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April 2022

EXTENDING THE SCOPE OF REASSESSMENT

By Pradip Kapasi | Gautam Nayak | Bhadresh Doshi
Chartered Accountants
Reading Time 33 mins
ISSUES FOR CONSIDERATION

Section 147, applicable up to 31st March, 2021, empowers an Assessing Officer (AO) to assess or reassesses the income in respect of any issue which has escaped assessment and which has come to his notice subsequent to the recording of reasons and the issue of a notice u/s 148, in the course of reassessment proceedings. The relevant part of the said section reads as under:

‘If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned.’

Section 147, effective from 1st April, 2021, has dispensed with the condition of ‘reason to believe’. Instead, a new provision in the form of section 148A has been introduced to provide for compliance of a set of four conditions by an AO before issuing any notice u/s 148. The Explanation thereto empowers the AO to reassess an income in respect of an issue for which the four conditions of s. 148A has not been complied with.

This Explanation is materially the
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