Wednesday, February 26, 2014

Extended period of 6 years not available for reassessment unless AO gets info to show escaped income above 1 lakh

Extended time-limit of 6 yrs under section 149(1)(b) requires data for prima facie computation of income escaping assessment. 

The High Court held as under:

1)  Extended time-limit of 6 years under section 149(1)(b)to initiate proceedings to bring to tax income escaping assessment cannot be availed by AO without getting hold of data which prima facie supports computation of  quantum of income escaping assessment above one lakh rupee;
2)  The Assessing Officers may be handicapped in such cases but there are sufficient provisions in the Act to get hold of the said data before proceedings are initiated or reasons are recorded;

3)  The AO must obtain such data for relevant assessment year and cannot even use data of subsequent or other assessment years as figures for every year will alter or change.