Mumbai: Responding to several writ petitions for the financial years 2015-16 and 2016-17, Delhi High Court Recently it has been held that the extended period of ten years for reopening of Income Tax (IT) assessments should be applicable only in such cases serious tax evasion Where there is evidence of concealment of income exceeding Rs. 50 lakhs. This decision is expected to help thousands of taxpayers.
The Delhi High Court had to decide the validity of the notices issued to the petitioners under Section 148 keeping in mind the period of limitation (the period within which notices for reopening of cases can be issued).
The petitioners submitted that the matters alleged in income saved Is below Rs. 50 lakh, the limitation period of three years prescribed in clause (a) of section 149(1) should apply. The extended limitation period of ten years will be applicable only if the residual income exceeds Rs 50 lakh.
On the other hand, IT officials argued that the notices were valid in view of the Supreme Court judgment in Ashish Agarwal’s case (released in May, 2022) and a subsequent circular issued by the Central Board of Direct Taxes (CBDT). ,
IT officials relied on the provisions of the Taxation and Other Laws (Exemption and Amendment of Certain Provisions) Act, 2020 (TOLA) and propounded the ‘travel back in time’ theory to justify the notice issued at a later stage . Have been issued in old times.
The Delhi High Court observed that as per both the speech of the Finance Minister and the memorandum explaining the provisions of the Finance Bill, 2021, the time limit for reopening of assessment was reduced from six to three years to facilitate ease of doing business . Only in cases where the residual income is Rs. In cases involving Rs 50 lakh or more, IT officials were given the freedom to investigate for up to ten years. Thus, the new arrangement will be applicable to previous years also, provided the notices under section 148 have been issued on or after April 1, 2021.
Deepak Joshi, a lawyer practicing in the Supreme Court, explains, “The Delhi High Court has held that the ‘travel back in time’ principle contained in the CBDT directive is bad in law. This is a welcome decision, which will help those taxpayers who are facing reassessment proceedings relating to residual income of less than Rs. 50 lakhs. Since this order applies in rem, it will also be beneficial for those taxpayers who have not filed the writ petition.”
The Delhi High Court had to decide the validity of the notices issued to the petitioners under Section 148 keeping in mind the period of limitation (the period within which notices for reopening of cases can be issued).
The petitioners submitted that the matters alleged in income saved Is below Rs. 50 lakh, the limitation period of three years prescribed in clause (a) of section 149(1) should apply. The extended limitation period of ten years will be applicable only if the residual income exceeds Rs 50 lakh.
On the other hand, IT officials argued that the notices were valid in view of the Supreme Court judgment in Ashish Agarwal’s case (released in May, 2022) and a subsequent circular issued by the Central Board of Direct Taxes (CBDT). ,
IT officials relied on the provisions of the Taxation and Other Laws (Exemption and Amendment of Certain Provisions) Act, 2020 (TOLA) and propounded the ‘travel back in time’ theory to justify the notice issued at a later stage . Have been issued in old times.
The Delhi High Court observed that as per both the speech of the Finance Minister and the memorandum explaining the provisions of the Finance Bill, 2021, the time limit for reopening of assessment was reduced from six to three years to facilitate ease of doing business . Only in cases where the residual income is Rs. In cases involving Rs 50 lakh or more, IT officials were given the freedom to investigate for up to ten years. Thus, the new arrangement will be applicable to previous years also, provided the notices under section 148 have been issued on or after April 1, 2021.
Deepak Joshi, a lawyer practicing in the Supreme Court, explains, “The Delhi High Court has held that the ‘travel back in time’ principle contained in the CBDT directive is bad in law. This is a welcome decision, which will help those taxpayers who are facing reassessment proceedings relating to residual income of less than Rs. 50 lakhs. Since this order applies in rem, it will also be beneficial for those taxpayers who have not filed the writ petition.”
(TagstoTranslate)Tax evasion(T)Serious tax evasion(T)Income tax (Assessment(T)Escaped income(T) Delhi High Court