The Supreme Court on the 4th of May, 2022 passed an order that overruled the decisions of the High Courts. As per the order the notices issued after 1st of April 2021, were valid under Section 148A of the Income tax Act 1961.
The reassessment notices issued after 1st of April 2021 were issued under the unamended provisions of Section 147 and hence the taxpayers contested it and high courts seconded it. But the Supreme court sought middle ground and upheld the validity of the notices.
Now the Central Board of Direct Taxes (CBDT) has issued guidelines that must be followed by tax officers (TO) to implement the instructions of the Supreme Court.
Section 149(1)(b) of the Act, as amended by Finance Act, 2021 refers to all cases where notices can be issued after 3 years but not later than 10 years from the relevant AY. The TO must be in possession of books of accounts or other documents or evidence that must show that the income chargeable to tax represented in the form of asset, amounts or is likely to amount to INR 5m or more for that year.
Applicable Assessment Years - AY 2013-14, AY 2014-15 and AY 2015-16
Actionable - Fresh notices under Section 148 of the Act can be issued with the approval of specified authority (Specified authority under section 151 of the Act under the new law will be the prescribed authority)
For cases where the amount is less than INR 5m, the TOs must exclude the cases and separate instructions will be issued by the CBDT.
Section 149(1)(a) of the Act, as amended by Finance Act 2021, specifies the cases where notices can be issued within 3 years from the end of the relevant AY except cases covered under Section 149(1)(b) of the Act.
Applicable Assessment Years - AY 2016-17 and AY 2017-18
Under the amended provisions the extended reassessment notices issued under the erstwhile reassessment provisions will be deemed to be show cause notices. They will deemed to have complied with all the requirements of the new law.