CBDT To Cite Reasons For Reopening Tax Assessments Upfront

Reasons for reopening and scrutinising I-T returns will be shared upfront with taxpayers. Only in case of unsatisfactory reply would it be opened, Central Board of Direct Taxes (CBDT) chief, P C Mody said on Friday.

Budget 2021-22 has lowered the time limit for reopening tax cases to three years, from six earlier. Ten-year-old cases would be reopened following serious tax frauds involving income concealment over Rs 50 lakh.

The Chairman of CBDT, the apex decision-making body for income tax, said that the new provision would bring certainty for taxpayers.

According to him, this was a heavily litigated area. To make it transparent, CBDT introduced provisions that no longer leave reopening of I-T cases to assessee officers’ discretion. Files would be reopened based on data analytics and risk assessments computed by CBDT.

Finance Minister Nirmala Sitharaman in her 2021-22 Budget speech said that a Dispute Resolution Committee would be set up to help reduce litigation for small taxpayers. Taxpayers with taxable incomes up to Rs 50 lakh and disputed income up to Rs 10 lakh can approach the committee.

“Majority of disputes are at the lower end of the spectrum. That is why the threshold has been proposed at what they are,” said Mody.

 “I suppose we can learn from this experience and see how things unfold and then take a call on whether this threshold needs some revision,” Mody added.

 He also said that the CBDT has extended the deadline for filing declarations under Vivad Se Vishwas scheme until February 28. The date for making payment to settle disputes is March 31, and there would be no further extension.

“It has already been extended to February 28. I suppose that should be the last extension. The payment date is already fixed on March 31. I think it should remain at that,” Mody said.

 Till January 31 about 1.20 lakh entities applied for settling dispute under the scheme, involving disputed tax amount of Rs 95,000 crore.

 The Vivad Se Vishwas scheme provides settlement for disputed tax, interest, penalty, or fees claimed following an assessment or reassessment order on payment of the entire disputed tax, 25 per cent of the disputed penalty or interest or levy.

 The taxpayer is granted immunity from the levy of additional interest and penalty. The individual also remains immune to prosecution under the Income-tax Act for matters covered in the declaration.

 The Direct Tax Vivad Se Vishwas Act, 2020, was enacted on March 17, 2020, to settle direct tax disputes locked up in various appellate forums.