Tax reassessment: I-T has 30 days to ship notices

With the Supreme Court upholding the reassessment notices issued earlier than the modification to the Income Tax Act by way of the Finance Act, 2021, taxpayers could have a time interval of two weeks to answer the notices despatched by the tax division, consultants mentioned.

According to the highest court docket’s judgment, the assessing officer will, inside 30 days from May 4, present the respective assesses the data and all related materials which was relied upon to ship the revenue tax restoration discover to them. Following the receipt of the discover, the assesses could have as much as two weeks to answer the discover, mentioned Maneet Pal Singh, associate at accounting agency I.P. Pasricha & Co, mentioned.

Around 90,000 notices had been issued beneath the outdated Section 148 even after passage of Finance Act 2021. They had been appealed in excessive courts of Delhi, Calcutta, Bombay, the place the courts quashed the reassessment notices. “All such notices issued beyond the limitation period of 31st March, 2021 shall now be valid and thousands of taxpayers who had been served with a notice shall have to prepare themselves for the reassessment proceedings,” Singh mentioned.

The ruling now additionally implies that each one reassessment notices hereon issued beneath Section 148 of the Act will probably be deemed to have been issued beneath Section 148A, as amended earlier this yr. Section 148 of the Income-Tax Act offers with discover in case the revenue chargeable to tax has escaped evaluation for the related evaluation yr and the Assessing Officer has obtained prior approval of the desired authority to situation such discover.

Section 148A, then again, offers with conducting inquiry, offering alternative of being heard to the assessee. Before situation of discover beneath Section 148, the assessing officer has to supply a chance of being heard to the assessee, by serving him a discover to point out trigger with the time being not lower than seven days and never exceeding thirty days from the date on which such discover is issued. As per the time limitation clause, a discover can’t be issued in regular eventualities if three years have elapsed for the reason that finish of the related evaluation yr. However, discover past three years will be taken up provided that there may be proof that the taxpayer has evaded an evaluation of taxable revenue of not less than Rs 50 lakh. In sure instances, discover will be issued past 3 years however solely as much as 10 years from the tip of the related evaluation yr.

On Wednesday, a two-judge Supreme Court Bench of Justices M R Shah and B V Nagarathna held that the notices issued to assessees after the closing date of March 31, 2021 will probably be deemed legitimate beneath the brand new part 148 (A) of the Income Tax act as a one time measure.

Tax consultants mentioned that the reassessment proceedings usually are not revived in all of the 90,000 instances, however as manner ahead to the ruling, all reassessment notices will probably be deemed to have been issued beneath the amended part.

“If the reassessment notices are considered to be valid even under the new amended law, then taxpayers will now need to be ready to file their ITR in response to the reassessment notice and be ready with all the necessary records, documents and explanations for questions expected to be asked by Income tax authorities in relation to these reassessment proceedings,” Rakesh Nangia, chairman, Nangia Andersen India, mentioned.