Income Tax Department cannot open a case older than 3 years. During an important hearing, Delhi High Court said that according to law, normally reassessment order cannot be issued in cases older than 3 years. However, in cases involving concealment of income of more than Rs 50 lakh and serious fraud, reassessment may be done for up to 10 years.
Know the whole matter-
- During the hearing on an income tax case, the Delhi High Court, while giving its verdict, said that reassessment cannot be done in income tax cases older than 3 years and less than Rs 50 lakh.
- Due to Law of Limitation, cases older than 3 years are generally time barred. However, serious fraud and cases involving more than Rs 50 lakh can be opened.
- Delhi High Court has given its decision citing Income Tax Act. Normally notice cannot be sent after 3 years of the assessment year.
- During Budget 2021-22, a new IT law was made regarding reassessment. In which the reassessment period was reduced from 6 years to 3 years. In case of more than Rs 50 lakh and serious fraud, reassessment can be done for up to 10 years.
The Supreme Court had also given a big decision – The Supreme Court had given its decision in the Abhisar Buildwell case in April. In this, the Supreme Court had clearly said that under Section 153-A of the IT Act, the Income Tax Officer cannot make any addition in the income of any taxpayer during the reassessment proceedings.
For this they should have solid evidence. However, the court had also said that the reassessment can be restored under sections 147 and 148 of the IT Act.
Under Section 148 (old system), the IT officer can open cases older than six years. Cases older than 10 years can be opened under Section 148A added in the Finance Act, 2021.
But for this the annual income should be more than Rs 50 lakh. According to CBDT, this limit will be applicable while opening old cases. That means, cases with annual income of less than Rs 50 lakh will not be opened.
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