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Time period for issuance of notice under section 148 under new regime wef 1.4.2021. As per substituted section 149 wef 1.4.2021

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

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

(b) If 3 years, but not more than 10 years, have elapsed from the end of the relevant assessment year unless the Assessing Officer 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.

Time period for Issue of section 148 notice wef 1.4.2021

 

148A response period is 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.

Comparison with old provision before 1.4.2021

Time limit to issue notice under the new regime (Amended vide Finance Act, 2021)

If reopening is proposed to be made within 3 years from end of relevant assessment year-

No condition, reopening possible irrespective of the amount of income that has escaped assessment

If reopening is proposed to be made after 3years but within 10 years from end of relevant assessment year

Condition: Reopening possible only 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 INR 50 lakhs or more for that year.

Time limit to issue notice under the earlier regime (prior to Finance Act, 2021)

Reopening was possible within 6 years from end of relevant assessment year in normal circumstances

Exceptions:

Reopening possible within 4 years in below cases:

If income chargeable to tax which has escaped assessment is less than Rs. 1 lakh.

If assessment framed earlier u/s 143(3) and assesses has disclosed fully and truly all material facts in the assessment [proviso to section 147] [except where income relates to asset located outside India]

Reopening possible within 16 years from end of relevant assessment year if the income in relation to an asset (including financial interest in any entity) located outside India has escaped assessment.

Note: 16 years limit is not prescribed under the new provisions since the cases pertaining to undisclosed assets outside India are intended to be covered under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

Impact of proviso to section 149

The proviso to substituted section 149 read as under:

“Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:

The above proviso requires taking into account the time limit as per 149(1)(b) as it stood prior to Finance Act, 2021 which read as under:

 “149. (1) No notice under section 148 shall be issued for the relevant assessment year,-

(a)If four years have elapsed form the end of the relevant assessment year, unless the case falls under clause (b) or clause (c);

(b)If four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;

(c)If four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.”

Even if asset located outside India, the test to be considered is that whether reopening was possible within 6 years (not 16 years)

Impact of proviso to section 149

Two interpretations are possible in respect of proviso to section 149 as under:

Interpretation 1 (as it appears from plain reading of the provisions):

The usage of the expression ‘at that time’ circles back to the time when notice is being issued – It is at such point when one  is required to apply the test whether notice could have been issued as per erstwhile provision of section 149(1)(b)

Accordingly, benefit of 10 years to be effectively available for AY 2022-23 and subsequent assessment years.

For AY 2021-22 and earlier assessment years, notice can be issued only within 6 years from the end of the relevant assessment year.

Interpretation 2 (as it appears is/was intended):

Under this interpretation, the test is whether the assessment year could have been reopened as per the erstwhile provision of section 149(1)(b) as on 31.03.2021 or not

Accordingly, under this interpretation, the benefit of 10 years should be available to the Department from AY 2014-15 onwards since it the last assessment year that could have been opened as on 31.03.2021.

Proviso to section 149(1) states that provisions of this sub section shall not apply in a case , where a notice u/s 153A , or section 153C read with section 153A , is required to be issued in relation to a search initiated under section 132 or books of account , other documents or any assets requisitioned under section 132A , on or before the 31st day of March 2021 .

149(2) says that the provisions of sub section (1) as to the issue of notice shall be subject to the provisions of section 151 of the Act.

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66 Comments

  1. prasad says:

    for AY 2018-19 148A notice issued on 21.3.2022 and 148 notice date is 18.4.2022. escaped income is below Rs 15 lakhs. whether notice u/s 148 time barred?

  2. Radhakrishnan KV says:

    Kindly guide as to whether reopening by issuing order u/s 148A(d) and notice dated 24/04/2022 issued u/s 148 for the AY-2015-16 is not time barred, as per first proviso to Section 149(1)?

  3. Kanwal Juneja says:

    Sir,
    My client has sold a property for 60 lakh in AY 2015-16, thereafter in his ancestral land he build a house and invest Rs. 35, lakh upto 31.3.2015. The case will be covered u/s. 149(1)(B)

  4. Ramesh says:

    Sir as pa per notice issued u/s 148, cash deposited in saving account is Rs. 55 lacs for AY 2015-16, but after bank statement summary, its looks like amount arround 27 lacs, because amount deposited, withdraw and again depositeed after some time. as all submission has to do faceless.

    what shall i do? department give me time of 30 days to furnish ITR in response to notice u/s 148

    1. Sandeep Jain says:

      File your true and correct return . Filing of the return does not depend on the cash which you have deposited with the bank . First prepare a true return , file it and then seek reasons recorded for issue of notice u/s 148 . You can seek help of a CA in your area . He shall prepare your correct return

  5. PARTHENDU BARUA says:

    Sir, I have issued notice u/s 148A on 27/03/2022 and as per SOP allow to seven days time i.e 02/04/2022 to the assessee.
    If notice u/s 148 pass after April ,then is it the valid notice..this is the case for AY 2015-16

    1. Sandeep Jain says:

      as per section. 149 for the ay 2018 19 the last date is 31.3.2022 for issue of notice under section 148 if the concealed income is less than 50 lakhs . if dectected income or it is found by ITD that undisclosed income is 50 laks or more then for issue of notice time period is 10 years . First check for which year this is . Do not hurry in making reply if it is for the Ay 2015 16 to ay 2017 18 if it is for the Ay 2018 19 then you must reply even today

    2. Sandeep Jain says:

      yes , if notice is issued in the month of April it will be a valid notice . The period prescribed as per section 149 is 10 years . It means for the AY 2015 16 the undisclosed income in the form of assets should be 50 laks or more otherwise you can not issue notice for the AY 2015 16 thanks with regards

    3. skjain1147 says:

      yes , if notice is issued in the month of April it will be a valid notice . The period prescribed as per section 149 is 10 years . It means for the AY 2015 16 the undisclosed income in the form of assets should be 50 laks or more otherwise you can not issue notice for the AY 2015 16 thanks with regards

      1. nimesh parikh says:

        sir earlier you had said in this foram that notice before ay 2015-16 cant be issued even in cases for More then 50 lacs as rule for 10 years is applicable from Ay 2015-16

    4. Sandeep Jain says:

      Mr Partthendu Ji section 149 is clear on the issue . over all ceiling limit for issue of notice can not be crossed . As you have issued notice for the ay 2015 16 it will be a valid notice in the month of April if the undisclosed income in the form of assets is 50 lakhs or more otherwise notice can not be issued . as the time period is 10 years if issue 50 lakh thanks with regards

    5. PARTHENDU BARUA says:

      Sir,
      I have very confused regarding time limit for passing order u/s 148A(d), kindly guide me.
      If I have issued SCN 148A(b) on 25.03.23 and given 7 days to the assessee to reply i.e on 01.04.23, then what is the time limit for passing order u/s 148A(d). Is it 08.04.23 or 30.04.23 ?

  6. Kavitha says:

    Sir,
    When 148A(b) notice is issued on 23.03.2022 with compliance date by 10th April 2022, then how is the limitation period is calculated to issue notice u/s 148 for AY: 2018-19. Proviso to sec 149 excludes the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A . Does this imply that notice u/s 148 to be issued before (10+7) 17th April or 10th May (10 days from the end of April)?
    Also, it implies that when 148A notice is issued, even after 3 years from the end of the assessment year, 148 notice can be issued for income escaping less than 50 lakhs.
    Please clarify

    1. skjain1147 says:

      Madam Kavitha Ji
      148A response period is 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.

  7. rupal shah says:

    respected sir
    today there was article in Economic times that IT software Insight to start issuing notice before it becomes time barred on 31/03/2022
    sir as per article can cases of 2012-13 can be opened in above 50 lacs cases also which are time barred on 2021
    also non filler also can be served notice
    do guide me

    1. Sandeep Jain says:

      Notice u/s 148 can not be issued for the AY 2013-14 and 2014-15 . It got time barred on 30.06.21 Notice for the AY 2015-16 can be issued if the income in the form of assets not declared with the ITR is in excess of Rs..50 Lakhs . Yes non filers can be served notice . The last date for issue of notice u/s 148 is 31.3.2022 for the AY 2018-19

      1. rupal shah says:

        thank you sir for your swift reply.
        under which section non filler can be issued notice and till which year sir plz do guide as you had replied to someone in forum that if asset purchased by undisclosed amount above 60 lacs then also notice cant be served before ay 2015-16

      2. nimesh parikh says:

        ok sir
        by that way aunt will be worried as non filler for income tax return can be served notice for Ay 2013-14
        is it random as she not got any notice u/s 142(1) for ay 2013-14

        1. nimesh parikh says:

          hello sir
          plz do guide
          if non filler not served notice u/s 142(1) till now for ay 2014-15 can it be served now or under any other section as heard that its timebarred

      1. nimesh parikh says:

        SIR can i call you on your mobile number as i had asked about my uncle who sold his property for around 1crore and not filled his return and expired . you had mentioned cases before ay 2015-16 cant be opened

  8. dipak panchal says:

    good afternoon
    sir i would like to know that my Father & Mother both are above 85 years and both have income from mutual fund dividends but under 5 lacs. is it compulsary to link their Aadhar with Pan card or they exempted from linking it as read in some article that it is not compulsary for super senior citizens to link aadhar with pan

  9. harish mehta says:

    Thank you sir for your guidance
    just 1 last query sir it means that cases for ay 2012-13 to 2014-15 cant be served notice or opene under ANY section of income tax for income not filled for above 60 lacs also under new provision of income tax act 2022

  10. harish mehta says:

    good afternoon sir
    sir was reading quaries by people and guidance given by you on Tax guru i can say that it is only you who responds to query from comon persons on Tax guru
    I having query that with new budget 2022 many sections are amendeted 1 such is section149(1)(b) sir can cases of assesment of 50 lacs or more amount can be opened now from Ay 2012-13.2013-14.2014-15 which had earlier in budget amendment of year 2021 were time barred as mentioned by you to some queries. Can this Ay2012-13.2013-14.2014-15 years cases be isued assesment notice after april 2022 or not do guide please

    1. skjain1147 says:

      The impact of this assessment could be explained with an example: If an income has escaped assessment say in the assessment year 2013-14 and the escapement is say Rs.60 lakhs. Before the amendment brought in by the Finance Act, 2021 if such escapement was detected say in January 2021 the time limit of 6 years would have elapsed by 31st March, 2020. By virtue of the extended time limit by the Finance Act, 2021 (or the Finance Bill, 2022 ) such escaped income should not be subjected to tax. Thus to provide finality, where any income or asset has escaped assessment before the assessment year 2021-22 then if it can be covered under the erstwhile provisions of section 149(1)(b) such of those incomes or assets could alone be subjected to tax after the change or extended reassessment time period.
      Now by virtue of section 149(1)(b) after amendment by Finance Act , 2021 these cases were time barred and should not be subjected to tax . There is the same proposal by the Finance Act , 2022. Hence in nut shell cases for the A.Yr. 2013-14 , 2014-15 can not be reopened by issue of notice u/s 148 of the Act . For the A.Yr. 2015-16 cases can be reopened if escaped income is more than Rs. 50 Lakhs . I hope now you are satisfied . Thanks with regards

  11. santosh singh says:

    Sir sorry to bother you but was reading aricles on google and read the following The Biggest Retrospective Amendment on section 148 & Section 148A by Union Budget – 2022? sir can this amendment open case of 50 lacs or more income escaped assesment before Ay 2015-16 also please do guide

    1. skjain1147 says:

      The impact of this assessment could be explained with an example: If an income has escaped assessment say in the assessment year 2013-14 and the escapement is say Rs.60 lakhs. Before the amendment brought in by the Finance Act, 2021 if such escapement was detected say in January 2021 the time limit of 6 years would have elapsed by 31st March, 2020. By virtue of the extended time limit by the Finance Act, 2021 (or the Finance Bill, 2022 ) such escaped income should not be subjected to tax. Thus to provide finality, where any income or asset has escaped assessment before the assessment year 2021-22 then if it can be covered under the erstwhile provisions of section 149(1)(b) such of those incomes or assets could alone be subjected to tax after the change or extended reassessment time period.
      Now by virtue of section 149(1)(b) after amendment by Finance Act , 2021 these cases were time barred and should not be subjected to tax . There is the same proposal by the Finance Act , 2022. Hence in nut shell cases for the A.Yr. 2013-14 , 2014-15 can not be reopened by issue of notice u/s 148 of the Act . For the A.Yr. 2015-16 cases can be reopened if escaped income is more than Rs. 50 Lakhs . I hope now you are satisfied . Thanks with regards

      1. santosh singh says:

        thank you for update but sir you mentioned that for 60 lacs income escaped assesment time limit of 6 years would have elasped but Sir for amount above 50 Lacs time limit is 10 years na
        and sir what this following means
        Thus to provide finality, where any income or asset has escaped assessment before the assessment year 2021-22 then if it can be covered under the erstwhile provisions of section 149(1)(b) such of those incomes or assets could alone be subjected to tax after the change or extended reassessment time period.
        income or assets could alone be subjected to tax

        1. skjain1147 says:

          Hence in nut shell cases for the A.Yr. 2013-14 , 2014-15 can not be reopened by issue of notice u/s 148 of the Act . For the A.Yr. 2015-16 cases can be reopened if escaped income is more than Rs. 50 Lakhs . I hope now you are satisfied . Thanks with regards

    1. skjain1147 says:

      Ask you aunt not to worry as notice for the AY 2013-14 and AY 2014-15 can not be issued right now . For these two years notice can not be issued even assessts for 50 Lakhs or more purchased out of the undisclosed income . No need to worry now

      1. nimesh parikh says:

        Sir thank you for your reply and conved to aunt she is relaxed not and has sent her blessings and well beign for your family.
        she has now just 1 concern that as you said notice for the AY 2013-14 and AY 2014-15 can not be issued right now means are there any chance in future to receive notice and under any other section of income tax can notice be served for AY 2013-14 and AY 2014-15
        hope to hear soon from you
        thanks again sir

  12. nimesh parikh says:

    sir
    my uncle had sold his property in Ay 2013-14 for around 1 crore and he expired in 2016 aunty came to know that he had not fillrd income tax return for Ay 2013-14 and now aunty is worried that she beign legal heir might get income tax notice for it what can be done if she receives notice

  13. D K Mittal says:

    Very well explained the position before and after 1.4.21. I appreciate your clarity on the issue.
    However, one more query- if a property as purchased in AY 11-12 out of loan from a finance Co. and loan amount was credited in the bank after four days of payment of purchase, can this be said that benefit of interest on borrowed amount would not be available. Order for AY 11-12 has already been passed u/s 143(3) and no adverse view was taken.
    Can ADI(Inv) call for bank statement for A Y 11-12 and recommend for action u/s 148 ?

    1. Sandeep Jain says:

      Sir , You are free from all the corners . As per section 149 of the Act , the case can not be reopened in any manner for the AYr. 2011-12

  14. santosh singh says:

    Sir
    read your article and your comments also to readers who posted their doubts regarding issue of notice for concelled income of more then 50 lacs and notices cant be issued for or before AY 2014-15 for concelment of income of more then 50 lacs but Sir this is year 2022 so 10 years back period can go till AY 2012-13 IN SIMPLE WORDS AM I RIGHT OR WRONG SIR

    1. skjain1147 says:

      When we read section 149 of the Income Tax Act , 1961 there we find that if assets are found of 50 Lakhs or more than 50 Lakhs not declared with the department , than it is considered that income of that amount has been concelaed by the assessee . The limitation period is 10 years . but the time period for reopening for the AYr 2013-14 and AY 2014-15 was 30.06.2021 . As the period for these two years expired on 30.06.2021 .then after this date reopening for these two years can not be made . Yes for the AY 2015-16 can be made within a period of 10 years . i.e. upto 31.3.2026 this case can be reopend if it is found that concelament of income is 50 lakhs or above . Otherwise in normal case the limitation period is 3 years . Thanks with regards

      1. Santosh singh says:

        Thanks sir for your reply and explaining whole senereo. By this it can be understood that no cases of income tax can be issued notices or opened before Ay 2015-16

      2. SANTOSH SINGH says:

        Sir sorry to bother you but was reading aricles on google and read the following
        The Biggest Retrospective Amendment on section 148 & Section 148A by Union Budget – 2022?
        sir can this amendment open case of 50 lacs or more income escaped assesment before Ay 2015-16 also please do guide

      3. santosh singh says:

        Sir sorry to bother you but was reading aricles on google and read the following
        The Biggest Retrospective Amendment on section 148 & Section 148A by Union Budget – 2022?
        sir can this amendment open case of 50 lacs or more income escaped assesment before Ay 2015-16 also please do guide

      1. santosh singh says:

        sir you used to promptly reply to our querrys hope you must have studied new budget 2022
        plz do suggest your valuable knowledge to following
        Was reading aricles on google and read the following The Biggest Retrospective Amendment on section 148 & Section 148A by Union Budget – 2022? sir can this amendment open case of 50 lacs or more income escaped assesment before Ay 2015-16 also please do guide

      2. santosh singh says:

        as in our article circle discussion is that this amendments are for cases quashed in different High courts regarding notice issued after 1//4/2021 to 30/6/2021 under section 148

  15. Rakesh p says:

    Your article says benifit of 10 years should apply from ay 2014-15
    Whereas you reply to 1 comment that cases of 2013-14 can be opened as 10 years pl do suggest which is correct

    1. Sandeep Jain says:

      YES , YOU ARE RIGHT , THERE IS CONTRADICTION .. Actually time period elapsed on 30.06.2021 for the AY 2013-14 and AY 2014-15 as the last date for issue of notices was 30.06.2021 even falling in category of 50 Lakhs . If falling in category of 50 Lakhs the notice for the AY 2013-14 and AY 2014-15 can not be issued after 30.06.2021 as there is specifically denial in section 149 for these two years . Read section 149 carefully .

    2. Sandeep Jain says:

      10 year period applies from the AYr. 2015-16 for 50 Lakhs category . Time period for the AY 2013-14 and AY 2014-15 is over by now even in the category of 50 Lakhs . Read section 149 carefully . Thanks with regards . Mistake is regretted in the comment box inadvertently

      1. rakesh p says:

        thank you sir your reply i would understand that case before Ay 2014-15 cannot be opened under ANY section of income tax for amount more than 50 lacs also

  16. Bimlesh says:

    Sir,
    Can you enlighten me if reassessment proceedings U/s 148 from April 2021can be initiated for AY 2016-17 when orders after complete scrutiny U/s 143(3) of income tax Act had already been passed in December 2018?

  17. Devika Bhargava says:

    Dear Sir,
    Please guide me regarding the latest position of law on limitation for issuance of notice u/s 148 of IT Act for AY 2013-2014

    1. skjain1147 says:

      The time period for issuance of notice u/s 148 for the AY 2013-14 is already over on 30.06.2021 .But as per section 149 it can still be issued if it is found that the assessee is having asset of Rs. 50 Lakhs out of undisclosed income , in this scenario time period is 10 years , hence still notice for the AY 2013-14 can be issued . for more information u can reach me at skjain1147@gmail.com . Thanks with regards

    1. skjain1147 says:

      The time period for issuance of notice u/s 148 for the AY 2013-14 is already over on 30.06.2021 .But as per section 149 it can still be issued if it is found that the assessee is having asset of Rs. 50 Lakhs out of undisclosed income , in this scenario time period is 10 years , hence still notice for the AY 2013-14 can be issued . for more information u can reach me at skjain1147@gmail.com . Thanks with regards

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