Section 148 of the IT Act

Section 148 of the IT Act

Subject: Economy

Section: Fiscal Policy

Context:

The Supreme Court on Wednesday held that the reassessment notices issued under the unamended Section 148 of the Income Tax Act on or after April 1, 2021, will not be deemed to be invalid just because they were issued under the old law. These notices will be deemed as show-cause notices issued to the respective assesses under the new Section 148A of the Act.

Concept:

Section 148 of the IT Act, granted the I-T officers the power to reopen past tax assessments, if they had ‘reason to believe’ that certain income had escaped assessment.

The Finance Act, 2021, introduced section 148A which streamlined the procedure and better protected the interest of the taxpayers.  It provided that before a re-assessment notice can be issued the I-T officer shall conduct an enquiry with the prior approval of senior officials – in other words – the concept of ‘reason to believe that income had escaped assessment’ stood diluted. Further it provided an opportunity to the taxpayer of being heard and called upon the I-T officer to take into cognisance the reply given by the taxpayer

But between April 1 and June 30, 2021, I-T officers issued reassessment notices under the old provision, which was challenged by taxpayers.’