Ontents C
CHAPTER 1
INTRODUCTION
1.1 Legislative Background of Reassessment provisions 1
1.2 The new provisions 12
1.3 Memorandum explaining the amended provisions regarding reassessment 22
1.4 The provisions in brief 34
1.5 The changes 37
1.6 Propositions which may govern new law of reassessment also 42
1.7 Some propositions applicable to new law only 43
1.8 Conclusion
CHAPTER 2
REOPENING UNDER OLD LAW - BASIC PRINCIPLES
2.1 Introduction 44
2.2 Relevant provisions u/ss 147 to 151 44
2.3 Constitutional validity 46
2.4 Concept of assess, reassess, assessment, reassessment and recomputation 46
2.5 Guidelines set by Hon’ble Apex Court in GKN Driveshaft 47
2.6 Conditions for Reopening of assessment 50
2.7 Nature of information received for reopening of assessment 51
2.8 The applicable law
2.9 Reasons for reopening
2.10 Limitation for reopening
2.11 Reopening barred by limitation
2.12 Certain expressions in section 147
2.13 The charge of escapement of income is necessary in a valid reopening 71
2.14 Subsequent material/development cannot justify reopening 72
2.15 Jurisdiction of the AO to issue notice u/s 148(1) 74
2.16 Issue and service of notice u/s 148(1)
2.17 Issuance of notice u/s 148
2.18 Sanction for issue of notice u/s 148
2.19 Objections and their disposal
2.20 The procedure for dealing with objections raised by the assessee 90
2.21 Principles governing reopening 91
2.22 Law relating to multiple issue of notices 94
2.23 Certain settled propositions in relation to reassessment proceedings 96
2.24 Conclusion
CHAPTER 3
REOPENING UNDER OLD LAW - SPECIFIC PROPOSITIONS
3.1 Introduction
3.2 Challenge to
3.4 Reopening on borrowed satisfaction
3.5 Where reopening is based on non-application of mind by the AO 111
3.6 Independent inquiries by the AO after receipt of information 113
3.7 Where reopening is done on the basis of presumptions, suspicion, conjecture, and surmises 115
3.8 Reopening is based on change of opinion 116
3.9 Live link of information and tangible material with escapement of income 120
3.10 The proposition about live link of the material with the formation of belief as laid down by Hon’ble Apex Court in Lakhmani Mewal Das’s case 123
CONTENTS
3.11 Existence of tangible material for formation of belief about escapement of income is also necessary in cases completed u/s 143(1)
3.12 Reopening is made on incorrect facts
3.13 Issue of notice u/s 148(1) issued on, or in respect of dead person/ non-existent entity and amalgamating company and proceedings thereafter
3.14 Changes by Finance Act, 2022
3.15 Impermissible considerations to reopen assessment completed u/s 143(3)
3.16
3.17
3.18 Reassessment without issue of notice u/s 143(2)
3.19 Addition of another item of escaped income
3.20 Reopening on account of bogus purchases
3.21 Additional claim for deduction/exemption in reassessment proceedings
3.22 Conclusion
CHAPTER 4
INCOME ESCAPING ASSESSMENT - SECTION 147
4.1 Introduction
4.2
4.4 Analysis of section 147 under new law
4.5 Difference between ‘reasons to believe’ under old law and ‘suggest’ under new law
4.6 Whether there will be any requirement of putting the material on record before issuance of notice u/s 148
4.7 What is the scope of expression “if any income chargeable to tax in the case of the assessee has escaped assessment for any assessment year”?
4.8 Conditions for invoking jurisdiction u/s 147
4.9 Whether section 147 can be invoked in following situations
4.10 Assessment of income in respect of new issue (under new law)
4.11 Whether whole assessment is open after issue of notice u/s 148
4.12 There is no bar in issuing multiple notices u/s 148
CONTENTS
4.13 Some important judicial propositions u/s 147 applicable under new law also 178
4.14 Whether concept of change of opinion would be applicable under new law 180
4.15 Whether writ could lie in respect of procedure laid down u/s 148A or in assumption of jurisdiction u/s 147 or issue of notice u/s 148 185
4.16 Conclusion 186
CHAPTER 5
ISSUE
OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT - SECTION 148
5.1 Introduction
5.2 The new provision
5.3 The provision in brief
5.4 Amendment by Finance Act, 2022
5.5 Amendment by Finance Act, 2023 193
5.6 Conditions for issue and service of notice u/s 148 194
5.7 Guidelines by CBDT 196
5.8 Information 203
5.9 Meaning and scope of the expression “so far as may be” 218
5.10 Notice u/s 148A/148 can be issued by AO having jurisdiction only 218
5.11 Issuance of notice u/s 148 in different situations
5.12 Reassessment during reassessment pending under new law
5.13 Principles governing reopening and reassessment under the new law
5.14 Service of notices under Faceless Reassessment
5.15 Conclusion 223
CHAPTER 6
CONDUCTING
INQUIRY, PROVIDING OPPORTUNITY BEFORE THE ISSUE OF NOTICE U/S 148 - SECTION 148A
6.1 Introduction 224
6.2 The provision 224
6.3 The provision in brief 225
6.4 Charge of escapement of income in a notice u/s 148A(b) is necessary 227
6.5 Whether section 148A covers the concept of reasons recorded and procedure laid down by Hon’ble Apex Court in GKN Drive Shafts (India) Ltd. v. ITO
6.6 Application of procedure u/s 148A
6.7 Table to show where the procedure u/s 148A is required to be followed
6.8 Kind and scope of inquiries, AO can do u/s 148A(a)
6.9 Providing an opportunity to the assessee u/s 148A(b)
6.10 Number of notices u/s 148A(b), the AO can issue
6.11 Conditions inherent in issue of notice u/s 148A(b)
6.12 Notice u/s 148A(b), order u/s 148A(d) and notice u/s 148 should be in the same status and for the same assessee
6.13 Other propositions in respect of notices u/s 148A(b)
6.14 To consider the reply furnished by the assessee
6.15 Where no reply is furnished by the assessee
6.16 Passing of an order u/s 148A(d)
6.17 Nature of order u/s 148A(d)
6.18 Certain propositions where order u/s 148A(d) and consequential issue of notice u/s 148 are not upheld
6.19 Scope and relevance of the expression “material available on record”
6.20 Application of section 148A in survey cases
6.21 What should be the contents of the reply to notice u/s 148A(b)
6.22 Non-applicability of section 148A
6.23 Approval involved in search/requisition cases
6.24 Circumstances when notice issued u/s 148A(b) and/or order u/s 148A(d) is held invalid and its consequences
6.25 Some valid information under Explanation 1
6.26 Explanation 1
6.27 Service of notices under Faceless Reassessment
6.28 Conclusion
CHAPTER 7
IMPLICATION OF SECTION 135A IN REOPENING OF ASSESSMENT
7.1 Introduction
7.2 Section 135A
7.3 Various provisions covered in the scheme u/s 135A
7.4 Explanation 1 to section 148 and clause (d) of the proviso to section 148A
7.5 Consequential effect of section 135A on section 148A
7.6 Conclusion
CHAPTER 8
CONCEPT AND SCOPE OF DEEMED INFORMATION
8.1 Introduction
8.2 Deemed information under Explanation 2 to section 148
8.3 Contents of information for the purposes of section 148A/148
8.4 Dumb information
8.5 Dumb document
8.6 Whether deemed information as per Explanation 2 can also be dumb information
8.7 If no documents/assets are found in the search/requisition for any relevant assessment year, for which no escaped income can be attributed, whether the issue of notice u/s 148 or assuming
8.8 Assessment in respect of other issues
8.12 Consequence of deemed information on reopening and completion of assessment
8.13 Conclusion
CHAPTER 9
TIME LIMIT FOR NOTICE - SECTION 149
9.1 Introduction
9.2 The provision
9.3 Amendment by Finance Act,
9.4 Amendment by Finance Act, 2023
9.5 The provision in brief
9.6 The conditions for invoking clause (a) of section 149(1)
9.7 The conditions for reopening under clause (b) read with section 149(1A)
9.8 Concept and scope of “asset”- Explanation to section 149(1)
9.9 Concept and scope of word “expenditure”
9.10 Escaped Income in the form of entry or entries in the books of account
9.11 Implication of the First Proviso
9.12 Implication of the Second Proviso
9.13 Implication of the Third Proviso
9.14 Implication of the Fourth Proviso
9.15 Implication of the Fifth Proviso
9.16 Implication of the Sixth Proviso
9.17 Implication of change from ‘less than seven days’ to ‘does not exceed seven days’
9.18 Implication of the Explanation
9.19 Computation of limitation to issue notice u/s 148 in non-search
9.20 Computation of Limitation in the case of search/requisition cases against the person searched or other person
9.21 Issue of notice u/s 148 in survey cases carried out as a consequence to search/requisition as per Fourth Proviso to section 149(1)
9.22 Implication of sub-section (1A)
9.23 Mechanism of operation of sub-section (1) and sub-section (1A) of section 149
9.24 Implication of sub-section (2)
9.25 Nature and scope of section 149(1)
9.26 The time limit for completing assessment/reassessment made under the new law 329
9.27 Meaning of expression “amounts to” or “likely to amount to”
9.28 Multiple notices u/s 148 and application of section 149
9.29 Important principles which can be applied to the new provisions of section 149
9.30 Cases where issuance of notice u/s 148 r.w.s. 149(1)(b) may not be upheld
9.31 Following kind of escaped income may not be brought to tax after three initial relevant Assessment Years by invoking section 149(1)(b)
9.32 Cases where issuance of notice u/s 148 r.w.s. 149(1)(b) may be upheld
9.33 Conclusion
CHAPTER 10
10.5 Source of books of account, documents or evidence for the purposes of section 149(1)(b)
10.6 Dumb document
10.7 Loose papers/documents/books seized/impounded in search/ survey should be relied upon as a whole
10.8
10.9
CHAPTER 11
11.5 Section 282 as amended by Finance (No. 2) Act, 2009 w.e.f. 01-10-2009
11.6 Addresses, as per Rule 127, at which service is to be affected
11.9 Difference in the law under section 282 as it existed prior to 1-10-2009 and thereafter
(multiple
11.16 Issue and service of notice u/s 148A
CHAPTER 12
CHAPTER 13
13.10 Prerequisites of sanction
13.11 Opportunity of being heard before approval
13.12 Non-Application of mind and mechanical approval
13.13 Incurable errors
13.14 Whether Assessee entitled to copy of approval/sanction order 437
13.15 The following kind of approvals/sanctions not upheld 438
13.16 Contrary view 439
13.17 Whether irregularity in granting approval is curable u/s 292B/ 292BB 440
13.18 Service of notices under Faceless Reassessment
CHAPTER 14
NOTICE DEEMED TO BE VALID UNDER CERTAIN CIRCUMSTANCES - SECTIONS 292B AND 292BB 14.1 Introduction
Section 292BB
Section 292B
14.4 Service of the notice u/s 148 and section 292BB
14.5 Issue of notice v. service of notice
14.6 Notice u/s 143(2), reassessment proceedings and section 292BB
14.7 Notice u/s 148A and section 292BB
14.8 Objection to issue and service of notice
14.9 At what stage one should raise the plea of non-service of notice 455
14.10 At what stage the question of service of notice u/s 148A(b) can be raised 455
14.11 Circumstances where section 292BB cannot be applied 456
14.12 Other situations concerning the application of section 292BB 457
14.13 Conclusion 459
CHAPTER 15
ASSESSMENT AND REASSESSMENT IN SEARCH, REQUISITION AND SURVEY CASES
15.1 Introduction
15.2 Assessment in search/requisition cases where search/requisition is initiated on or after 1-4-2021
15.3 Assessment in cases where survey u/s 133A is initiated on or after 1-4-2021
15.4 Bar for issuing notice u/s 148 for certain earlier years
15.5 Possible options in different years
15.6 Time limit for completing assessment/reassessment under new provisions
15.7 Amendment by Finance Act, 2022
15.8 Amendment by Finance Act, 2023
15.9 Ingredients of section 153A
15.10 Concept of relevant assessment year
15.11 Concept of “pending” u/s 153A
15.12 Concept of abatement
15.13 Various situations of abatement and completion of assessment
15.14 Relevance of incriminating material
15.15 The non obstante clause in sections 153A and 153C 488
15.16 The meaning of assess and reassess 490
15.17 Time limit for completion of assessment u/s 153A (search before 1-4-2018) 490
15.18 Assessment u/s 153C
15.19 Exclusion of time in handing over of the books
15.20
CHAPTER 16
REVISION OF REASSESSMENT ORDERS
16.1 Introduction 522
16.2 Ingredients of section 263 522
16.3 Amendment by Finance Act, 2022 524
16.4 Amendment by Finance Act, 2023 525
16.5 The power and function of the Commissioner in revision 526
16.6 The concept of “erroneous” 527
16.7 Concept of prejudicial to the interest of revenue 529
16.8 Revision of the assessment orders involving the issues in respect of cash deposits, receipts, investment and expenditure 531
16.9 Explanation 2 to section 263 535
16.10 Relevant propositions u/s 263 538
16.11
16.13 Doctrine of merger 548
16.14 No revision is permissible on marginal loss to Revenue 549
16.15 Limitation 550
16.16 Revision of order passed u/s 148A(d) 550
16.17 Revision of reassessment order for making addition on new issues 551
16.18 Revision of reassessment order by invoking Explanation 2 to section 263 552
16.19 Limitation 553
16.20 Various propositions on application of section 263 taken in reassessment 554
16.21 Application of above principles in the context of new reassessment procedure 555
16.22 Conclusion 556
CHAPTER 17 PENALTIES
17.1 Introduction 558
17.2 Nature of default and penalties 558
17.3 General principles for penalty proceedings/order 559
17.4 Section 271(1)(c) 561
17.5 Penalty u/s 271D 563
17.6 Penalty u/s 271E 575
17.7 Penalty u/s 271AAD 580
17.8 Penalty u/s 271AAC 592
17.9 Penalty u/s 271DA 594
17.10 Penalty u/s 271AAB 597
17.11 Penalty u/s 271AAE 604
17.12 Conclusion 606
CHAPTER 18
MISC. ESCAPED INCOME AND REOPENING UNDER NEW LAW
18.1 Introduction 607
18.2 Procedure followed under new law 608
18.3 Cash deposited in bank 609
18.28 Expenditure (on elections, temple constructions, foreign travels, school fees)
18.38 Unaccounted money received from developer 648
18.39 Unaccounted money paid by the developer 649
18.40 Expenditure found in electronics devices/loose sheets 650
18.41 Conclusion 651
CHAPTER 19
AGGREGATION OF ESCAPED INCOME U/S 149(1A)
19.1 Introduction 652
19.2 Rule of aggregation u/s 149(1A) 653
19.3 Possible inferences and defence 656
19.4 Whether escaped income in the form of asset can be clubbed with escaped income in the form of expenditure/entry to workout threshold limit provided u/s 149(1)(b) 658
19.5 Whether u/s 149(1A) aggregation is done only in respect of outexpenditure (in relation to an event or on an occasion) or whether such aggregation can be done both for asset and expenditure put together 660
19.6 Whether AO can stop if aggregation comes to ` 50 lakhs and thereafter does not identify other items of asset or expenditure? 661
19.7 Conclusion 661
CHAPTER 20
VALIDITY OF NOTICES ISSUED
U/S
148 AFTER
01-04-2021
UNDER THE OLD LAW
20.1 Introduction
20.2 Extension of due dates
20.6 The decision of the High Courts 667
20.7 SLP of the Revenue 671
20.8 The procedure to be followed as per Ashish Agarwal’s case (supra) 672
20.9 Analysis of section 149(1) of new law providing time limit for issue of notice u/s 148 673
20.10 Defence available to the taxpayer 675
20.11 Instructions issued by the CBDT 678
20.12 Comments
20.13 The gist of above Instructions
20.14 Conclusion
CHAPTER 21
RESPONSE TO THE NOTICES UNDER NEW LAW
21.1 Introduction 690
21.2 Pre-notice procedure followed by the Department 690
21.3 Evaluation of notice u/s 148A(b) by the assessee 696
21.4 Further checking by the assessee before furnishing reply 698
21.5 Contents of the reply u/s 148A(b) 700
21.6 Evaluation by the assessee after the receipt of order u/s 148A(d) and notice u/s 148
21.7 Challenge to notice u/s 148 issued under new law 702
21.8 Writ may not be allowed in following circumstances 703
21.9 Conclusion 715
CHAPTER 22
DEVELOPMENTS SUBSEQUENT TO ASHISH AGARWAL’S CASE
22.1 Introduction 716
22.2 The decision in Touchstone Holdings (P.) Ltd. v. ITO 717
22.3 The decision in Nutan Bhusan Jena v. PCIT 718
22.4 The decision in Ashok Kumar Agarwal v. UOI 719
22.5 The decision in Ved Prakash Mittal’s case 721
22.6 The decision in Salil Gulati v. ACIT 722
22.7 The decision in Rajeev Bansal v. UOI 722
22.8 The decision in Keenara Industries (P.) Ltd. v. ITO 725
22.9 Other decisions following Ashish Agarwal’s case 729
22.10 Considering the background cases and above judgments, entire development can be summed up 736
22.11 issued under old law between 01-04-2021 to 30-06-2021 738
22.12 The AO can drop notices u/s 148 issued under old law during the period between 01-04-2021 to 30-06-2021 and issue fresh notices under new law 738
22.13 A Possible different view 739
22.14 Possible scenario for issue of notice u/ss 148A(b) and 148 during FYs 2022-23 and 2023-24 742
22.15 Conclusion 743
CHAPTER 23 ENHANCEMENT IN REASSESSMENT
23.1 Introduction 744
23.2 The power of CIT(A) falling within the scope of enhancement 744
23.3 Limitation on the power of enhancement of CIT(A) 745
23.4 Power of enhancement of CIT(A) in reassessment order under old law 747
23.5 Enhancement in reassessment u/s 153A/153C 749
23.6 Enhancement in reassessment made under Explanation 1 and under Explanation 2 (in respect of survey) to section 148 under new law 751
23.7 Enhancement in reassessment made under Explanation 2 to section 148 (other than survey) under new law 752
23.8 Conclusion 753
23.9 Introduction 754
23.10 The provisions 754
23.11 Whether Tribunal has power of enhancement? 757
23.12 Power of enhancement in Proviso to section 254(2) 757
23.13 Analysis of the above Proviso 758
23.14 Scope of word “assessment” in the Proviso to section 254(2) 758
23.15 Power of conversion of income assessed under one head into another 758
23.16 The consequence of lack of power of enhancement 759
23.17 Conclusion 760
CHAPTER 24
THEORY OF ‘TRAVEL BACK IN TIME’
24.1 Introduction 761
24.2 The Concept
24.3 Relaxation Act, 2020
24.4 762
24.5 The issues arising
24.6
24.7 Conclusion
CHAPTER 25
AMENDMENT BY FINANCE (NO. 2) ACT, 2024
25.1 Introduction 769
25.2 Memorandum explaining the new scheme of reassessment 769
25.3 The Scheme in brief 772
25.4 Section 147 773
25.5 Section 148 774
25.6 Section 148A 778
25.7 Section 149 782
25.8 Section 151 787
25.9 Section 152 788
25.10 New Reassessment provisions in brief 789
25.11 Comparative chart of the law of reassessment existing on or before 31-03-2021, existing between 01-04-2021 and 31-08-2024 and proposed w.e.f. 01-09-2024
25.12 Following propositions held in respect of law existing between 01-04-2021 till 31-08-2024 will also be applicable in respect of law effective from 01-09-2024 798
25.13 Conclusion 800
CHAPTER 26
Old law v. New law 802
Scope of section 147 802
Scope of section 148A 803
To issue Fresh Notice u/s 148A(b), if earlier Notice is Defective 807
Jurisdiction of the AOs Conducting Proceedings u/s 148A and issuing Notice u/s 148 809
Scope of section 148 810
Issue of Notice u/s 148 in Faceless Assessment Scheme 811
Scope of Explanation 1 to section 148 811
Time limit for Utilizing Information for Reopening of Assessment under new law 815
CONTENTS
Not enclosing order u/s 148A(d) with the Notice u/s 148 815 816
Scope of Explanation 2 to section 148 817
Scope of deemed income 820
Interplay of section 153C/153A and section 148A 821
Notice u/s 148 during Pendency of Reassessment Proceedings 823
Notices u/s 148 in search and Requisition cases 823
Reopening of Assessment on the basis of Survey 828
Issue of notice u/s 148A/148 during time available for issue Notice u/s 143(2) 831
Scope of Proviso to section 148 832
General scope of section 149(1) 832
Reopening of Assessment beyond three years under new law 837
Scope of sixth Proviso to section 149 837
Scope of Expression ‘asset’ in section 149(1) 838
Scope of section 149(1A) 842
Reopening under new law on the basis of Suspicion 843
Recording of reasons is not required under new law 844
Concept of Abatement of Proceedings under new law 845
Approval in Reopening under new law 846
Inclusion of new issue in Reassessment under new law 847
Disturbing concluded issues in Reassessment under new law 852
Requirement of issue of Notice u/s 143(2) in Reassessment under new law 854
Reopening on the Allegation of Assessment at Lower rate of tax 855 under new law 855
Entry as an Escaped Income 858
Sections 68 to 69D and Reassessment under new law 859
Utility of Statement Recorded during Summons/survey and Search 860
Penalties in Reassessment under new law 861
Utility of Books/Documents/Evidence in non-search cases 862
Scope of Expression ‘a Transaction’ 863
Revision u/s 263 of an order of Reassessment 864
Limitation in set aside cases 865
SUBJECT INDEX 873
CHAPTER
RESPONSE TO THE NOTICES UNDER NEW LAW
21.1 Introduction
The department may obtain information from different sources about escapement of income. The information about various transactions coming to the knowledge of Department is checked and verified through return of income filed by the assessee for the relevant assessment year. Wherever further required such as in those cases where return of income is not filed, the AO may carry out inquiries to ascertain the correctness of the transactions coming to its knowledge and amount of assessable income arising from such transactions. The AO may also receive information including documents recovered and seized/impounded/requisitioned which may also indicate escapement of income. After such inquiries and verification, the AO may issue, to the assessee, a notice u/s 148A(b) enclosing therewith material in his possession, asking him to furnish his reply/objections or explanations in respect of charge of escapement of income. The assessee has to respond to such notices enclosing with the reply, the material and document supporting his stand. In this chapter, various sources through which Department obtains information and carries out verification and inquiries, kind of response assessee is supposed to give and various defences under law available to him are briefly described.
21.2 Pre-notice procedure followed by the Department
21.2-1 Source of information/data
(i) SFT/TDS/TCS/Foreign Remittances/Export-Import Data.
(ii) Third party information- sale and purchase of immovable property, cash/time deposit or withdrawal from the bank, information from Investigation Wing.
(iii) Data from share brokers, stock exchange, third party.
(iv) In case of transactions in immovable property, information from Form No. 61A, AIS, or 26AS or from deductor or deductee.
(v) Where information is received from Investigation Wing-to gather entire uploaded data.
(
vi) Equity shares - In case of sale of equity shares- whether settled by actual delivery or by transfer on a recognised stock exchange.
21.2-2 Further inquiries
(
i) Whether return of income is filed for the relevant assessment year, how it is assessed, u/s 143(1) or 143(3), source of income, returned and assessed income.
(ii) Whether escaped income is reflected in the return and if yes in what manner.
(iii) The independent verification specially from institutions such as banks or from other Departments or from officers of the department, or from the portals.
(
iv) To collect documents as under-
i. Bank statement(s).
ii. Sale Deed/Purchase Deed, Form 26AS of other party.
iii. Form 16 (Salary case) or Form 16A (TDS case).
iv. Ledger a/c, contract/agreement/terms of appointment/Demat account.
v. Broker’s bank statement reflecting assessee’s payments against margin or purchase of scrip).
(v) In search/seizure cases documents relating to assessee, relevant statements.
(
vi) In case of circular transactions who is the end beneficiary
21.2-3 Cases which may fall under exceptions
(i) Case of restructuring of companies which involve actions such as Merger, Amalgamation/Demerger, or restructuring.
(ii) Cases involving deceased taxpayers where the assessment must be done after bringing the legal heirs/representatives on record and the same is not done.
(iii) Cases having Stuck Off Companies where there is a detailed procedure mandated by CBDT to revive the company.
(iv) Companies under Liquidation – NCLT cases.
(v) Cases involving the duplication of PAN.
21.2-4 Common cases to be picked up for reopening
(i) Cases of penny stock.
(ii) Cases of TDS but no return filed.
692 RESPONSE TO THE NOTICES UNDER NEW LAW
(iii) Transactions in immovable properties.
(iv) Survey, search, seizure and requisition cases.
(v) Bogus purchases.
(vi) Cases of deposit and withdrawal in bank, particularly relating to demonetisation.
(vii) Claim of wrong deductions and exemptions.
(viii) Audit based cases.
(ix) Cases involving accommodation entries.
(x) Bogus Purchases booked
(xi) Client Code Modification for LTCG/LTCL
(xii) Capital Introduction through bogus Unsecured Loans/Share Premium.
(xiii) Cash on-money payment for purchase of immovable property detected during Search/Survey at Third Party premises.
(xiv) Entry providers’ own cases.
21.2-5 Contents of notice u/s 148A(b)
(i) Assessee and assessment year should be correct.
(ii) Not to be a case of deceased assessee.
(iii) To specify transactions leading to escapement of income.
(iv) Quantify escaped income on the basis of information and documents.
(v) Identify, it is chargeable to tax.
(
vi) Identify documents leading to inference that income chargeable to tax has escaped assessment.
(vii) To make it clear that the SCN does not violate First Proviso to section 149(1).
(viii) Identify that escaped income satisfies the definition of asset applicable to relevant assessment year.
(ix) Enclosed with the SCN all the documents/information leading to inference that income chargeable to tax has escaped assessment.
(x) Adequate time is given to reply and if required to extend the time to reply.
(xi) If after the issue of SCN further material is received in respect of escaped income, another SCN may be issued but before passing of order u/s 148A(d).
21.2-6 Steps which may be taken by the AO before issue of notice u/s 148A(b)
By taking following steps the AO may decide to initiate reassessment proceedings and the assessee may decide whether reassessment proceedings are justified as per provisions of the law-
(i) Identi cation of Escaped Income Type: Whether the information containing or indicating escapement of income falls under Explanation 1 or under Explanation 2 to section 148. If yes, one may proceed further to evaluate other conditions.
(ii) Identi ability of Assessee and AY: Whether assessee and AY are identifiable from the information. If yes, to proceed further.
(iii) Assessment Year Classi cation: Determine whether AY pertains to the limitation falling u/s 149(1)(a) or under the limitation of section 149(1)(b). Then to proceed further.
(iv) Need for Procedure u/s 148A: Whether the information requires procedure u/s 148A (required in respect of information falling in clauses (i), (ii), (iii) and (v) of Explanation 1 and survey cases of Explanation 2 to section 148). If procedure u/s 148A is followed, then to proceed further.
(
v) Accompanying Order u/s 148A(d): Where procedure laid down u/s 148A required to be followed has been followed and order u/s 148A(d) has been passed, whether notice u/s 148 is accompanied with that order.
(vi) Approval from Speci ed Authority: Where escapement of income arises under Explanation 2 to section 148 or falls u/s 135A, (whether falling in the AY within the limitation of section 149(1)(a) or within the limitation of section 149(1)(b)) whether approval from specified authority has been taken before issue of notice u/s 148.
(
vii) Possession of Books, Documents or Evidence: Where escapement of income falls in the AY within the limitation of section 149(1)(b), whether the AO has in his possession books of account, documents or evidence showing escapement of income. If yes, to proceed further.
(viii) Escaped Income as an Asset: Where escapement of income falling in one AY within limitation of section 149(1)(b), is represented by an asset (or assets), whether total amount of escaped income is ` 50 lakhs or more, if yes, invoking of section 149(1)(b) for that year will be justified.
(ix) Escaped Income as Expenditure: Where escapement of income falling in one AY within limitation of section 149(1)(b), is represented by expenditure in respect of a transaction (or transactions) or expenditure in relation to an event (or events) or occasion (or occasions) or in respect of entry or entries, whether total amount of escaped income
(
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in these forms is ` 50 lakhs or more, if yes, invoking of section 149(1) (b) for that year will be justified.
x) Escaped Income Spread Over AYrs as Asset: Where escapement of income in the form of an asset is spread over in more than one AY and aggregate escaped income is ` 50 lakhs or more, invoking of section 149(1A) and reopening of all the concerned AYs would be justified.
xi) Escaped Income Spread Over AYrs as Expenditure: Where escapement of income in the form of expenditure on an event or occasion is spread over in more than one AY and aggregate escaped income is ` 50 lakhs or more, invoking of section 149(1A) and reopening of all the concerned AYs would be justified.
(xii) Escaped Income in Transactions: Where escapement of income in the form of expenditure in respect of transactions is found in more than one AY, aggregation and consequently invoking of section 149(1A) and reopening of all the concerned AYs would NOT be justified as a transaction is complete in one year. In other year it will be a different transaction.
(xiii) Escaped Income in Entries: Where escapement of income in the form of expenditure in respect of entry or entries is found in more than one AY, aggregation and consequently invoking of section 149(1A) and reopening of all the concerned AYs would NOT be justified as an entry is complete in one year. In other years it will be a different entry.
(xiv) Multiple Assets with Aggregate Escaped Income: Where escaped income represented in the form of more than one asset acquired in different years (say, asset A1 in AY4, and asset A2 in AY5) out of unaccounted income, investment in individual asset does not exceed threshold limit but aggregate amount of escaped income invested in all these assets exceeds threshold limit, invoking of section 149(1A) for reopening the assessment for the concerned AYs will NOT be justified.
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xv) Multiple Expenditures in Transactions: Where escaped income represented in the form of expenditure in more than one transactions carried out in different years (say, Ex.1 in AY6, and Ex.2 in AY7) out of unaccounted income, outflow in individual transaction does not exceed threshold limit but aggregate amount of escaped income invested in all these transactions exceeds threshold limit, invoking of section 149(1A) for reopening the assessment for the concerned AYs will NOT be justified.
(xvi) Multiple Entries with Aggregate Escaped Income: Where escaped income represented in the form of more than one entry falling in different years, (say, En.1 in AY8, and En.2 in AY9) outflow of escaped income in individual entry does not exceed threshold limit but aggregate
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amount of escaped income falling in all these entries exceeds threshold limit, invoking of section 149(1A) for reopening the assessment for the concerned AYs will NOT be justified.
(xvii) Non-Clubbing of Different Types of Escaped Income: Where escaped income represented in the form of more than one asset and expenditure in more than one transaction or expenditure in relation to more than one occasion or event or more than one entries, all falling in the same AY, then as explained in para 2.2 above, aggregation (or clubbing) of all these escaped income for considering threshold limit will not be justified. (All escaped income falling in clauses (i), (ii) & (iii) cannot be clubbed to determine threshold limit for that year) What can be clubbed for one year is escaped income invested in assets (falling in clause (i) of section 149(1)(b), it is one group), or escaped income being expenditure or entries (falling in clauses (ii) and (iii) of section 149(1)(b), it is another group). If such clubbed escaped income in each group exceeds threshold limit, reopening of the assessment for that year would be justified.
(xviii) Inclusion of Additional Escaped Income: Where assessment of an AY is reopened on conditions u/s 149(1)(b) having been satisfied, other escaped income which by themselves were not capable of invoking section 149(1)(b) can be included in the reassessment.
(a) In cases of cash transactions being cash deposit in the bank the FAU may-
(i) Find out name of the account holder, address, email, mobile number of the person reported in Form No. 61A.
(ii) Find out other bank accounts linked with that person and PAN.
(iii) Find out whether the person concerned is account holder or authorised signatory, in that case to find out the real account holder.
(iv) Find out whether account is open as joint account.
(v) Check the cash transactions with AIR and CIB information and to find out further cash transactions.
(b) In case of property transaction-
(i) Checking of account holder, address, email, mobile number and PAN of the person involved in property transaction.
(ii) Checking of property transaction with SFT and TDS information.
(iii) Checking whether same property transaction is reported by another person being joint seller or joint buyer.
(iv) Collecting documents of sale agreement or conveyance deed.
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c) Checking information from GST - Checking of sales reported in GSTR-1, total sales reported GSTR-3B and comparison with sales reported in the ITR.
d) Checking of export, import information and the value of shipping bill of entry, duty drawbacks and comparison with data declared in the return.
e) Collection of the information from the banks.
21.3 Evaluation of notice u/s 148A(b) by the assessee
After the receipt, the notice u/s 148A(b) may be evaluated as under-
(i) Jurisdiction Veri cation: Whether AO issuing the notice has jurisdiction to make the assessment over the assessee. Thus, check jurisdiction of the AO.
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ii) Limitation Check: Whether the notice is for the AY which is within 3 years or is for 4th to 10th relevant assessment year. Thus, check limitation of three years or 4th to 10th years.
(iii) Incorporation of Enquiry Results: Whether results of enquiries are incorporated in the notice and if such enquiries are carried out, whether approval from specified authority has been taken for carrying out enquiries. Thus, check approval required for carrying out inquiries u/s 148A(a).
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iv) Relevance of Material in Notice: Whether material contained in the notice pertains to the assessee and to the relevant assessment year (or to a different assessment year). Thus, check relevance of the material/ information contained in the notice to the assessee and to the assessment year.
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v) Nature of Income Check: Whether notice contains information in respect of income which is chargeable to tax or in respect of income which is exempt. Thus, check nature of income, whether exempt.
(vi) Comparison with Return: Whether assessee has filed the return for that year and whether concerned income has been declared in that return or information thereof is declared claiming certain exemption or deduction. Thus, compare the information in the notice with the information/data declared in the original return.
(vii) Source of Information: What is the source of information contained in the show cause notice? Check whether material forming the basis of notice u/s 148A(b) is enclosed with the notice.
(viii) Time Allowed for Reply: What is the time allowed for furnishing reply whether it is less than 7 days being statutory time? Check time provided to reply.
(ix) Request for Additional Time: To demand further time to reply on plausible ground.
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x) Composition of Escaped Income: Where notice is issued for 4th to 10th relevant assessment year, (that is the case covered u/s 149(1)(b)) what is the composition of income- whether it is represented by asset, entry, or expenditure. Thus, check composition of escaped income as given in the notice.
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xi) Veri cation of Re ected Income: Whether there is mention in the notice that escapement of income is represented by any asset entry or expenditure and whether such asset/entry/expenditure are reflected from which books of account documents or evidence in possession of the AO, and whether photocopies of such books/documents/evidence are enclosed with the notice. Thus, check whether asset, entry or expenditure alleged to have escaped assessment are reflected from the books of account in possession of A.O.
(xii) Fit into Concept of Asset, Entry or Expenditure: Check whether escaped income relating to asset, expenditure on event or occasion or entry/entries fit into the concept of asset, expenditure and entry and the basis of their identification by the AO. Thus, compare escaped income given in the notice with the concept and scope of asset, entry or expenditure.
(xiii) Demand for Verbatim Copy of Information: To demand verbatim copy of information suggesting escapement of income.
(xiv) Demand for Copies of Adverse Material: To demand copies of adverse material and adverse statements.
(xv) Demand for Material Gathered by AO: To demand the copy of material gathered by AO on the basis of enquiry.
(xvi) Request for Cross-Examination: To ask for the cross examination of the persons who may have given the adverse depositions against assessee. (It may not be provided at 148A stage)
(xvii) Demand for Approval Note and Copy: To demand the copy of the note on the basis of which approval of specified authority was granted and demand copy of the approval.
(xviii) Submission of Facts and Evidence: To submit facts and evidence in repelling the information.
(xix) Penalty and Adverse Consequence: There is no penalty or adverse consequence provided in law except order 148A(d) & 148 notice, for non-compliance or incomplete compliance of notice 148A.
(xx) Consideration of Challenging Orders: Consider challenging the order u/s 148A(d) and issue of notice u/s 148 before High Court.
(xxi) Survey-Speci c Information Check: In case of survey check whether notice u/s 148A(b) contains information specific to that year.
RESPONSE TO THE NOTICES UNDER NEW LAW
(xxii) Aggregation Compliance: Whether AO has resorted to Aggregation for determining threshold limit and if yes, whether it is in accordance with Section 149(1A). Thus, check whether AO has correctly resorted to aggregation.
(xxiii) Inquiry and Veri cation Purpose: Whether reopening is sought to be done for inquiry and verification which is not permissible.
(xxiv) Notice Issuance and Service Check: Check issue and service of notice, unsigned notice, wrong address.
(xxv) Questionnaire in Notice: Whether notice u/s 148A(b) in the questionnaire or information about escapement of income. The questionnaire cannot be replied u/s 148A(b).
(xxvi) Capital Gains Escapement Check: In case where notice u/s 148A(b) contains allegation about escapement of capital gains, it is the amount of capital gains which will be the escaped income and not the gross sale consideration. If the amount of capital gains is less than ` 50 lakhs whereas sale consideration is more than ` 50 lakhs, then reopening cannot be done for fourth to tenth assessment year.
21.4 Further checking by the assessee before furnishing reply
(i) To check whether reopening is barred by limitation under new law.
i Whether the time period consumed in stay by a court and in furnishing reply by the assessee u/s 148A(c) save the limitation expiring on 31-03-2022 or 31-03-2023.
ii. Whether reopening of assessment for AYrs 2013-14 and 2014-15 are barred by limitation under new law because of first proviso to section 149(1), if notice u/s 148 is issued after 30-06-2021.
iii Where assessment year which is reopened is 2015-16 and limitation expiring on 31-03-2022 is saved, by excluding the time period as provided in fifth proviso to section 149(1), the provisions of Finance Act, 2021 will be applicable. But if limitation expiring on 31-03-2022 is not saved, the reassessment is barred by limitation.
(ii) To check the nature of escaped income. In case of capital gains, it will be the amount of capital gains and not the sale consideration, which will be the escaped income.
(iii) To check whether the provisions of Finance Act, 2021 or of Finance Act, 2022 is applicable.
i. Applicability of Finance Act Based on Limitation provided u/s 149(1): If limitation is saved by third proviso to section
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149(1) the provisions of Finance Act, 2021 will be applicable and if not, the provisions of Finance Act, 2022 will be applicable.
ii. Impact on AYrs 2016-17 and 2017-18 when Limitation is Not Saved: Where assessment years which are reopened are 2016-17 and 2017-18 and limitation expiring on 31-03-2022 is not saved, by excluding the time period as provided in fifth proviso to section 149(1), notice u/s 148 will be deemed to be issued in FY 2022-23 and therefore, the provisions of Finance Act, 2022 will be applicable.
iii. Applicability for AYrs 2016-17 and 2017-18 When Limitation is Saved: Where assessment years which are reopened are 2016-17 and 2017-18 and limitation expiring on 31-03-2022 is saved, by excluding the time period as provided in fifth proviso to section 149(1), notice u/s 148 will be deemed to be issued in FY 2021-22 and therefore, the provisions of Finance Act, 2021 will be applicable.
iv. Treatment of Ayr 2018-19 with Unsaved Limitation: Where assessment years which is reopened is 2018-19 and limitation expiring on 31-03-2022 is not saved, by excluding the time period as provided in fifth proviso to section 149(1), notice u/s 148 will be deemed to be issued in FY 2022-23 and therefore, the provisions of Finance Act, 2022 will be applicable.
v. Finance Act Provisions for Assessment Year 2018-19 with Saved Limitation: Where assessment years which is reopened is 2018-19 and limitation expiring on 31-03-2022 is saved, by excluding the time period as provided in fifth proviso to section 149(1), notice u/s 148 will be deemed to be issued in FY 202122 and therefore, the provisions of Finance Act, 2021 will be applicable.
(iv) To check whether Explanation 1 or Explanation 2 to section 148 is applicable-
i. In general, Explanation 2 to section 148 under new law will not be applicable in respect of the notices issued u/s 148 under old law, if such notices relate to search, survey or requisition initiated on or before 31-03-2021.
ii. Almost all the AYs in respect of which notice u/s 148 under old law has been issued during 01-04-2021 to 30-06-2021 will fall under Explanation 1 to section 148 under new law.
iii. Explanation 1 to section 148 as per Finance Act, 2021 will be applicable if limitation expiring on 31-03-2022 is saved as per fifth proviso to section 149(1).
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iv. Explanation 1 to section 148 as per Finance Act, 2022 will be applicable if limitation expiring on 31-03-2022 is NOT saved even after invoking fifth proviso to section 149(1).
v) To check whether provisions of section 149(1)(b) or that of section 149(1)(a) are applicable-
i. Where notice u/s 148 under new law is deemed to be issued in FY 2021-22, the assessment years falling under the limitation of section 149(1)(b) will be, 2015-16, 2016-17 and 2017-18. Accordingly, AY 2018-19 and onwards will fall within the limitation of section 149(1)(a).
ii. Where notice u/s 148 under new law is deemed to be issued in FY 2022-23, the assessment years falling under the limitation of section 149(1)(b) will be, 2016-17, 2017-18 and 2018-19. Accordingly, AY 2019-20 and onwards will fall within the limitation of section 149(1)(a).
vi) To check what is the escaped income and in which form it is-
i. Where provisions of Finance Act, 2021 are applicable and assessment year falls within the limitation u/s 149(1)(b), the escaped income should be ` 50 lakh or more and has to be in the form of asset.
ii. Where provisions of Finance Act, 2022 are applicable and assessment year falls within the limitation of section 149(1)(b), the escaped income should be ` 50 lakh or more and has to be in the form of an asset, entry, or expenditure in a transaction or in relation to an event or occasion.
vii) To check whether provisions of section 149(1A) are correctly invoked.
21.5 Contents of the reply u/s 148A(b)
(i) Details of the return for the relevant assessment year, audit report, scrutiny assessment orders, computation of income.
(ii) Queries and reply in respect of original assessment proceedings, if scrutiny assessment is carried out.
(iii) Bank statements to support the transactions.
(iv) Various technical deficiencies in the notice, as pointed out above in paras 4 & 5.
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v) Explanation and submissions in separate paragraphs and documents for each item of escaped income pointed out in the notice u/s 148A(b).
Law Relating to Reassessment
AUTHOR : AJAY KUMAR AGRAWAL, D.C. AGRAWAL
PUBLISHER : TAXMANN
DATE OF PUBLICATION : SEPTEMBER 2024
EDITION : 4TH EDITION
NO. OF PAGES : 912
ISBN NO : 9789364556279
BINDING TYPE : PAPERBACK
DESCRIPTION
Rs. 2,695
This book is a comprehensive guide to reassessment under the Income Tax Act, covering the historical evolution and latest amendments from the Finance (No. 2) Act, 2024. It provides an in-depth analysis of Sections 147 to 153, discussing the nuances of tax planning, avoidance, and evasion, with over 3,500 case laws and practical insights. The Fourth Edition highlights key changes, including Sections 148A and 149, and covers crucial topics like deemed information, procedural requirements, and penalties.
It is designed for professionals and beginners; the book systematically explains legal provisions and practical applications, with dedicated chapters on revisions, search assessments, and more.
It is helpful for tax professionals, legal practitioners, and departmental officers seeking detailed guidance on reassessment laws.
The Present Publication is the 4th Edition and has been amended by the Finance (No. 2) Act, 2024. This book is authored by D.C. Agrawal & Ajay Kumar Agrawal with the following noteworthy features:
• [Exhaustive Coverage] Detailed analysis of reassessment provisions, including Sections 147 to 153, procedural aspects, and the impact of amendments from 1918 to 2024
• [Analysis of Amendments and Case Laws] Covers legislative changes, the introduction of Block Assessments, new reassessment schemes, and landmark judicial decisions shaping current procedures
• [FAQs and Practical Guidance] Includes 147 FAQs addressing common reassessment scenarios, procedural nuances, and practical implications
• [Focused Chapters on Key Topics] Dedicated chapters on revisions, assessments in search cases, penal provisions, and responses to notices under new laws
• [User-friendly Structure] Each chapter begins with an introduction and systematically covers relevant provisions and interpretations, with summaries for quick reference
• [Special Focus on Latest Amendments] Detailed discussion on amendments by the Finance (No. 2) Act, 2024, including modern enhancements to older reassessment procedures
• [Practical Utility] Provides strategies for presenting reassessment cases, responding to notices, handling objections, and ensuring procedural compliance
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