As Amended by Finance Act, 2022 INTRODUCTION Finance Act, 2021 introduced major changes to the provisions of reopening of assessment of an assessee for previous assessments years. Erstwhile Sections 147 to 151 were replaced with amended Sections 147, 148, 148A, 149, 150 and 151 respectively, with effect from 1 April 2021.
Thus, any notice for re-opening of assessments issued after 1 April 2021 will be governed by the new provisions contained in amended sections 147 to 151 as upheld by Hon’ble Supreme Court of Indian in the matter of Union of India & Ors. Appellant (S) Vs. Ashish Agarwal. Section 148A was introduced by Finance Act, 2022 requiring the Assessing Officer to conduct inquiry, providing opportunity before issue of notice under section 148.
DISTINCTION BETWEEN OLD AND NEW PROVISIONS
Under the erstwhile regime, the Assessing Officer (AO) used to issue notices u/s 148, requiring the assessee to file Income Tax Returns for a particular Assessment Year without disclosing the reasons for re-opening of assessment. The assessee was obliged to file the return in response to the said notice U/s 148 of erstwhile regime and thereupon they used to file an application with the AO to ascertain the reasons for re-opening and satisfaction recorded by the AO for re-opening of the Assessment Proceedings. The assessee used to file objections against the reasons for re¬opening of assessment proceedings and satisfaction recorded by AO (if any) and the AO was obliged to dispose-off the objections of the assessee by way of a speaking order as stipulated by Hon’ble Supreme Court of India in the Case of GKN Driveshafts (India) Ltd vs Income Tax Officer and Ors.
Lot of litigations used to take place on account of either non-supply of reasons for re-opening, satisfaction notes and sanctions obtained u/s 151 by the Assessing Officer or Assessing Officers making assessments without passing speaking orders in respect disposing the objections filed by the assessee.
Hence, a new regime for re-opening of the assessment proceedings was envisaged in Finance Act, 2021 whereby the section 148 was given a “New Avtaar”.
The legislatures amended the provisions of section 148 w.e.f 1 April 2021 making it mandatory to follow the procedures as stipulated U/s 148A, prior to issue of notice U/s 148. Under the new regime, an opportunity is provided by the revenue to the assessee by issuing a notice u/s 148A, which requires the assessee to explain his case and to get the proceedings dropped with the satisfaction of the AO.
Under the new regime, it is obligatory for the AO to Issue Notice U/s 148A(b) to the assessee, containing the information alongwith adverse material purporting escapement of income, which can be countered by the assessee by way material and evidences available with him. This is a major change qua the old provisions in which this information (reasons for re-opening and satisfaction recorded) was made available to the assessee after issuance of notice U/s 148 of the erstwhile regime and filing of return of the Income by the assessee
DISECTION OF SECTION 148A
The provisions of section 148A as introduced by the Finance Act 2021 as amended by Finance Act 2022 are reproduced as under;
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, 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:
insert a new section 148B to provide that no order of assessment or reassessment or recomputation under the Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, in respect of assessments consequent to search, survey and requisition to reduce avoidable inaccuracies.
