Budget 2024 proposes amendments to sections 153 and 139 of the Income Tax Act to streamline and rationalize the timelines for tax assessments, reassessments, and recomputations. Section 153 is amended to include a new sub-section (1B), which allows assessments related to returns filed under section 119(2)(b) to be completed within 12 months from the end of the financial year in which the return is filed. Sub-section (3) is updated to include references to section 250, aligning the time limit for fresh assessments following orders from the Commissioner (Appeals). Sub-section (8) is revised to set timelines for orders in revived assessments or reassessments due to annulment of block assessments. Additionally, Explanation 1 Clause (xii) is modified to adjust the exclusion period for search-related assessments to the end of the month after the exclusion period. Section 139 is also amended with a new sub-section (9A) to ensure that the provisions apply to returns furnished under an order from section 119(2)(b). These changes aim to address procedural difficulties and ensure the timely completion of tax processes, effective from October 1, 2024.
Budget 2024: Rationalisation of provisions related to time-limit for completion of assessment, reassessment and recomputation
The existing provisions of section 153 of the Act specify the various time-limits for completion of assessment, reassessment and recomputation under various provisions of the Act. In this regard, representation has been received regarding procedural difficulties in implementation of the provisions of the said section. Considering the same, following changes have been proposed for amendment in section 153 of the Act:-
(i) Sub-section (1) of said section provides, inter-alia, that assessment under section 143 or section 144 shall be completed within twelve months from the end of the assessment year in which the income was first assessable. In this regard, it is proposed to insert a new sub-section (1B) so that order of assessment of cases where return of income is furnished in consequence of an order under section 119(2)(b) may be completed within twelve months from the end of the financial year in which such return is furnished.
(ii) Sub-section (3) of the said section provides the time-limit for passing the fresh assessment order in pursuance of an order under section 254 or section 263 or section 264 setting aside or cancelling an assessment. The said subsection provides that such fresh assessment order shall be passed at any time before the expiry of twelve months from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be. In this regard, it is proposed to insert the reference of section 250 in this sub-section in order to provide the time-limit for disposal of cases which are proposed to be set aside by the Commissioner (Appeals).
(iii) Further, sub-section (8) of the said section provides that order of assessment or reassessment relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in the said section or sub-section (1) of section 153B, whichever is later. In this regard, it is proposed to amend sub-section (8) of the said section to provide the timeline for passing of order in the case of revived assessment or reassessment proceedings as a consequence of annulment of block assessments under Chapter XIV-B of the Act.
(iv) Clause (xii) of Explanation 1 of the said section provides, that the period (not exceeding one hundred and eighty days) commencing from date of initiation of search and ending on the date on which the books of account/documents/seized materials are handed over to the Assessing Officer is excluded while computing the period of limitation. In this regard, it is proposed to amend the provision of Explanation 1(xii) of the said section by inserting a 6th proviso so as to provide that the date of limitation in such cases falls at the end of the month, after taking into account the exclusion provided in the Explanation.
2. Further, the existing provisions of the section 139 prescribe, inter-alia, that every person, being a company or a firm, or being a person other than a company or a firm whose total income exceeds the maximum amount which is not chargeable to income-tax, shall, furnish a return of his income. In this regard, consequential amendment is proposed in the said section to provide that where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section 139 shall apply.
3. These amendments will take effect from the 1st day of October, 2024.
[Clause 41 & 48]
Extract of Clause 41 of Finance Bill 2024
Clause 41 of the Bill seeks to amend section 139 of the Income-tax Act relating to return of income.
The said section provides that every person, being a company or a firm, or being a person other than a company or a firm whose total income exceeds the maximum amount which is not chargeable to income-tax, shall, furnish a return of his income.
It is proposed to insert a new sub-section (9A) in the said section to provide that return of income furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of section 139 shall apply.
This amendment will take effect from 1st October, 2024.
Extract of Clause 48 of Finance Bill 2024
Clause 48 of the Bill seeks to amend section 153 of the Income-tax Act relating to time-limit for completion of assessment, reassessment and recomputation.
Sub-section (1) of the said section provides that assessment under section 143 or section 144 shall be completed within twelve months from the end of the assessment year in which the income was first assessable.
It is proposed to insert a new sub-section (1B) in the said section to provide that order of assessment of cases where return of income is furnished in consequence of an order under clause (b) of sub-section (2) of section 119 may be completed within twelve months from the end of the financial year in which such return is furnished.
Sub-section (3) of the said section provides the time-limit for passing the fresh assessment order in pursuance of an order under section 254 or section 263 or section 264 setting aside or cancelling an assessment. It further provides that such fresh assessment order shall be passed at any time before the expiry of twelve months from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be.
It is proposed to insert the reference to section 250 in the said sub-section in order to provide the time-limit for disposal of cases which are separately proposed to be set aside by the Commissioner (Appeals).
Sub-section (8) of the said section provides that order of assessment or reassessment relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in the said section or sub-section (1) of section 153B, whichever is later.
It is proposed to amend the said sub-section so as to provide the timeline for passing of order in the case of revived assessment or re-assessment proceedings as a consequence of annulment of block assessments.
Clause (xii) of Explanation 1 to the said section, inter alia, provides that the period (not exceeding one hundred and eighty days) commencing from the date of initiation of search and ending on the date on which the books of accounts or documents or seized materials are handed over to the Assessing Officer is excluded while computing the period of limitation.
It is proposed to insert sixth proviso in the said Explanation to provide that the date of limitation in such cases falls at the end of the month, after taking into account the exclusion provided in the said Explanation.
These amendments will take effect from 1st October, 2024.
Amendment of section 139.
In section 139 of the Income-tax Act, after sub-section (9) and the proviso to the Explanation thereof, the following sub-section shall be inserted with effect from the 1st day of October, 2024, namely:––
“(9A) Where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section shall apply.”.
Amendment of section 153
In section 153 of the Income-tax Act, with effect from the 1st day of October, 2024,––
(I) after sub-section (1A), the following sub-section shall be inserted, namely:––
“(1B) Notwithstanding anything in sub-section (1), where a return is furnished in consequence of an order under clause (b) of sub-section (2) of section 119, an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished.”;
(II) in sub-section (3), for the words and figures “order under section 254” wherever they occur, the words and figures “order under section 250 or section 254” shall be substituted;
(III) in sub-section (8),––
(i) for the word, figures and letter “section 153B” at both the places where they occur, the words, figures and letters “section 153B or section 158BE” shall be substituted;
(ii) for the words, brackets, figures and letter “revived under sub-section (2) of section 153A”, the words, brackets, figures and letters “revived under subsection (2) of section 153A or sub-section (5) of section 158BA” shall be substituted;
(IV) in Explanation 1, after the fifth proviso, the following proviso shall be inserted, namely:––
“Provided also that where after exclusion of the period referred to in clause (xii), the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month.”.
