After new directives, Income Tax department may reopen a large number of past cases
Aug 28, 2023
Synopsis
The Central Board of Direct Taxes (CBDT) has issued comprehensive directives to tax officials regarding the reopening of past cases under the Income-tax (I-T) Act. The guidelines emphasize that cases already concluded will not be reopened or reassessed if the verdict of the appellate authorities has already achieved the finality.
In line with a Supreme Court (SC) order issued in April, the Central Board of Direct Taxes (CBDT) has sent comprehensive directives to tax officials concerning the reopening of past cases under the Income-tax (I-T) Act.
As per a TOI report, these instructions, dated August 23, are aimed at establishing a standardized approach. Notably, the guidelines emphasize that cases which have already been concluded will not be reopened or reassessed if the verdict of the appellate authorities has achieved finality. This development offers a measure of relief. However, it's anticipated that in the upcoming months, there could be instances where significant sums are involved, leading to the reopening and reassessment of past cases.
In providing clarity on this matter, Deepak Joshi, a legal expert and SC advocate, told TOI, “The noteworthy aspect of the CBDT's instruction is its decision to exclude cases from reconsideration if they lack ongoing appeals before the appellate authorities and have concluded prior to the SC's April decision, which served as a precedent in this matter.”
The Supreme Court ruled that I-T officials cannot add to a taxpayer's income during a reassessment case under Section 153-A of the I-T Act.
However, the Supreme Court ruled that reassessment might be pursued through the reassessment method under Section 147/148 if the conditions therein were met, such as allowing the taxpayer the chance to be heard. In light of the CBDT's direction, Joshi stated, "In simple terms, for the rest of the taxpayers, it's another round of future litigation that could last decades."
In cases of evaded income, the I-T officer could revisit them dating back six years under Section 148 (old regime). Cases dating back 10 years can be revived under section 148A (introduced by the Finance Act, 2021) if the income that has eluded assessment exceeds Rs 50 lakh and a correct process is followed. The CBDT's instructions state that the current monetary restrictions would apply while reopening assessments from previous years.
[The Economic Times]
