CBDT instructs Income Tax Officers to not reopen cases with less than 50L for AYs 14-16

The Central Board of Direct Taxes (CBDT) has provided detailed instructions to its income tax (I-T) cadre about the reopening of cases in order to comply with a recent Supreme Court order. These guidelines will prevent minor instances from being reopened from previous years.

According to the ruling, roughly 90,000 reassessment notices issued by the I-T department after April 1, 2021 under the provisions of the unamended section 148 were declared legitimate.

However, the order stipulated that the precautions outlined in the Finance Act of 2021 be implemented.

CBDT issues instructions on Supreme Court decision on Section 148 notices

To begin, the CBDT’s instructions specify that notices cannot be issued in cases for assessment years (AYs) 2013-14, 2014-15, and 2015-16 if the income escaping assessment is estimated to be less than Rs.50 lakh.

In circumstances of untaxed income, the I-T officer could reopen cases dating back six years under Section 148 (previous regime). Cases dating back 10 years can be revived under section 148A (introduced by the Finance Act, 2021) if the income that has eluded assessment exceeds Rs.50 lakh and a correct process is followed.

The CBDT has stated in its instructions for AYs 2016-17 and 2017-18 that further notifications can be issued with the approval of higher authorities as long as the three-year time limit has not expired.

“CBDT‘s issue of these guidelines is a welcome move,” Dhruva Advisors partner Ajay Rotti told.

However, significant uncertainties persist. “The order is unclear as to how I-T officers are meant to apply the new standards in circumstances when the fleeing income exceeds Rs 50 lakh.” “That could be one area where taxpayers could still challenge the I-T officers’ actions,” Rotti added.

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