Responding to a bunch of writ petitions, for the financial years 2015-16 and 2016-17, the Delhi high court has recently held that the extended period of ten years, for re-opening of Income-tax (I-T) assessments should be applicable only in cases involving serious tax evasion where evidence of concealing income is above Rs. 50 lakh. This judgement is expected to help thousands of taxpayers.
The Delhi high court had to decide the validity of the notices issued to the petitioners under section 148, keeping in view the period of limitation (period within which notices for re-opening of cases can be issued).
The petitioners submitted that in cases where the alleged escaped income is below Rs. 50 lakh, the period of limitation of three years as stipulated in clause (a) of section 149(1) should apply. The extended limitation period of ten years would apply only if the escaped income was more than Rs. 50 lakh.
On the other hand, the I-T authorities contended that the notices were valid, given the Supreme Court’s judgment in the case of Ashish Agarwal (issued in May 2022) and a circular that was subsequently issued by the Central Board of Direct Taxes (CBDT).
The I-T authorities relied on the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and propounded the ‘travel back in time’ theory to justify that those notices issued at a later stage, were deemed to have been issued back in time.
Read more at : The Times of India
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