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February 2023

Reopening of Assessments under section 147 with effect from 1st April 2021

By Nilesh Patel, Certified Public Accountant
Reading Time 25 mins

1. INTRODUCTION

The law applicable to the reopening of assessments is enshrined in sections 147 to 151. That law was changed by the Finance Act 2021 with effect from 1st April 2021.

The objective for the change is explained in the Explanatory Memorandum explaining the provisions of the Finance Bill 2021:

There is a need to completely reform the system of assessment or reassessment or re-computation of income escaping assessment and the assessment of search related cases. The Bill proposes a completely new procedure of assessment of such cases. It is expected that the new system would result in less litigation and would provide ease of doing business to taxpayers.

This Article discusses –

(i) Change in the law of reopening of assessments by the Finance Act 2021 with effect from 1st April 2021.

(ii) The consequences of the aforesaid change in the law.

(iii) Judgement of Hon. Supreme Court in UOI vs Ashish Agarwal (2022) 444 ITR 1 (SC)

(iv) How should the assessee reply to notices issued by the Assessing Officer under section 148A(b)?

(v) When should the assessee challenge, i

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