Section 148 of the Income Tax Act, 1961 has been amended/ substituted, by the Finance Act 2021, with effect from AY 2021-22, to provide that, prior to making the assessment, reassessment, or re-computation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed under clause (d) of section 148A, requiring him to furnish, within such period as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner, and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as possible, apply accordingly as if such return were a return required to be furnished under section 139; provided, however, that no such return is required to be furnished under section 139.
Explanation 1 to Section 148 states that “information which suggests that the income chargeable to tax has escaped assessment” means “any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time or any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment has escaped assessment.”
The new framework of re-opening of assessment proceedings introduced by Finance Act, 2021, applicable in cases of income evasion including search/ survey, will reduce litigation and contribute to progress toward ease of doing business. Except in search cases, the AO will first conduct an inquiry and give the assessee an opportunity to be heard before issuing the assessment reopening notice under the new regime.
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 148: Issue of Notice where Income has Escaped Assessment (as Substituted by the Finance Act 2021)
Section 148 of the Income Tax Act, 1961 has been substituted/ revised, vide Section 41 of the Finance Act, 2021, applicable w.e.f. 01/4/2021 (AY 2021-22), as under:
“Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy
of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in
respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
Explanation 1.- For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,-
(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor-General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.
Explanation 2.- For the purposes of this section, where,-
(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after 01/04/2021, in the case of the assessee; or
(ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after 01/04/2021, in the case of the assessee; or
(iii) 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 or requisitioned under section 132 or under section 132A in case of any other person on or after 01/04/2021, belongs to the assessee; or
(iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or 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, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.
Explanation 3.- For the purposes of this section, specified authority means the specified authority referred to in section 151.”