21 ASSESSMENT PROCEDURE

Transcription

1 21 ASSESSMENT PROCEDURE AMENDMENTS BY THE FINANCE ACT, 2015 (a) Approval regime for issue of notice for re-assessment simplified [Section 151] Effective from: 1 st June, 2015 Section 151 requires the Assessing Officer to obtain sanction from certain authorities before issue of notice for reassessment of income under section 148, under certain specified circumstances. (ii) Under section 151, the sanctioning authorities are specified on the basis of (1) whether scrutiny under section 143(3) or section 147 has been made earlier or not, (2) whether notice is proposed to be issued within or after four years from the end of relevant assessment year, and (3) the rank of the Assessing Officer proposing to issue notice. (iii) In order to simplify the approval regime for issue of notice for reassessment, section 151 has been substituted. Time limit (from the end of the relevant A.Y.) Issue of Notice under section 148 by (1) Upto 4 years Assessing Officer below the rank of Joint Commissioner Competent authority who has to be satisfied on the reasons recorded by the A.O., that it is a fit case for the issue of such notice Joint Commissioner (2) After 4 years Assessing Officer Principal Chief Commissioner/ Chief Commissioner/Principal Commissioner/ Commissioner 141

2 Issue of notice u/s 148 Upto four years By an AO below the rank of the JC, if the JC is satisfied that it is a fit case for issue of notice Beyond four years By an AO, if the Principal Chief Commissioner / Chief Commissioner/ Principal Commissioner/ Commissioner is satisfied that it is a fit case for issue of notice. (iv) It is further clarified that in the above cases, the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or the Joint Commissioner, as the case may be, has to be satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148. However, these authorities are not required to issue the notice themselves. (b) Beneficial Owner / Beneficiary of any asset located outside India required to file return of income in the prescribed form and manner [Section 139(1) )] Effective from: A.Y (ii) The fourth proviso to section 139(1) requires a person, being a resident other than not ordinarily resident in India, having (1) any asset (including financial interest in any entity) located outside India or (2) signing authority in any account located outside India to file a return of income in the prescribed form compulsorily, whether or not he has income chargeable to tax. The return of income should be verified in the prescribed manner and provide such particulars as may be prescribed. The fourth proviso to section 139(1) has been substituted with effect from A.Y It now requires filing of return of income or loss for the previous year in the prescribed form and verified in the prescribed manner on or beforee the due date, by every person, being a resident other than not ordinarily resident in India within the meaning of section 6(6), who is not required to furnish a return under section 139(1) if such person, at any time during the previous year, - (a) holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has a signingg authority in any account located outside India; or 142

3 (b) is a beneficiary of any asset (including any financial interest in any entity) located outside India. (iii) However, an individual being a beneficiary of any asset (including any financial interest in any entity) located outside India would not be required to file return of income under the fourth proviso to section 139(1), where, income, if any, arising from such asset is includible in the income of the person referred to in ii(a) above in accordance with the provisions of the Income-tax Act, Requirement of filing of return of income as per the new fourth and fifth proviso to section 139(1) A resident other than not ordinarily resident within the meaning of section 6(6) Who is not required to furnish a return of income u/s 139/(1) AND Who at any time during the P.Y. A OR B holds, as beneficial owner or otherwise, any asset (including financial interest in any entity) located outside India OR has a signing authority in any account located outside India is a beneficiary of any asset (including financial interest in any entity) located outside India However, where any income arising from such asset is includible in the hands of the person specified in (A) in accordance with the provisions of the Act, an individual, being a beneficiary of such asset, is not required to file return of income. 143

4 (iv) Consequential amendment has been made in section 139(6) to provide that in the prescribed cases, the assessee shall be required to furnish the particulars of the assets of the prescribed nature and value, held by him as a beneficial owner or otherwise or in which he is a beneficiary, in the prescribed form of the returns referred to in sections 139(1)/139(3) and in section 142(1). Meaning of beneficial owner and beneficiary in respect of an asset for the purpose of section 139: Beneficial Owner An individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person. Beneficiary An individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person, other than such beneficiary. (c) Assessment of income of a person other than the person in whose case search has been initiated or books of account, other documents or assets have been requisitioned [Section 153C] Effective from: 1 st June, 2015 Section 153C relates to assessment of income of any other person. (ii) As per section 153C(1), where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to any person, other than the person referred to in section 153A, then, the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A, if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing 144

5 on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1). (iii) The words belongs to in respect of a document may lead to different interpretations as, for instance, when a given document seized from a person is a copy of the original document, whether the copy can be considered to belong to the other person. (iv) In order to resolve this issue, section 153C has been amended to provide that, notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that - (1) any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to ; or (2) any books of account or documents seized or requisitioned pertain to; or (3) any information contained therein, relates to, any person, other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A, if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1). (d) Procedure for appeal by revenue when an identical question of law is pending before Supreme Court [New Section 158AA] Effective from: 1 st June, 2015 Section 158A enables an assessee, during pendency of proceedings in his case for an assessment year, to submit a claim before the Assessing Officer or any appellate authority that - (1) a question of law arising in the instant case for the assessment year under consideration is identical with the question of law already pending in his own case before the High Court or Supreme Court for another assessment year; and (2) if the Assessing Officer or any appellate authority agrees to apply the final decision on the question of law in that earlier year to the present year, he will not agitate the same question of law once again for the present year before higher appellate authorities. (ii) The Assessing Officer or any appellate authority before whom his case is pending can admit the claim of the assessee and as and when the decision on the question 145

6 of law becomes final, the ratio of the decision of the High Court or Supreme Court for that earlier case would be applied to the relevant year s case also. (iii) So far, there is no corresponding provision for revenue to not file appeal for subsequent years where the Department is in appeal on the same question of law for an earlier year. Consequently, appeals are filed by the revenue year after year on the same question of law until it is finally decided by the Supreme Court. This increases the pending litigation. (iv) Accordingly, new section 158AA has been inserted to provide that notwithstanding anything contained in the Act, where any question of law arising in the case of an assessee for any assessment year is identical with a question of law arising in his case for another assessment year which is pending before the Supreme Court, in an appeal or in a special leave petition under Article 136 of the Constitution filed by the revenue, against the order of the High Court in favour of the assessee, the Commissioner or Principal Commissioner may, instead of directing the Assessing Officer to appeal to the Appellate Tribunal under section 253(2) or section 253(2A), direct the Assessing Officer to make an application to the Appellate Tribunal in the prescribed form within sixty days from the date of receipt of order of the Commissioner (Appeals) stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the earlier case. (v) The Commissioner or Principal Commissioner shall direct the Assessing Officer to make an application under section 158AA(1), only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case. However, in case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed in accordance with the provisions contained in section 253(2) or section 253(2A). Accordingly, the Commissioner or Principal Commissioner may, if he objects to the order passed by the Commissioner (Appeals), direct the Assessing Officer to appeal to the Appellate Tribunal. (vi) Where the order of the Commissioner (Appeals) is not in conformity with the final decision on the question of law in the other case (if the Supreme Court decides the earlier case in favour of the Department), the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal against such order within 60 days from the date on which the order of the Supreme Court is communicated to the Commissioner or Principal Commissioner. (vii) Unless otherwise provided in section 158AA, all other provisions of Part B of Chapter XX Appeals to Appellate Tribunal shall apply accordingly. 146