Comparison of the erstwhile regime and the new regime concerning income escaping assessment under section 147 of the Act:

Section 119 accords the following powers to CBDT:
Particulars Before amendment (before 01 April 2021) After amendment  (on or after 01 April 2021)
Relevant sections Section 147 to 153 Section 147, 148, 148A, 149, and 151. Section 148A has been newly inserted. (however, sections 150, 152, 153 will continue to apply as it is)
Process of reassessment proceedings (i) Service of notice to a taxpayer under section 148 requiring the taxpayer to file a return of income (ROI) if the tax authority has reason to believe that any income chargeable to tax has escaped assessment. The further procedure is laid down below (ii) taxpayer to file ROI in response to such notice (iii) If the taxpayer seeks reasons for reassessment, the tax authority shall furnish a copy of such reasons within a reasonable time  (iii) On receipt of reasons, the taxpayer may file objections, if any, with respect to reassessment notice (iv) Tax authority shall dispose of the objections by way of a speaking order after giving the taxpayer an opportunity of being heard (v) If tax authority rejects the objections, he shall initiate reassessment proceedings in respect of: 
  • any income which has escaped assessment and
  • any other income which he subsequently notices in the course of the proceeding
and an appropriate order under section 147 shall be passed after giving the taxpayer an opportunity of being heard. The time limit for issue of notice under section 148 is:
  • If the income that escaped assessment doesn’t exceed INR 1 lac, four years from the end of the relevant AY.
  • If the income that escaped assessment exceeds INR 1 lac, six years from the end of the relevant AY.
  • If the income that escaped assessment relates to assets located outside India, sixteen years from the end of the relevant AY.
(i) Tax authority is required to follow a newly laid down procedure under section 148A before issuing a notice under section 148 if he possesses ‘information which suggests that income chargeable to tax has escaped assessment’,  (In search, requisition or survey cases initiated or conducted or made, on or after 01 April 2021, there is a deeming fiction that the tax authority has the information which is suggestive of the income chargeable to tax that has escaped assessment for the three assessment years ('AY') immediately preceding the AY in which the search is initiated, or survey is conducted, or requisition is made, or any material is seized or requisitioned) (ii) Procedure under 148A: The tax authority may conduct an inquiry if required with the prior approval of the prescribed authorities  (The same is tabulated under the section ‘Obtaining prior approval of prescribed authorities’)  The taxpayer is allowed an opportunity to dispute the proposal of reassessment by serving upon him a notice requiring him to file a response within a time not less than seven days but which may extend up to 30 days, i.e. 7-30 days
  • Tax authority to pass an order under section 148A(d) with the prior approval of prescribed authorities within a month from the end of the month:
  1. in which taxpayer’s reply is received or
  2. expiry of the time allowed to the taxpayer, in case no such response is furnished
(procedure under section 148A shall not apply in a case of search and seizure in case of the taxpayer or any other person on or after 01 April 2021, and tax authority can directly issue the notice under section 148) (iii) If the tax authority decides to reopen the assessment, then it shall issue a notice to the taxpayer under section 148 with the prior approval of the prescribed authorities along with a copy of the order under section 148A(d) The tax authority shall decide the time limit for issuance of notice based on the following:
  • Ten years from the end of the relevant AY, where the tax authority possesses 
  1. Books of accounts or other documents; and
  2. Income escaped assessment represented in the form of an asset; and 
  3. Income that escaped assessment is greater than INR 50 lacs for such a year
  • Three years from the end of the relevant AY, in any other case
(the above timeline does not apply to cases where the search is initiated (section 132) or requisition of books/documents is made (section 132A) on or before 31 March 2021. Such cases will continue to be governed by section 153A to 153C as per the old regime before the amendment) (iv) Initiate reassessment proceedings in respect of: 
  • any income which has escaped assessment and
  • any other income, which he subsequently notices in the course of the proceeding
and pass an appropriate order under section 147 
Basis for reassessment 
  • The tax authority has ‘reason to believe’ that income has escaped assessment.
  • Such an escapement had happened because of omission or taxpayer's failure to disclose all material facts completely and genuinely, which were necessary for the assessment.
  • Tax authority should possess information which suggests that income chargeable to tax has escaped assessment.
  • Section 148 vide explanation 1 provides that the ‘information which suggests that the income has escaped assessment’ means-
  1. any information flagged for the relevant AY as per the risk management strategy formulated by the Central Board of Direct Taxes;
  2. any final objection raised by the Comptroller and Auditor General of India that the assessment for the relevant AY was not made in accordance with the provisions of this Act.
Time limit for issuing notice 4 to 16 years 3 to 10 years
Obtaining prior approval of prescribed authorities
  • After four years from the end of relevant AY: Principal Chief Commissioner (PCCIT) or the Chief Commissioner (CCIT) or the Principal Commissioner (PCIT) or the Commissioner (CIT)
  • Up to four years from the end of the relevant AY: Joint Commissioner (JC)
  • After three years from the end of relevant AY:
Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT) (in case there is no PCIT/PDGIT then Chief Commissioner (CCIT) or the Director General (DGIT))
  • Up to three years from the end of the relevant AY: PCIT/PDIT/CIT/DIT

The above approval will be required at various stages in the proceedings as enlisted below:
  • For conducting an enquiry before the issue of notice in respect of information in possession of tax authority suggesting income escapement
  • While providing an opportunity of being heard under section 148A
  • Passing an order as provided under section 148A(d)
  • Before issuance of notice under section 148 
Procedure to be followed by tax authority before issuing notice under section 148 No formal procedure except recording the reasons to believe before issuing the notice.
  • A separate procedure has been prescribed under section 148A as below:
  1. Conducting an inquiry
  2. Providing the taxpayer with an opportunity to dispute the proposal of reassessment
  3. Pass an order
  • The tax authority is required to provide a copy of the order passed under section 148A(d) along with the issuance of reassessment notice under 148.

Particulars Search Survey Others
Possession of information which suggests that income chargeable to tax has escaped assessment  Deemed to be in possession of such information for three years Deemed to be in possession of such information for three years Need to possess such information to reopen an assessment 
The requirement to follow the procedure as laid down in 148A Not applicable Applicable Applicable

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.

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