Continued from
Provision Of Reassessment Under Income Tax Act 1961- PART I
Case Situation 3
In case, the assessee has to file u/s 92 E reports against some international transaction he made:
In this case, the income escaping reassessment is applicable if the AO believes that the assessee has entered into an international transaction that requires him to file u/s 92E report but has not done so.
Case Situation 4
In case the assessment has been carried out earlier against the assessee:
In this case, the income escaping reassessment is applicable if the AO believes that:
- The income of the assessee has been under-assessment during the first phase of assessment
- The rate of income assessment has been too low
- Income is subject of excessive relief from various sections
- If the assessee has computed depreciation allowance or excessive loss, or any other type of allowance
Case Situation 5
In case the assessee has some holding over foreign assets or interests in financial equity then he must declare this investment and show the same in the income tax returns:
In this case, the income escaping reassessment is applicable if the AO has substantial evidence to believe that assessee has interests in foreign assets but has not disclosed them through his income tax returns.
Apart from these five situations, under section 147, when any taxable income is the subject matter of revision, appeal or reference then the AO cannot reassess such income. Under this section 147 of Income Tax Act 1961, apart from reassessment, normal assessment that is carried out for the first time is also included.
Issue of reassessment notice
The details about reassessment notice come under section 148 and 149. According to the section, the reassessment notice has to be sent within four years from the end of the concerned assessment year for which reassessment has to be made. Three different situations are considered while issuing reassessment notice.
Case Situation 1
In case the taxable income has not been assessed as, the assessee in his tax return did not show it in response to the notice under sub-section (1) of section 147 or under the section 139 or section 148. In such a situation, a period of six years is considered valid for sending reassessment notice.
Case Situation 2
In case the taxable income has escaped during the earlier assessment or the income earned is 1,00,000 or much above, the notice can be issued to the assessee within six years from the assessment year.
Case Situation 3
In case the escaped income involves investment or ownership in foreign assets or firm, the notice can be issued within 16 years from the assessment year.
Reassessment of income as the word suggests is assessing the income of an assessee again even when the assessment has taken place earlier. Such reassessment of income is often carried out when the AO notices that some of the income has not been included in the assessment and its source needs to be explored further. Escapement of income is another reason that can make the AO decide for the reassessment of the income. This can be also in the case where no earlier assessment has been carried out. If the same process is carried out in normal manner, it is taken as normal assessment of income. However, when it comes under the escapement of income it has to be handled according to the Income Tax Act 1961 meant for reassessment of income tax.
