The government has taken a big step for quick settlement of assessment cases of taxpayers. For this, an amendment has been proposed in the Income Tax Act. Instead of sending separate notices for assessments of different years, a single notice for assessments of six years will be sent to taxpayers.
The government has taken a big step to speed up the assessment process. The Finance Bill proposes to amend the Income Tax Act to consolidate the assessment process of such cases which have been going on for many years. This will make it easier for taxpayers and speed up the workflow. Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal has told about this in an interview to Moneycontrol. He said that steps are being taken to provide relief to the assessee in such cases in which tax evasion is investigated after searches. Now the assessment of six years of such cases will be clubbed. After that they will have to be settled in 12 months. After that a single demand notice will be sent to the assessee.
Currently different notices are sent for each assessment year
Currently different notices are sent at different times for each assessment year. This takes up to 10 years in proceedings. Aggarwal said, “Initially, tax assessments could be opened for up to 10 years in search cases. This led to sending multiple notices in different years. Each notice had a different time-barring date. This increased the number of proceedings, causing problems for both taxpayers and tax officers.” In the earlier system, if a notice was sent in a year, its effect was seen in the next year as well. The final time-barring date used to last for several years.
It will take less time to resolve cases
The CBDT chief said that the earlier system led to an increase in dispute cases, which also took more time to resolve them. In the world of tax, time-barring means a date before which it is necessary for the tax authorities to complete the assessment and issue a notice to the taxpayer. If this deadline is not followed, the assessment becomes time-barred. This means that the tax authorities lose the legal right to assess additional tax during that period.
Assessments for six years will be examined at once
CBDT has introduced a consolidated assessment approach to overcome this problem. Agarwal said, “Tax assessments for six years will be examined at once. Then a single notice and a single assessment order will be sent for all the years. This will eliminate the need to send separate notices for different years in the previous system.” The new system will eliminate complexities related to tax assessment and proceedings will also take less time.
Assessment has to be completed within 12 months
CBDT Chairman said, “Assessment has to be completed mandatorily within 12 months of last authorization. This will be very convenient for both taxpayers and the Income Tax Department.” Consolidation will also affect appeal cases. Aggarwal said that the new amendment made in the Income Tax Act will have to be followed in cases of searches conducted on and after September 1, 2024.
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