Four level of approvals are required before issuance of notice from specified authority .

1. Before conducting enquiry u/s 148A(a)

2. Before issuing notice under section 148A(b)

3. Before passing order under section 148A(d)

4. Before issuing notice under section 148 [proviso to section 148]

In case where procedure under section 148A is not applicable (such as search based assessments), first 3 approvals will not be required. But before issue of notice u/s 148 the approval is required .In search based assessment one approval is required . Other than search based reopening 4 levels of approval are required . Approval means not just an eye wash . Approval has to be given by the specified authority with full application of mind not in a mechanical manner as the same is usually done in no. of cases with one approval . Separate Approval has to be given  for each and every case otherwise litigation is generated of high level .

Approval for issue of notice u/s148 is required in search cases as well as non search cases from specified authority .

However, the approval before issuance of notice under section 148 shall still be required even in such cases [refer proviso to section 148]. Thus, the effect of deeming fiction of Explanation 2 to section 148 (which deems that AO is in possession of information for 3 years that income has escaped assessment) is diluted since there shall be a requirement to seek prior approval before issuance of notice under section 148.

Earlier, approval u/s 153D was required before passing assessment order in case of search based assessments. Now there is however no requirement to obtain any approval before passing reassessment order even in case of search based reassessment order.

Specified Authority for the purpose of granting approval under Section 148 and Section 148A

Specified Authority are as under .

If reopening made within 3 years from end of relevant assessment year – Pr. CIT or Pr. DIT or CIT or DIT

If reopening made after 3 years from end of relevant assessment year

  • CCIT or Pr. DGIT
  • Where there is no Pr. CCIT or Pr. DGIT, then by CCIT or DGIT

Earlier, in case reopening was made within 4 years, approval was required from joint Commissioner. If reopening was made after 4 years, approval was required from Pr. CCIT or CCIT or CCIT or Pr. CIT or CIT.

The authority from which approval is now required is  of a higher rank than the authority from which the approval was required earlier.

Time period for issuance of notice under section 148 under new regime

As per substituted section 149, no notice shall be issued   for the relevant assessment year if:

3 years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) below

If 3 years, but not more than 10 years, have elapsed from the end of the relevant assessment year unless the AO has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to INR 50 Lakhs or more for that year.

Explanation to section 149: “Asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.Deposit in bank account includes fixed deposits and current deposits .

148A response period excluded while computing limitations under section 149

The time or extended time allowed to the assessee, as per  show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded while computing limitations period for issuance of notice under section 148

Where immediately after the exclusion of the period u/s 148A as above, the period of limitation available to the AO for passing an order under 148A(d) is less than 7 days, such remaining period shall be extended to 7 days and the period of limitations under section 149(1) shall be deemed to be extended accordingly.

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Qualification: LL.B / Advocate
Company: S.K. Jain and Co.
Location: Faridabad, Haryana, India
Member Since: 16 May 2019 | Total Posts: 100
I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K. Jain and Co. and I am prop. of this concern . I am in practice for the last 30 years . Professionals and non professional can feel free to contact me on mail . My mail ID is View Full Profile

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2 Comments

  1. Rajinder says:

    Good Article. Could you pl guide me if the Capital Gains loss incurred (upto AY 2020-21) on equity oriented investments capital gains on which was exempt, could be adjusted against that year’s income from other sources of income and balance of Capital Loss could be c/f to subsequent years. Pl give some case-law

    1. skjain1147 says:

      Dear Mr.Rajinder Ji,

      To answer your question, we need to refer some section of the Act:

      As per sub section (3) of section 71 of the Income Tax Act, Where in respect of any assessment year, the net result of the computation under the head “Capital gains” is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.

      As per section 74:
      Where in respect of any assessment year, the net result of the computation under the head “Capital gains” is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and—
      (a) in so far as such loss relates to a short-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset;
      (b) in so far as such loss relates to a long-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset not being a short-term capital asset;
      (c) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.
      (2) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.

      Crux of abovementioned section is that, capital loss whether short term or long term cannot be adjusted against any other income other than capital gain. Further, short term capital loss can be adjusted both type of capital gain whether short term or long term, however, long term capital loss can be adjusted against long term capital gain only.

      As per judgement of Kolkata bench of ITAT Tribunal in the case of “Shri S. Jhajharia vs. JCIT (I.T.A. No. 511/Kol/2017)”, it was held that Long Term Capital Loss on listed securities (which if income will be exempt under section 10(38) of the Act) should be allowed to be set-off against other capital gains and/ or to be carried forward.

      The Tribunal reiterates the principle that if a source of income is completely exempt from tax, the set-off and carry forward of loss shall not be available. However, if the exemption applies only to a part of the source of income and/ or is subject to fulfillment of some conditions, the loss from such source of income will be allowed to be set-off and carried forward.

      Further, recent judgement of Delhi Bench in the case of “Shiv Kumar Jatia Vs ITO (ITAT Delhi)” reaffirms the above decision.

      I hope the above submission will satisfy your question.

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