Lok Sabha Question No. 56 (STARRED), answered on 2023-02-06
Subject: Alleged Harassment by Income Tax Authorities
Ministry: FINANCE
Asked by: Mahua Moitra

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA STARRED QUESTION NO. 56

## TO BE ANSWERED ON MONDAY, 06 TH  FEBRUARY, 2023/ MAGHA 17, 1944 (SAKA)

## ALLEGED HARASSMENT BY INCOME TAX AUTHORITIES

## 56. SHRIMATI MAHUA MOITRA:

## Will the Minister of FINANCE be pleased to state:

- (a) whether amendment to the Finance Act in April 2022 has resulted in changes wherein the Income Tax authorities while assessing the income tax of individuals and companies and conducting searches and raids after April 2021 have to presume the deemed acceptance of previous income that has escaped assessment and if so, the details thereof; and
- (b) whether the Income Tax authorities are reportedly using the aforesaid provision to reassess individuals  and  companies  and  conduct  search  and  seizes  by  taking  into  account  the previous  income  of  past  three  years  and  earlier  without  giving  prior  information  to  the assessees and if so, the details thereof and the reaction of the Government thereto?

## ANSWER

## THE MINISTER OF FINANCE (SHRIMATI NIRMALA SITHARAMAN)

(a) to (b): A statement is laid on the Table of the House.

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## STATEMENT REFERRED IN REPLY TO LOK SABHA STARRED QUESTION NO. 56 FOR ANSWER ON 06 th  FEBRUARY, 2023

## (a) and (b) : No

1. The scheme for re-assessment of income escaping assessment, as laid down in Section 148 of the Income Tax Act, 1961 ('Act') was reformed by the Finance Act, 2021 & Finance Act, 2022. The new scheme was introduced with an intent to reduce litigation and provide ease of doing business to taxpayers  by  reducing  the  time  limit  and  specifying  a  higher  threshold  by  which  a  notice  for assessment  or  reassessment  or  re-computation  can  be  issued.  Simultaneously,  assessments/reassessments/re-computation  in  search  &  seizure  cases  initiated  after  31 st March  2021  have  been brought under the ambit of Section 148 in place of the erstwhile sections 153A/153C of the Act.

2.  The  salient  features  of  the  new  scheme  under  Section  148  for  search  &  seizure  cases,  inter-alia, include:
2. o In search cases, the time limit to issue notice for re-assessment was reduced to 3 years from the end of the relevant assessment year as against erstwhile 6 years period.
3. o Notices  can  now  be  issued  beyond  3  years  and  upto  6  years  from  the  end  of  the  relevant assessment  year  only  for  cases  wherein  income  chargeable  to  tax  which  has  escaped assessment is likely to exceed rupees fifty lakh in the form of: (a) an asset; or (b) expenditure in respect of a transaction or in relation to an event or occasion; or (c) an entry or entries in the books of account as against no such threshold in the earlier regime.
4. o For the purpose of issuance of notice beyond 6 years and upto 10 years from the end of the relevant assessment year, the provisions for reopening of assessment are similar with respect to the threshold limit as applicable for search assessment prior to 01.04.2021.
5. o Before  issuance  of  notice  under  Section  148  of  the  Act  by  the  Assessing  Officer,  for  reopening of assessments in search & seizure cases, prior approval of specified authority is now mandatory, which was not so for initiation of proceedings under Section 153A/153C of the Act.
6. o Further, if search & seizure action reveals any evidence/assets/documents, etc. belonging/relating  to  any  person  other  than  the  searched  person,  prior  approval  of  the specified authority is required to ensure that the evidence/ assets/ documents, etc. belongs/relates to that person, before the initiation of re-assessment proceedings under Section 148. As against this, no prior approval of higher authority was required for issuance of notice under Section 153C of the Act.
3. After issuance of notice u/s 148 with the approval of specified authority, the AO, following the principle  of  natural  justice,  provides  adequate  opportunity  of  being  heard  to  the  assessee  before framing the assessment.

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