For the AY 2018-19 the income tax department has begun investigating the cases to find which of them required to be reopened, a process that may result in tax notices.
In the matters of escaped income, this follows the union budget proceeds to lessen the time limit for tax reassessment from 10 years to 5 years.
From September 1 the new provision shall come into force and would make past assessments for AY 2019-19 time-barred.
Under the provisions, the initial letters furnished are anticipated to be various though the number would lessen post risk assessment.
The taxpayer is required to be notified that their information has been chosen as high-risk under the risk management strategy of the I-T systems. As per that, we will give 1 week to answer, or the case will be automatically reopened.
The Central Board of Direct Taxes, the Supreme body of direct taxation asked the officials to upload these time-restricted cases by August 2 on Insight, the tax portal that details tax dodgers across the nation.
The I-T department following the uploading of the list on Insight, will send a preliminary letter u/s 148A of the Act, pursuing responses from the concerned taxpayers.
The final notice of reassessment shall be furnished laying on the answers of the taxpayer. As the most litigated provisions, the budget 2024 has tried to ease the reopening and reassessment procedure.
An assessment in this could be reopened beyond three years from the finish of the Assessment year merely when the income escaped is Rs 50 lakh or exceeding that up to the highest duration of 5 years from the finish of the AY, FM Nirmala Sitharaman mentioned addressing the budget.
She added that even in search cases, a time limit of 6 years before the year of search is proposed, instead of the existing 10-year limit. This change will reduce tax uncertainty and disputes.
The new rule is anticipated to decrease litigation. “In normal cases, no notice under Section 148A shall be issued if three years have elapsed from the end of the relevant AY. Notice beyond the period of three years from the end of the relevant AY can be issued only in a few specific cases,” according to the Budget document.
“In specific cases where, as per the information with the assessing officer, the income escaping assessment amounts to or is likely to amount to Rs 50 lakh or more, notice under Section 148A can be issued beyond the period of three years but not beyond the period of five years from the end of the relevant AY,” adds the Budget explanatory memorandum.
