Introduction
Background of Section 148
Section 148 of the Income Tax Act empowers the income tax authorities to reopen an assessment that has already been completed if they have reason to believe that income chargeable to tax has escaped assessment. This provision is intended to prevent taxpayers from evading tax by not disclosing their income accurately. The income tax authorities can issue a notice to the taxpayer to reopen the assessment within a prescribed time limit.
Amendment to Section 148
The amendment to section 148 was made in the Finance Act 2021, which came into effect on 1st April 2021. The amendment inserted a new proviso to sub-section (2) of section 148. The proviso states that if the income tax authorities have reason to believe that an assessment has been reopened on the basis of information received from any person under section 133(6), the notice issued for reopening the assessment shall be deemed to have been issued after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be.
Impact of Amendment
The amendment to section 148 has significant implications for taxpayers. Earlier, the income tax authorities could issue a notice to reopen an assessment if they had reason to believe that income chargeable to tax had escaped assessment. However, with the new proviso, the authorities are required to obtain approval from a higher authority before issuing a notice if the information for reopening the assessment is received under section 133(6).
This amendment provides a safeguard for taxpayers against arbitrary and frivolous notices being issued by the income tax authorities. It ensures that the authorities have to exercise due diligence and have credible information before reopening an assessment. This will help in reducing the burden on taxpayers who would otherwise have to go through the hassle of responding to frivolous notices.
Conclusion
The amendment to section 148 of the Income Tax Act is a welcome change that provides much-needed relief to taxpayers. It ensures that the income tax authorities have to exercise due diligence and have credible information before issuing a notice for reopening an assessment. This amendment will help in reducing the burden on taxpayers and ensure that the income tax authorities focus their resources on cases where there is a genuine case of income escaping assessment.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q: What is the Income Tax Act? A: The Indian Income Tax Act, 1961, is a comprehensive legislation that governs the levy, collection, and assessment of income tax in India.
Q: What is section 148 of the Income Tax Act? A: Section 148 of the Income Tax Act empowers the income tax authorities to reopen an assessment that has already been completed if they have reason to believe that income chargeable to tax has escaped assessment.
Q: What is the new proviso inserted in section 148? A: The new proviso inserted in section 148 requires the income tax authorities to obtain approval from a higher authority before issuing a notice to reopen an assessment if the information for reopening the assessment is received under section 133(6).
Q: What is section 133(6) of the Income Tax Act? A: Section 133(6) of the Income Tax Act empowers the income tax authorities to call for information from any person in connection with any matter under the Act.
Q: Why was the amendment made to section 148? A: The amendment was made to section 148 to provide a safeguard for taxpayers against arbitrary and frivolous notices being issued by the income tax authorities.
Q: What is the impact of the amendment on taxpayers? A: The amendment provides relief to taxpayers as it ensures that the income tax authorities have to exercise due diligence and have credible information before issuing a notice for reopening an assessment. It reduces the burden on taxpayers and ensures that the income tax authorities focus their resources on cases where there is a genuine case of income escaping assessment.
