Income Tax Reassessment Under Section 148A: Updated Schedules and Processes

Section 148A of the Income-tax Act, 1961, and other sections pertaining to income tax reassessment were significantly modified by the Finance Act, 2021. The reassessment process will be streamlined, litigation will be decreased, and timelines and procedures will be made clearer thanks to these modifications. We will discuss the new deadlines and protocols for income tax reassessment under Section 148A in this blog.

Context

Sections 147 and 148 of the Income-tax Act governed the requirements for income tax reassessment prior to the Finance Act, 2021. But these clauses were frequently criticized for being unclear, which resulted in needless lawsuits and taxpayer harassment. A new structure for income tax reassessment, Section 148A, was adopted by the Finance Act, 2021, in response to these issues.

Updated Schedules

The following are the revised deadlines for income tax reassessment under Section 148A:

• Within a period of three years following the conclusion of the assessment year, the Assessing Officer (AO) may begin the process of a reassessment.
• Ten years after the assessment year ends: The AO may start reassessment procedures within ten years after the assessment year's conclusion in situations where the income evading assessment is Rs. 50 lakh or higher.

Novel Protocols

The following are the new processes for income tax reassessment under Section 148A:

• Show-cause notice: The AO is required to provide the taxpayer with a show-cause notice outlining the reasons for the proposed reassessment before commencing reassessment procedures.
• The taxpayer's answer: The show-cause notice gives the taxpayer a chance to reply within a predetermined window of time (typically 30 days).
• AO's choice: The AO will determine whether to move further with the reassessment or to end the proceedings after taking the taxpayer's response into account.
• Reassessment order: In the event that the AO chooses to move further with the reassessment, an order outlining the amount of income that is exempt from assessment and the tax due will be passed.

Important Elements

Key characteristics of the recently implemented Section 148A reassessment requirements include:

• Faceless reassessment: To minimize the necessity for in-person meetings and interactions with the AO, the reassessment procedures will be carried out facelessly.
• Electronic communication: To ensure speed and transparency, all correspondence between the taxpayer and the AO shall be conducted electronically.
• Time-bound: The reassessment procedures have a time limit, which guarantees that the procedure is finished in the allotted amount of time.

In Summary

The goals of the revised schedule and protocols for income tax reassessment under Section 148A are to guarantee a fair and transparent process, lessen litigation, and offer clarity. In order to maintain compliance and prevent needless arguments, taxpayers need to be aware of these changes. The reassessment process's automated and faceless format will facilitate ease of doing business and lessen the load on taxpayers.

Please take note that this blog is meant purely for informational reasons and should not be construed as legal counsel. In order to receive particular advice on income tax reassessment under Section 148A, taxpayers are recommended to speak with a licensed tax professional.

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