CA.Mohit Gupta
Quick Summary
Introduction The Honble Union Finance Minister Nirmala Sitharaman had presented the Union Budget 2021 of India on the 1st of February, 2021. In significant changes to the taxation process, among other tax measures, the Honble Finance Minister recommend paradigm changes to the provisions relating
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FAQ :
The Finance Act 2021 has replaced the existing legal framework (Sections 153A to 153D) for assessments following searches or requisitions conducted on or after April 1st, 2021. Assessments will now be framed under Section 147 read with Sections 148, 148A, 149, and 151 of the Income Tax Act.
The stated reasons for these changes include the failure of the previous framework to achieve early resolution of search assessments and its tendency to lead to high litigation. The new system is expected to result in less litigation and offer greater ease of doing business for taxpayers due to reduced time limits for issuing notices.
Section 148 has been substituted, and Explanation 2 now deems that an Assessing Officer has information suggesting escaped income for the three assessment years preceding the search or requisition, for cases initiated on or after April 1st, 2021.
No, the procedure mandated by Section 148A, which requires an inquiry and an opportunity for the assessee to be heard before issuing a notice, does not apply in cases of search or requisition.
In normal cases, no notice can be issued if three years have elapsed from the end of the relevant assessment year. However, notices beyond three years but within ten years can be issued only in specific cases where escaped income, represented as an asset, amounts to fifty lakh rupees or more.
The new provisions and the cessation of Sections 153A to 153D apply only to searches initiated on or after April 1st, 2021. Searches initiated on or before March 31st, 2021, will continue to be governed by the older provisions, and Section 149(1) shall not apply to them.
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