Section 148A of the Income Tax Act, 1961, is a provision that deals with the issuance of notice for reopening of assessment. The section was introduced in the Income Tax Act in the year 2021, and it came into effect from 1st April 2021.
The primary objective of Section 148A is to empower the tax authorities to re-open the assessment of an individual or a company if the authorities have reasons to believe that income has escaped assessment. The tax authorities can issue a notice under Section 148A within six years from the end of the relevant assessment year.
The relevant assessment year is the financial year in which the income was earned. For instance, if the income was earned in the financial year 2015-16, the relevant assessment year will be 2016-17. The tax authorities can issue a notice for reopening of assessment under Section 148A within six years from the end of the relevant assessment year.
The reasons for the tax authorities to believe that income has escaped assessment could be due to various reasons such as the failure of the taxpayer to disclose all relevant facts, misrepresentation of facts, or due to a mistake of fact or law.
The notice for reopening of assessment under Section 148A must be issued after obtaining the prior approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner. The notice must be issued in writing, and it must be served on the taxpayer.
The taxpayer has the right to file a return of income within thirty days of receiving the notice under Section 148A. The taxpayer can also file a written objection to the notice within thirty days of receiving the notice. The tax authorities are required to dispose of the objections filed by the taxpayer within six months of receipt of the objections.
If the tax authorities decide to proceed with the reopening of assessment, they must issue a notice under Section 143(2) of the Income Tax Act, 1961. The taxpayer will then have the opportunity to provide all relevant documents and information to the tax authorities.
When can the tax authorities re-open assessment under Section 148A?
The tax authorities can re-open assessment under Section 148A if they have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. This means that if the tax authorities believe that the taxpayer has not disclosed all relevant facts, or if there is any misrepresentation of facts, or if there is a mistake of fact or law, they can re-open the assessment.
How is Section 148A different from Section 147?
Section 147 of the Income Tax Act, 1961, deals with the circumstances under which the tax authorities can re-open an assessment. Section 147 allows the tax authorities to re-open an assessment if they have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. However, Section 147 does not require the tax authorities to obtain the prior approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner before issuing a notice for re-opening of assessment.
On the other hand, Section 148A requires the tax authorities to obtain prior approval from the above-mentioned officials before issuing a notice for re-opening of assessment. This means that Section 148A provides an additional layer of protection to taxpayers, as it ensures that the decision to re-open an assessment is made after due diligence.
What is the time limit for issuing a notice under Section 148A?
The tax authorities can issue a notice for re-opening of assessment under Section 148A within six years from the end of the relevant assessment year. This means that if the income was earned in the financial year 2015-16, the tax authorities can issue a notice for re-opening of assessment under Section 148A till 31st March 2022 (i.e., six years from the end of the relevant assessment year).
Can the taxpayer object to the notice issued under Section 148A?
Yes, the taxpayer can object to the notice issued under Section 148A within thirty days of receiving the notice. The taxpayer can also file a return of income within thirty days of receiving the notice. The tax authorities are required to dispose of the objections filed by the taxpayer within six months of receipt of the objections.
What happens if the tax authorities decide to proceed with the re-opening of assessment?
If the tax authorities decide to proceed with the re-opening of assessment, they must issue a notice under Section 143(2) of the Income Tax Act, 1961. The taxpayer will then have the opportunity to provide all relevant documents and information to the tax authorities. The tax authorities will then assess the income chargeable to tax and determine the tax liability. The taxpayer will have the right to appeal against the assessment order passed by the tax authorities.
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Frequently Asked Questions (FAQs)
Q.1 What is Section 148A of the Income Tax Act?
Section 148A of the Income Tax Act is a provision that allows the tax authorities to re-open an assessment if they have reason to believe that any income chargeable to tax has escaped assessment for any assessment year.
Q.2 When can the tax authorities re-open assessment under Section 148A?
The tax authorities can re-open assessment under Section 148A if they have reason to believe that any income chargeable to tax has escaped assessment for any assessment year.
Q.3 Is there a time limit for issuing a notice under Section 148A?
Yes, the tax authorities can issue a notice for re-opening of assessment under Section 148A within six years from the end of the relevant assessment year.
Q.4 What is the role of the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner in re-opening of assessment under Section 148A?
Section 148A requires the tax authorities to obtain prior approval from the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner before issuing a notice for re-opening of assessment.
Q.5 Can the taxpayer object to the notice issued under Section 148A?
Yes, the taxpayer can object to the notice issued under Section 148A within thirty days of receiving the notice.
Q.6 What happens if the tax authorities decide to proceed with the re-opening of assessment?
If the tax authorities decide to proceed with the re-opening of assessment, they must issue a notice under Section 143(2) of the Income Tax Act, 1961. The taxpayer will then have the opportunity to provide all relevant documents and information to the tax authorities. The tax authorities will then assess the income chargeable to tax and determine the tax liability. The taxpayer will have the right to appeal against the assessment order passed by the tax authorities.
