Section 147 has been Amended vide Finance Act 2021.
Information is required by AO for reopening not “Reasons to believe”
If any income chargeable to tax, in the case of an assesses, has escaped assessment for any assessment year. The assessing office may, subject to the provisions of Section 148 to 153, assess or re-assess such income or re-complete the loss or depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this Section and in sections 148 to 153 referred to as the relevant assessment year).
For the purpose of assessment or re-assessment or re-computation under the section, the assessing officer may assess or re-assess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.
Section 147, Prior to Finance Act, 2021
If this assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provision of section 148 to 153, assess or re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section or re-compute the loss or the depreciation allowance or any other allowances, as the case may be for the assessment year concerned (here after in this section and in section 148 to 153 referred to as the relevant assessment year).
When can notice u/s 148 be issued under the new provisions.
Notice u/s 148 can be issued by AO if:
1. There is “information with the assessing officer where suggest that the income chargeable to tax has escaped assessment” in the case of the assesses for the relevant assessment year : and
2. The assessing officer has obtained prior approval of the specified authority to issue such notice.
There has to be information with the AO regarding escapement of income
Information with the assessing officer which suggest that the income chargeable to tax has escaped assessment”
Meaning and Scope of the information .
There are two explanations provided under the new section 148 which provides the meaning of the expression “information with the AO which suggest that the income chargeable to tax has escaped assessment.
Explanation 1 to Section 148
1. Any information tagged in this case of the assesses for the relevant assessment year in accordance with the risk management strategy formulated by the board from time to time. This flagging would largely be done by computer based system.
2. Any final objection raised by the comptroller and Auditor general of India to the affect that the assessment in the case of the assesses for the relevant assessment year has not been made in accordance with the provision of this Act.
Explanation 2 to Section 148
Cases where AO shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment
a) Search u/s 132 – A search is initiated u/s 132 on or after the 1st day of April,2021 in the case of the assesses.
b) Requisition u/s 132A – Books of Accounts or other documents or any assets are requisitioned u/s 132A, on or after the 1st day of April, 2021 in the case of the assessee
c) Survey u/s 133A – A survey is conducted u/s 133A, other than a survey u/s 133A (2A) [TDS, TCS related survey] or a survey u/s 133A (5) [survey to verify expenditure incurred in connection with any function, ceremony or event], on or after the 1st day of April 2021, in the case of the assesses
d) Asset seized or requisitioned during search belongs to another assesses; AO is satisfied with the prior approval of the Pr. CIT or CIT, that any money bullion, jewelry or other valuable article or thing, seized or requisitioned u/s 132 or Section 132A in the case of any other person on or after the 1st day of April 2021, belongs to the assesses
e) Documents seized or requisitioned during search related to or pertains to another assesses; AO is satisfied , with the prior approval of Pr, CIT or CIT, that any books of accounts or documents, Seized or requisitioned u/s 132 or Section 132A in case of any other person on or after the 1st day of April 2021, pertains to or pertain to, or any information contained therein, relate to the assesses
In the above cases stated in explanation the AO shall be deemed to have information which suggest that the income chargeable to tax has escaped assessment in the case of the assesses for the 3 assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, the documents or any assets are requisitioned or survey is conducted in the case of the assesses or money, bullion, jewelry or other valuable article or thing or books of accounts or documents are seized or requisitioned in the case of any other person. Search based assessments now covered u/s 147, Provisions of Section 153A and 153 not to be applicable in respect of search on or after 01-04-2021.
In search based assessments the period for which reopening shall be mandatory is now 3 assessment years, in case the AO intends to re-open for beyond 3 years, he can do so by complying with explanation 1 to Section 148 –
Deemed case where income chargeable to tax has escaped assessment .
The deemed cases are now captured under Exp.1 and Exp.2 to Section 148 as discussed above. Earlier, different category of cases were captured under Explanation 2 to Section 147.
Author Bio
Whether AO can make addition in reassessment on issues not recorded in the reasons for reopening U/S 147 after the amendment made in 148