New Section 148A of the Income Tax Act, 1961, inserted by the Finance Act 2021, with effect from AY 2021-22, seeks to provide that, before issuing any notice under section 148, the Assessing Officer shall conduct any enquiry, if necessary, with the prior approval of specified authority, with respect to information indicating that income chargeable to tax has escaped assessment.
Further, Sections 148A provides that before issuing any notice under section 148, the Assessing Officer shall, with the prior approval of specified authority, provide an opportunity of being heard to the assessee by serving upon him a notice to show cause within specified time, as to why a notice under section 148 should not be issued based on information indicating that income chargeable to tax has escaped assessment in his case for the relevant assessment year, and the results of any enquiries conducted, if any.
Section 148A also provides that the AO shall consider the Assessee’s reply to the show cause notice, if any, and decide, on the basis of material available on record, whether or not it is a fit case to issue a notice u/s 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 to the show cause notice is received by him.
It may be noted that Finance Act 2021 has amended/ substituted/ inserted Sections 147, 148, 148A, 149 and 151 of the Income Tax Act 1961 with regard to reduction of Time Limit for re-opening of income tax proceedings, applicable with effect from 01/04/2021 (AY 2021-22).
Section 148A: Conducting Inquiry, providing Opportunity before Notice under section 148 (as inserted by the Finance Act 2021)
New Section 148A of the Income Tax Act, 1961 has been inserted, vide Section 42 of the Finance Act, 2021, applicable w.e.f. 01/4/2021 (AY 2021-22), as under:
“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, with the prior approval of specified authority, 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:
Provided that the provisions of this section shall not apply in a case where,-
(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after 01/04/2021; or
(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after 01/04/2021, belongs to the assessee; or
(c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after 01/04/2021, pertains or pertain to, or any information contained therein, relate to, the assessee.
Explanation.- For the purposes of this section, specified authority means the specified authority referred to in section 151.”