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Taxman challenges HC order quashing reassessment notices

The Income-Tax division has moved the Supreme Court difficult an order by the Allahabad High Court quashing income tax notices issued after March 31, 2021, underneath the previous re-assessment regime.

This is a setback for a number of taxpayers who had obtained beneficial orders from numerous excessive courts on reassessment proceedings initiated by the tax authorities.

In the 2021 funds, the federal government had amended a provision governing reassessment proceedings underneath Section 148 of the Income-Tax Act, 1961. The modification had restricted the interval for issuing notices with respect to reopening previous years’ evaluation to 3 years from six earlier.

The modification, which was geared toward decreasing litigation, was to take impact from April 1, 2021.

However, the revenue tax authorities prolonged the time restrict to June 30, 2021, citing the second wave of Covid-19.

It then went forward and issued notices to 1000’s of taxpayers between April 1, 2021, and June 30, 2021, for reopening previous evaluation proceedings.

The tax division issued these notices underneath Section 148, alleging improper disclosure of revenue for years previous to the final three evaluation years.

Taxpayers moved the Allahabad High Court contesting the notices on the grounds that they have been contradictory to the provisions of the brand new tax regime.

The HC had stated that the brand new tax regime didn’t empower the I-T division to reopen instances after March 31, 2021.

This was adopted by comparable orders by different excessive courts, together with the Rajasthan High Court, Delhi High Court and Calcutta High Court, stopping the income-tax division from reopening instances for reassessment.

The difficulty, nonetheless, continues to simmer because the tax division has challenged the most recent Allahabad High Court order earlier than the apex courtroom.

“It is anticipated that the I-T division will file comparable SLPs (Special Leave Petitions) in opposition to beneficial orders of different High Courts, whereby these reassessment notices have been quashed. Thus, a remaining phrase on this difficulty is now anticipated solely from the Supreme Court,” stated Shailesh Kumar, associate, Nangia & Co LLP.

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