CA Chintan Rachh
Time limit to issue notice- One of the major differences between the new and old regime is the time limit of issue of notice, under the earlier regime the time limit for issue of notice was 4 years from the end of the relevant assessment year however in certain circumstances it was 6 and 16 years.
In the new regime, the general time limit of 4 years has been reduced to three years from the end of the relevant AY. However, the 3 years time limit may be extended to 10 years if 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 fifty lakh rupees or more for that year.
Lawmakers have also inserted proviso 1 to section 149 which clarifies that no notice under this section shall be issued if such notice could not have been issued if no new time limit was introduced (i.e the original period of 4/6/16 years has been expired) To understand the above proviso let’s take an example for an AY 2013-2014, reassessment notice that could have been issued till 31st march 2020 (considering 6 years from the end of relevant Assessment years). Now however due to the insertion of a new time limit of 10 years no new notice can be issued post 31st March 2020 as it is time-barred. So as of 31-03-2021 original time has been expired. Therefore, an extended period, in this case, will not apply.
Let’s take another example of AY 2015-2016 time limit of 6 years expires on 31st March 2022 now the question arises whether extended period i.e 10 years (i.e from 31-03-2022 till 31-03-2026) can be considered in this case, the answer would be yes because the first proviso clearly restrict the time-barred cases i.e 6 years are completed on or before 31st March 2021, however, if 6 years are not completed then the extension period can be considered by AO for the issue of notice assuming other conditions are satisfied