Trinamool asks whether amendment in Finance Act 2022 ‘used for conducting searches and seizures’

MP  |  14 Feb 2023  |   Kolkata: At a time when Income Tax raids in the country have seen a spurt, Trinamool Congress (TMC) MP Mahua Moitra questioned the Centre as to whether tax authorities are using the new amendment in the Finance Act 2022 to conduct searches and seizures by taking into account the previous income of past three years and earlier without giving prior information to the assesses. 

The MP wanted answers surrounding the changes made following the amendment to the Finance Act in April 2022. She asked whether the Income Tax authorities, while assessing the income tax of individuals and companies and conducting searches and raids after April 2021, have to presume the deemed acceptance of previous income that has escaped the assessment. 

In a written reply, Union Finance minister Nirmala Sitharaman said the scheme for re-assessment of income escaping assessment, as laid down in Section 148 of the Income Tax Act, 1961 was reformed by the Finance Act, 2021 and Finance Act, 2022. 

The new scheme was introduced to reduce litigation and provide ease of doing business to taxpayers by reducing the time limit and specifying a higher threshold by which a notice for assessment or reassessment or re-computation can be issued. 

Simultaneously, “assessments/reassessments/re-computation in search and seizure cases initiated after March 31, 2021 have been brought under the ambit of Section 148,” it was pointed out. Under the new scheme, in search cases, the time limit to issue notice for re-assessment was reduced to 3 years from the end of the relevant assessment year as against the erstwhile 6 years period, she said. 

“Notices can now be issued beyond 3 years and upto 6 years from the end of the relevant assessment year only for cases wherein income chargeable to tax which has escaped assessment is likely to exceed rupees fifty lakh in the form of (a) an asset; or (b) expenditure in respect of a transaction or in relation to an event or occasion; or (c) an entry or entries in the books of account as against no such threshold in the earlier regime.” 

Her reply mentioned that before the issuance of notice under Section 148 of the Act by the Assessing Officer (AO), for the reopening of assessments in search and seizure cases, prior approval of specified authority is now mandatory. 

Further, “if search and seizure action reveals any evidence/assets/documents, etc. belonging/relating to any person other than the searched person, prior approval of the specified authority is required to ensure that the evidence/ assets/ documents, etc. belongs/relates to that person, before the initiation of re-assessment proceedings under Section 148.” 

After issuance of notice under Section 148 with the approval of specified authority, the AO, following the principle of natural justice, provides adequate opportunity of being heard to the assessee before framing the assessment, Sitharaman said. 

https://www.millenniumpost.in/bengal/trinamool-asks-whether-amendment-in-finance-act-2022-used-for-conducting-searches-and-seizures-508683