1. Post implementations of amendments proposed in the Finance Act, 2021 the form in which assessment used to be carried out has undergone a drastic change. Survey under section 133A of the Income Tax Act, 1961 can be carried out on mainly 3 accounts-
Where the Income Tax Authority (ITA) may enter any place at which a business or profession or activity for a charitable purpose is carried on to inspect books of account or other documents, check or verify the cash, stock or other valuable article or thing which may be found and require the furnishing of such information as they may require.
Where the ITA may enter any place for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter XVII or under sub-heading BB of Chapter XVII
Having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so to do, he may, at any time after such function, ceremony or event, require the assessee by whom such expenditure has been incurred or any person who, in the opinion of the income-tax authority, is likely to possess information as respects the expenditure incurred, to furnish such information as he may require.
ITA shall in case of a & b above shall only enter the premises only after sunrise and before sunset. However in the case of c as mentioned above ITA shall initiate action only after the function, ceremony or event has finished.
2. As discussed in the earlier article on sections 148 & 148A AO before issuing notice u/s 148 has to comply with the requirements of section 148A. However, in the following cases, AO can dispense off with the requirements of 148A and directly proceed to issue notice u/s 148-
A search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April 2021; or
The Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April 2021, belongs to the assessee; or
The Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.
So practically where a search/survey is conducted AO shall in all probability issue notices for at least 4 Assessment years as under-
For the Year for which notice u/s 143(2) can be issued, assessment notice u/s 143(2) shall be issued.
At least 3 Preceding years` notice u/s 148 shall be issued.
Now in case where assets/expenses/entries have been found which have escaped assessment and amount to or are likely to amount to fifty lakh rupees or more notice up to 10 preceding years can be issued. Explanation 1A to Section 149 also becomes relevant here-
“(1A) Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.”
So now if in any year the escaped income/assets/expenses exceed Rs. 50 lakhs, AO can open cases beyond three years and up to 10 years even if the amount that might have escaped assessment is less than Rs. 50 lakhs in that particular year.
CA Pranay Jain is a young and aspiring Chartered Accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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