The Finance Act, 2021, with effect from 01.04.2021 has
done away with the legal framework for assessments to be made in cases of
search, survey and requisition for searches initiated and surveys conducted on
or after 01.04.2021 assessments shall henceforth be framed under Section 147 read
with sections 148, 148A, 149, 151 of the Income Tax Act, 1961. Chapter
XIV of the Income-tax Act, 1961 comprising of sections 153A to 153D of
the Income-tax Act, 1961 shall cease to apply in respect
of search or survey actions carried out on or after 01.04.2021. A sunset clause
has been inserted to the effect that these provisions shall cease to apply for
searches etc. initiated on or after 01.04.2021.
Explanation
2 to section 148
However,
Explanation 2 to section 148 provides that the said procedure shall not apply
in cases where search is initiated under section 132, assets requisitioned under section 132A or survey conducted under
section 133A wherein the Assessing Officer shall be deemed to have
information which suggests that the income chargeable to tax has escapement
assessment in the case of the assessee for “three assessment years
immediately preceding the assessment year relevant to the previous year in
which the search is initiated or books of account, other documents or any
assets are requisitioned or survey is conducted in the case of the assessee or
money, bullion, jewellery or other valuable article or thing or books of
account or documents are seized or requisitioned in case of any other person.”
In such cases the
satisfaction of the Assessing Officer as to income escaping assessment will
have been deemed have been automatically arrived at and the procedure
prescribed in section 148A shall not be applicable and the various approvals
mandated therein will not be required.
Conditions as specified in
section 149(1)(b)
In such cases the twin conditions as specified in
section 149(1)(b) need to be satisfied viz
(a)
the Assessing Officer has
in his possession books of accounts or other documents or evidence;
(b)
which reveal that income
chargeable to tax “represented in the form of asset” which amounts to
or is likely to amount to Rs. 50 lakhs or more for that year has escaped
assessment
In such cases there should be a live and clear-cut
link between the evidence relied upon and it being represented in the form of
an asset e.g. where certain evidence in the form of diaries, documents etc. has
been unearthed which give clear-cut and pointed evidence as the existence of an
asset (e.g jewellery, bullion etc) which has not been recorded in the books and
whose value exceeds Rs. 50 lakhs, the Assessing Officer can, by following the
procedure laid down in section 148A, go back upto ten years. Notice under
section 148 can only be issued for the specific year for which the twin
conditions are cumulatively satisfied. The Assessing Officer will also have to
obtain sanction for the issue of notice as prescribed in section 151.
Proceedings
under Section 147 pertaining to search assessments to be tantamount to be “de-novo”
and pending assessments not to abate
Post
search assessments do not tantamount to “de novo” (from the beginning, afresh) proceedings. In cases where
proceedings are abated or are pending, both the original assessment and the
assessment proceedings under section 153A stood merged and in such cases only
one assessment was made separately for each such assessment year on the basis
of the findings of the search and any other material existing or brought on
record by the Assessing Officer.
Assessment of the persons other than the person searched (erstwhile section 153C) [Sub-clauses (iii) and (iv) of Explanation 2 to Section 148]
Sub-clauses (iii) and (iv) of Explanation 2 to the
substituted section 148 vide Finance Act, 2021 provide that in case of search,
survey or requisition initiated or made or conducted on or after 01.04.2021, it
shall be deemed that the Assessing Officer has information which suggests that
income chargeable to tax has escaped assessment, in the case of the assessee,
for three assessment years immediately preceding the assessment year relevant
to the previous year in which search is initiated or any material is seized on
requisitioned or survey is conducted if:-
(i) the Assessing Officer is satisfied “with the
prior approval of the Principal Commissioner or Commissioner”, that any money,
bullion, jewellery or other valuable article or thing seized or requisitioned
under section 132 or section 132A “in case of any other person on or after 01.04.2021
belongs to the assessee”; or
(ii) the Assessing Officer is satisfied, “with the
prior approval of Principal Commissioner or Commissioner”, that any books
of account or documents, seized or requisitioned under section 132 or section
132A in case of any other person on or after 01.04.2021 pertains or pertain to,
or any information contained therein relate to the assessee.
The above procedure does not postulate any
requirement of recording of the prior satisfaction of the Assessing Officer of
the searched person so far as that the money, bullion, jewellery, other
valuable article, thing or books of accounts or documents seized belongs
to/pertains to/relates to a person other than the person subjected to such
search. It is only the satisfaction of the Assessing Officer of the person
other than that of the searched person, with the prior approval of the
Principal Commissioner or Commissioner, and not that of the person searched
that is required to be recorded.
For search assessments, no
prior approval of the superior authority is required to be obtained by the
Assessing Officer before passing of the order
Under the new scheme of
search assessments which has been inserted by the Finance Act 2021 in Sections
147 to Section 151, there is no provision of prior approval of superior
authority before passing of such an assessment order.
Procedure under section 148A is not applicable
Procedure laid down under section 148A will not be
applicable in cases of search and requisitions carried out on or after 01.04.2021
in the cases of “person searched” and in the cases of “other person” as covered
in clauses (a), (b) and (c) of Proviso to section 148A. Also procedure of carrying out inquiries, issuing
show cause notice and passing order under section 148A(d) is not
required to be followed in following cases:
(i)
In cases of searches carried out under
section 132(1) on or after 01.04.2021.
(ii) In requisition cases under section 132A,
where books of accounts or other documents or assets are requisitioned on or
after 01.04.2021.
(iii) In search/requisition cases where the Assessin
g Officer is satisfied with the prior approval of PCIT/CIT that money, bullion,
jewellery or other valuable article or thing seized in the search/requisition
(against person searched) carried out after 01.04.2021, or requisitioned under
section 132A after 01.04.2021 belongs to “other person”.
(iv) In search/requisition cases where the Assessing
Officer is satisfied with the prior approval of PCIT/CIT that books of account
or documents seized in the search/ requisition (against person searched)
carried out on or after 01.04.2021 or requisitioned under section 132A on or
after 01.04.2021 pertains to or pertain to, or any information contained
therein relate to the “other person”.
Text of Section
148A
[1][CONDUCTING INQUIRY, PROVIDING OPPORTUNITY
BEFORE ISSUE OF NOTICE UNDER SECTION 148.
148A. The Assessing Officer shall, before
issuing any notice under section 148,—
(a)
conduct any enquiry, if required, with the prior approval of specified
authority, with respect to the information which suggests that the income
chargeable to tax has escaped assessment;
(b)
provide an opportunity of being heard to the assessee, with the prior
approval of specified authority, by serving upon him a notice to show cause
within such time, as may be specified in the notice, being not less than seven
days and but not exceeding thirty days from the date on which such notice is
issued, or such time, as may be extended by him on the basis of an application
in this behalf, as to why a notice under section 148 should not be issued on
the basis of information which suggests that income chargeable to tax has
escaped assessment in his case for the relevant assessment year and results of
enquiry conducted, if any, as per clause (a);
(c)
consider the reply of assessee furnished, if any, in response to the
show-cause notice referred to in clause (b);
(d)
decide, on the basis of material available on record including reply of
the assessee, whether or not it is a fit case to issue a notice under section
148, by passing an order, with the prior approval of specified authority,
within one month from the end of the month in which the reply referred to in
clause (c) is received by him, or where no such reply is furnished, within one
month from the end of the month in which time or extended time allowed to
furnish a reply as per clause (b) expires:
PROVIDED that the provisions of this
section shall not apply in a case where,—
(a)
a search is initiated under section 132 or books of account, other
documents or any assets are requisitioned under section 132A in the case of the
assessee on or after the 1st day of April, 2021; or
(b)
the Assessing Officer is satisfied, with the prior approval of the
Principal Commissioner or Commissioner that any money, bullion, jewellery or
other valuable article or thing, seized in a search under section 132 or
requisitioned under section 132A, in the case of any other person on or after
the 1st day of April, 2021, belongs to the assessee; or
(c)
the Assessing Officer is satisfied, with the prior approval of the
Principal Commissioner or Commissioner that any books of account or documents,
seized in a search under section 132 or requisitioned under section 132A, in
case of any other person on or after the 1st day of April, 2021, pertains or
pertain to, or any information contained therein, relate to, the assessee.
Explanation. - For the purposes of this
section, specified authority means the specified authority referred to in
section 151.]
KEY NOTE
1. Inserted by the Finance Act, 2021, with
effect from 01.04.2021.
Cases where the procedure under section 148A is required/not required to be followed
Following table shows in
which cases procedure under section 148A is required to be followed:
|
Section |
Limitation to issue
notice under section 148 |
Explanation 1 to
Section 148 |
Explanation 2 to Section 148 (Deemed Information) |
|||
|
|
|
|
Survey |
Search |
Requisition |
Search/Requisition –
Other Person |
|
149(1)(a) |
Up to three years from the end of the relevant assessment year |
|
|
|
|
Provided Assessing Officer is satisfied with
prior approval of PCIT/CCIT on conditions in clauses (iii) and (iv) |
|
Whether procedure under section 148A is
required to be followed |
|
Yes |
Yes |
No |
No |
No |
|
|
From three years or more but not more than ten years have elapsed from the
end of the relevant assessment year |
|
|
|
|
|
|
Whether procedure under section 148A is
required to be followed |
|
Yes |
Yes |
No |
No |
No |
Time limits for issue of notice under section 148 [Section 149]
Section 149 of the Income Tax Act, 1961 as substituted by the Finance
Act, 2021 lays down the time limits for issue of notice under section 148 and
provides that no notice shall be issued :
(a) if three years have elapsed
from the end of the relevant assessment year; unless
(b) three years or more but not
more than ten years have elapsed from the end of the relevant assessment year
unless
the Assessing Officer has in his “possession books of accounts 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 Rs. 50 lakhs or more for that year.
Sanction for issue of Notice [Section 151]
Section 151 of the Act
provides that specified authority for the purpose of issue of notice under
section 148 shall be –
Competent sanctioning
authority of issue of notice under section 148 (From 01.04.2021)
|
S.
No. |
Number
of Years from the end of Assessment years within which notice can be issued |
Required
authority to be satisfied that it is a fit case for the issue of such notice |
|
1. |
if
three years or less than three years have elapsed from the end of the
relevant assessment year; |
Principal
Commissioner or Principal Director or Commissioner or Director. |
|
2 |
if
more than three years have elapsed from the end of the relevant assessment
year |
Principal
Chief Commissioner or Principal Director General or where there is no
Principal Chief Commissioner or
Principal Director General, Chief Commissioner or Director General. |
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