I-T Department starts issuing Reassessment Notices for time-barred FYs
Income tax department has started issuing Income Tax notice of reassessment of tax liability for FYs 2013-14, 2014-15 and 2015-16. In some cases, the notices were given on the basis of questions raised in audit reports, while in others, the reasons were linked to the evasion of taxable income.
According to sources, a large number of notices have been issued since the tax department only has a month before the notices become time-barred.
“The IT department has started issuing notices seeking to reassess income tax liability of taxpayers for these financial years, scrutinizing the income tax returns filed by taxpayers for these years,” said one professional.
Read Also: 15 Reasons you may get Income Tax Notice
In the Union Budget 2021, the finance ministry amended the legislation for reassessment proceedings from this year onwards. In general, if three years have passed after the end of the relevant assessment year, an assessing officer cannot issue a warning. The previous time limit was six years.
“Reassessment notices have to be issued before the expiry of statutory time limits. Keeping in view the intent of the government to reduce tax litigation, it is likely that focus will be on high tax transactions or big mis-matches, rather than smaller tax payers,” said by professional
If the assessing officer has evidence that income escaping assessment in the form of an asset amounts to or is likely to amount to Rs 50 lakhs or more, a notice may be given beyond the three-year limiting period but not beyond ten years from the end of the relevant assessment year.
The new law was scheduled to take effect on April 1, 2021, and notifications were supposed to be sent out by March 31, 2021. However, the deadline has been extended until April 30, 2021, resulting in a flurry of notices being sent out to firms, enterprises, and practitioners in areas where reassessment is needed.
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