still relevant in relation to assessment orders passed under old law and material will be required by the tax practitioners to deal with those cases at appellate level.
The law relating to reassessment under new law has been discussed and deliberated upon in an elaborate manner covering the issues that may arise during its implementation and has been explained in a lucid manner identifying the issues in the new law and their probable resolution. The entire subject matter is supplemented with the case law decided under old law and which still find its relevance under the new regime. A lot of judgments have been pronounced on applicability and scope of section 148A and all such cases have been properly discussed in the book. The book is thus updated with the case laws reported till July, 2022, if found relevant.
Not only the book is directed towards explaining the law aspect of new procedure for reassessment, its comparison with old law, concepts still relevant, concepts given go-by yet the book also acts as a practice guide in the manner that it identifies steps to be taken on receipt of show-cause notice under section 148A and on receipt of final notice under section 148. It provides a detailed check-list as to what is to be done on receipt of notice under section 148A/148. Thus enabling the reader to find out pitfalls on part of the Revenue before issuing notice under section 148A/148 and prepare for the further course of action.
Assessments for the year of survey so far were generally completed under section 143(3) or section 144 and were taken in scrutiny compulsorily. If any information relating to tax evasion was found in years prior to survey then obviously action was taken under section 147 subject to satisfaction of other conditions. Now, the situation has been fully altered post Finance Act, 2021. And where any survey is conducted [other than TDS Survey] then the assessing officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for all ten years from the end of relevant assessment year. However, in survey cases mandatory procedure under section 148A will have to be followed and the reopening will be subject to time limits with monetary limitations as provided in section 149 just like any other case.
The Finance Act, 2021 , while introducing new section 147 , has rendered section 153A and 153C inoperative from 1-4-2021. These sections dealt with search assessment or requisition cases.
Further, it has been provided that where search is initiated after 31-3-2021 or requisition in connection with such search is made post that date then it shall be deemed information as to escapement for all the ten assessment years and accordingly, assessment be made under section 147 subject, however, to time limits with monetary limitations as provided in section 149 just like any other case.
Keeping this in mind the procedure relating to survey and search assessments post 1-4-2021 has also been discussed in detail identifying the issues that may arise and explaining with reasons their probable resolution. Readers may note that issues relating to search/survey are subject matter of a separate book and here I have discussed only the provisions relating to assessment part of search/survey.
While the new scheme of reassessment, search assessment and survey assessment has been explained from all the possible angles identifying issues and solutions thereto, certain important aspects have also been taken care of in special chapters. To be specific, special chapters like :
(i) Decisions Under Old Law and their Applicability in New Law
(ii) Reassessment of Issues Coming to Notice of Assessing Officer Subsequently
(iii) Checklist for Notices Issued under Section 148A/148
(iv) Notices under Section 148 under Unamended Law--Position Post Supreme Court Verdict
(v) Issues Concerning New Scheme of Reassessment
(vi) Notice by E-Mail
(vii) Notice to Dead Person
(viii) Notice to Non-Existent Company
(ix) Faceless Reassessment Proceedings
(x) Whether New Claim Can be Made in Search Assessments Under New Regime
(xi) Claim of Loss in Reassessment Proceedings
(xii) Claim of Fresh Reliefs, Deductions or Rebates in Reassessment Proceedings
(xiii) New Reassessment Procedure and Change of Opinion
(xiv) Furnishing of Updated Return Vis-a-Vis Reassessment Proceedings
have been incorporated in this book.
In an era where the returned income is being accepted without scrutiny and the Revenue is armed with 360 degree profile of the assessees, reassessment provisions have become a lot more significant than ever before. In such a scenario the Tax Professional needs to be armed with understanding of all facets of the law alongwith practice guide to handle the notice under section 148A/148 and then, if reopening happens to face the assessment proceedings. Thus armed, the professional will be able to find out pitfalls in the procedure followed by the assessing officer while conducting reassessment and then to prepare for challenging the same, if need arises thereof. This way they can save the clients from evils of Reopening, of course legally though.
This book caters to all these aspects and thus is a must in all the Tax Professionals' library to be read so that they can acquaint themselves with the intricacies of law relating to reassessment and be fully prepared to handle the situation.
Needless to say that the entire subject matter is fully updated in the wake of Finance Act, 2022 with circulars/notifications/instructions issued so far, wherever relevant for the subject matter of the book. Relevant latest case law and many judgments in recent past pronounced with regard to section 148A find place in the book. Thus fully updated and relevant material is in hands of readers. Issues concerning section 148A have been discussed in detail. The Author has conducted various webinars on the topic Intricacies related to Reassessment Proceedings and has immensely benefitted from the queries raised by the attendees. These queries have apprised me of the issues in the minds of the Tax Professionals and all such queries have been dealt with while finalizing the text of the Book.
With this I present this book to our readers anticipating that this, present esteemed publication will benefit them to a great extent. Suggestions and feedbacks from our readers are always welcome.
|
27 July, 2022 |
|
|
Jodhpur |
|