Income Tax department may reopen big old cases, even after CBDT Relief

The Central Board of Direct Taxes (CBDT) has delivered thorough guidelines to tax officers about the reopening of prior cases under the Income Tax Act, in accordance with a Supreme Court judgement issued in April.

According to a source, these orders, dated August 23, are intended to develop a standardised strategy. Notably, the rules emphasise that matters that have previously been resolved will not be reopened or reviewed if the decision of the appellate authority has reached finality. This development brings some relief. However, it is expected that considerable sums will be implicated in the future months, resulting in the reopening and reconsideration of earlier cases.

The CBDT’s directive is notable for its decision to remove cases from reconsideration if they do not have continuing appeals before the appellate authority and had finished prior to the Supreme Court‘s April ruling, which acted as a precedent in this regard.

The Supreme Court held that Income tax authorities cannot increase a taxpayer’s income during a reassessment case under IT Act Section 153-A.

In light of the CBDT’s decision, it may be stated that “in simple terms, for the rest of the taxpayers, it’s another round of future lawsuit that could last decades.”

In situations of evaded income, the IT officer might go back six years under Section 148 (old regime). Cases dating back 10 years can be reopened under section 148A (introduced by the Finance Act, 2021) if the income that has escaped assessment exceeds Rs 50 lakh and the proper procedure is followed. The CBDT’s guidelines say that the present monetary constraints would apply while reviewing evaluations from past years.