The Income Tax (I-T) department is on track to complete reassessments for 170,000 notices by March 2025.
These reassessment notices, issued between March 2021 and March 2024, pertain to undisclosed income from past assessment years. The Central Board of Direct Taxes (CBDT) had reopened approximately 600,000 cases over this three-year period due to discrepancies between reported income and information available with the department. So far, about 430,000 reassessments have been completed, with orders passed accordingly, as per a senior official with direct knowledge of the matter.
While the exact financial impact remains unclear, rough estimates suggest the amount involved could exceed a thousand crore rupees. The reassessment notices cover various assessment years from 2014-15 to 2022-23, with some cases approaching the statute of limitations.
These notices, issued under Section 148 of the Income Tax Act, primarily target individuals with incomes above Rs 50 lakh. Under Section 148, I-T officers can review income evasion cases up to six years old. Section 148A, introduced by the Finance Act, 2021, extends this to over a decade for cases involving undisclosed income exceeding Rs 50 lakh. For amounts below Rs 50 lakh, notices cannot be issued if three years have passed since the relevant assessment year.
The CBDT guidelines stipulate maintaining current financial limits when reopening past assessments. Once reassessment notices are issued, an assessing officer reviews the taxpayer’s return if there is reason to believe income has escaped assessment.
In 2022, the Supreme Court upheld all reassessment notices issued on or after April 1, 2021, allowing the I-T department to reopen assessments going back six years. This ruling followed numerous challenges in high courts, which led the department to seek the Supreme Court’s intervention.
However, the I-T department dropped reassessment notices for fiscal years 2012-13, 2013-14, and 2014-15 for small taxpayers where the escaped income was less than Rs 50 lakh. The Supreme Court ruled that reassessment could proceed under Section 147/148 if conditions were met, including giving the taxpayer a chance to be heard.
Following this ruling, the CBDT issued a directive to standardize the approach for reopening cases, ensuring cases concluded by appellate authorities or courts would not be reopened.
For more updates on income tax reassessments and other financial news, stay tuned.
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