Following are the key changes relating to income tax assessments–
Changes related to assessments
- In Budget 2022, the time limit for summary or scrutiny assessment under section 143 or best judgement assessment under section 144 was reduced to 21 months from the end of the financial year. Earlier, this time limit was 33 months. The reduced time limit is proving insufficient and therefore, the same has been now increased to 24 months from the end of the financial year. The aforementioned time limit relates to assessments for FY 2022 onwards.
- The time limit for assessment in case of an Updated Return is also increased from 9 months to 12 months from the end of the year in which such a return is filed.
- The time limit for assessment shall be extended by further 12 months if any search under section 132, or a requisition under 132A is made. These amendments are effective from FY 2023 onwards.
- On receipt of a notice under section 148, a return has to be filed within 3 months from the end of the month in which such notice is issued. The tax officer may allow a further period on receipt of a request from the taxpayer.
- Income tax refunds can be adjusted with any outstanding tax, only after providing written intimation mentioning the reasons.
- Penalty interest in case of Updated Returns will be calculated on the differential tax and not the total tax.
- Under section 92D, the Assessing Officer can request for transfer pricing report during proceedings. This report will now be required to be submitted within 10 days, instead of 30 days, from the date of receipt of the notice. On application, this period can be extended by 30 days.
Changes related to appeals
- A new level of income tax authority with the title Joint Commissioner (Appeals) / Additional Commissioner (Appeals) has been added to handle the pending appeals, in certain cases relating to Individuals and HUFs where the disputed amount is small. (Effective from FY 2024 onwards)
- Taxpayers are now allowed to file appeals against the penalty orders imposed by the Commissioner (Appeals) under sections 271AAB, 271AAC, and 271AAD and revision orders by the Principal Chief Commissioner or Chief Commissioner under Section 263. Taxpayers can also file a memorandum of cross-objections in all cases which can be appealed to an Appellate Tribunal.
- The time limit for disposing of pending rectification applications with the Interim Settlement Commission has been increased to September 30, 2023. The erstwhile Settlement Commission was abolished on February 1, 2021, onwards, in the Budget 2021.
Changes related to survey, search and seizure
- If any search-related information is available after March 15 of a financial year, an additional period of 15 days will be allowed for issuing notice under section 148.
- To address technological aspects during search and seizure, the tax officers need to employ professionals with expertise in data forensics, archiving, decoding data, valuation of digital assets, etc. Further, services of locksmiths, carpenters etc are also becoming a common requirement. Therefore, tax officers are now being allowed to hire any such professional for search and seizure after obtaining approval from the higher authorities.