Deadline for reassessment of these old ITRs approaching; Know who can get tax notice u/s 148 by August 31, 2024
The last date for the tax department to issue an income tax notice is August 31, 2024, if the undisclosed income is Rs 50 lakh or more in the assessment year 2018-19 (financial year 2017-18). The Budget 2024 has caused the deadline to be shortened, prompting the income tax department to allocate resources towards reopening old cases related to Assessment Year (AY) 2018-19 by August 31, 2024. Cases prior to Budget 2024 could have been reopened within 10 years from the end of the respective AY.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} "I heard from income tax assessing officers that most of their transfer orders have been put on hold till August 31, 2024, and they are being asked to find proof and present them for re-opening AY 2018-19 cases," says a chartered accountant who did not wish to be named.
What has Budget 2024 proposed
For AY 2018-19, where the income escapement is Rs 50 lakh or more, the maximum time limit to issue a notice under section 148 or an order under section 148A is August 31, 2024. From September 1, 2024, assessments for AY 2018-19 will be time-barred.Sanjoli Maheshwari, Executive Director, Nangia Andersen India, says that for AY 2018-19, as per the existing provisions, the notice under section 148 for the reopening of assessment could have been issued up to ten years from the end of the relevant assessment year, i.e., March 31, 2029. "However, the time limit for the same has been reduced i.e. up to June 30, 2024, as per the proposed provisions effective from September 1, 2024. Therefore, the time limit for notice to be issued under Section 148A and 148 would be August 31, 2024," she says.
Source: CA (Dr.) Suresh SuranaWho can and cannot get an assessment and reassessment notice under section 148
If the income that escaped the assessment is Rs 50 lakh or more and it relates to AY 2018-19 or later, then it is likely that you will get a section 148 notice by August 31, 2024. If your case does not meet these conditions, then it is unlikely that you will get a section 148 notice.Experts say you may not get enough time to reply to the section 148 notice due to the short deadline. Says Maheswari, "Considering the short span of time available up till 31st August 2024 given the proposed provisions applicable from 1st September 2024; it is probable that the Tax Authorities may not grant sufficient time to Taxpayers for furnishing the response and may pass the order under section 148A considering the case fit for reassessment and issue notice under Section 148."
As per Surana, the reassessment notice for AY 2018-19 and prior years, under section 148 or the order under section 148A needs to be passed on or before August 31, 2024. "As such, with regards to notice under section 148A, if the same is issued now, then, the order under section 148A needs to be passed before 31 August 2024 i.e. within 1 month. As such the taxpayer may not have sufficient time to respond to such notice under section 148A. However, if the notice under section 148 for AY 2018-19 is issued before 31 August 2024, the reassessment proceeding will be initiated which needs to be completed within 9 months from the end of the financial year in which the notice is served i.e. the reassessment proceedings shall be completed latest by 31 December 2025 as per provisions of section 149. As such, the taxpayer would have sufficient time to respond to the 148 reassessment notice and complete the proceedings," says Surana.
How does the tax department send you a notice under sections 148 and 148A
According to chartered accountant Mihir Tanna, associate director, S.K Patodia LLP, a CA firm, here's how the process works:Step 1: As per current provisions of the reassessment process, before issuing the reassessment notice, the officer may conduct an inquiry, issuing the show cause (SCN) to taxpayers along with information which suggests escapement of income.
Step 2: Based on the taxpayer's reply to the SCN, an order may be passed. This order will mention whether the case is fit for issuing reassessment notice with the prior approval of the specified authority (Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director).
Step 3: Before making the reassessment, the taxpayer gets an opportunity to file a revised ITR within 3 months.
Maheswari explains that before issuing notice under section 148, tax authorities are required to conduct an inquiry for which notice is required to be issued under section 148A. This notice under section 148A provides the taxpayer with an opportunity to be heard, as to why the case should not be reopened based on the information available.
"In case, no response is filed by the taxpayer in response to 148A notice within the specified time provided, the concerned tax authority shall pass the order under Section 148A considering the same as a fit case for issuing notice under Section 148. Subsequently, notice under Section 148 is issued, requiring the taxpayer to furnish the ITR in response to the same within the time specified. If the person fails to file the return and comply with the notice under section 148 within the specified time, the same shall not be deemed to be a valid ITR furnished under Section 139," says Maheswari from Nangia Andersen India.
What happens if reassessment process is started against you
So, if you have not replied or your reply is unsatisfactory for the tax department, a reassessment order is issued.As per Maheshwari from Nangia Andersen India, once reassessment proceedings are initiated, subsequent notices are issued under Section 142(1) asking for further information/details. "Failure to which may entail a penalty of Rs 10,000 in terms of Section 272A for each failure," she says.
Maheswari explains what happens if you fail to furnish any necessary information, documents or other details asked from you. She says that in this case, tax authorities may proceed with passing the order, assessing the total income to the best of his judgment and details available in his record and determine the tax liability payable by the taxpayer.
"Furthermore, depending upon the additions/disallowances considered therein, notice may also be issued initiating penalty proceedings under Section 270A of the Act levying penalty ranging from 50% to 200% (as the case may be) of the tax payable on such underreported/misreported income," says Maheswari.
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This story originally appeared on: India Times - Author:Faqs of Insurances
