The Department of Income Tax has asked field offices not to issue reassessment notices for tax years 2012-13, 2013-14, and 2014-15 to small taxpayers whose escaping income is less than at Rs 50 lakhs. In issuing an instruction on the implementation of the high court’s ruling regarding notices sent beyond the three-year reassessment period, the department said that for FY16 and FY17 when the time frame for issuance of such notices falls within After 3 years, tax officials will issue supporting arguments. notices and provide information to taxpayers to initiate re-settlement procedures within 30 days.
The Central Board of Direct Taxation (CBDT) has asked tax officials to give taxpayers two weeks to respond to such notices, which can be extended further at the request of the taxpayer in genuine cases. Earlier this month, the Supreme Court ruled in favor of the IT Department, upholding all reappraisal notices issued on or after April 1, 2021, reopening appraisals going back up to 6 years. The government had reduced in last year’s budget (2021-22) the reopening time for IT assessments from 6 years to 3 years. However, the tax department sent out a series of notices for the reopening of assessments going back even more than 3 years.
These notices were later challenged in several higher courts and the IT Department later appealed to the Supreme Court to uphold the notices. Nangia & Co LLP partner Shailesh Kumar said that to provide clarity to both tax officials and taxpayers and to ensure that the High Court’s instructions are uniformly interpreted and implemented across all 90,000 rare cases in India , CBDT has issued this much needed instruction. “This is a very welcome circular from CBDT that provides clarity for both taxpayers and tax officials.
Many cases are expected to be cleared for AY 2013-14, 2014-15 and 2015-16 for small taxpayers… except in rare cases, where an extended schedule is invoked for assets worth Rs 50 lakh or more,” he said. Kumar AMRG & Associates Senior Partner Rajat Mohan said this circular would clear up all the issues stemming from the controversy created around the reassessments by the Finance Act 2021 and the after effects of the high court ruling. completed for notices issued April through June 2021,” Mohan said.
AKM Global Tax Partner Sandeep Sehgal said CBDT has issued instructions to officers to provide material to taxpayers for reopening reasons so they can respond accordingly within 2 weeks. “Deadlines are aggressive for the taxpayers. Also, when the evaded income is less than Rs 50 lakh for certain years, the tax officials will not provide any material as they would not proceed with these cases. The proper defenses u/s 148A would also be will be available to taxpayers where appropriate,” Sehgal said.
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Story first published: Thursday, May 12, 2022, 1:56 PM [IST]