Presentation is about the Amendment in the Income escaping assessment procedure under the newly amended Income Tax act 1961 (Finance Act 2021). Along with the details of section 154,263 and 264.

1. Rectification u/s 154
Order or intimation
passed by an income tax
authority
Has a mistake apparent
from record
On an application by
assessee/ AO/ suo motu
Can amend the order or
intimation
Amendment has effect
of enhancing income
Amendment has effect
of reducing income
Pass the rectification
order
Give a SCN to the
assessee and consider
his reply

2. Rectification u/s 154
• Order shall be passed within 4 years from the end of FY in which the
original order was passed
• Where an application is made by assessee, the rectification will be
done within 6 months from the end of month in which the application
was received
• Where any issue in the order has been taken in appeal or revision,
then that issue cannot be taken in rectification. However other issues
can be taken in rectification even if some issue has been taken in
appeal(partial merger).

3. Section 263 – Revision of Order
Order passed By
AO]
Erroneous &
Prejudicial to the
interest of Revenue
CIT/PCIT revise the
order – enhance or
modify the income
CIT/PCIT will give
SCN to Assessee]
Respond
Direct for fresh
assessment
Time Limit- 2 years from the
end of FY in which AO
passed the relevant Order
• This order can never be against the
interest of Department
• Concept of partial merger applies
• Records means everything
available at that time with CIT/PCIT
• Order is appealable in HC or SC
Key notes-

4. • This order is not appealable
• Concept of total merger applies
• Remedy under this section is only
available if right to appeal or time
limit for appeal is waived
• Order to be passed within 1 year
from the date of application
Key notes-
CIT/ PCIT
Application made by assessee
(within 1 year of date of order
of AO)
On his own
Examine the
records
Passed Revisional
order
1 year from the
date of passing
the order by AO
1 year from the
date of receiving
application
Section 264 – Revision of Order

5. Concept of
Partial Merger
Concept of
Total Merger
However in case of Partial merger , if appeal is filed for 3 points even then
rectification u/s 154 and revison u/s 263 can be done on remaining 2
points of AO order.
If the assessee makes an appeal on few matters of an order passed by AO
to appellate authority say 3 points after 5 points in the order of AO , then it
shall be deemed that whole order of AO has been merged.
Which means we can not file appeal for the remaining two points u/s 264

6. Assessee
Return Filed Return Not Filed
Return Filed Notice U/s 142(1)(i)
143(1)
No Return Filed
143(2)
142(1)(ii) & other Best Judgement - 144
Response No Response
143(3)
Re-assessment - 147
148

7. Remedies available to department
Remedies available to assessee
Rectification u/s 154
Appeal to CIT(A) u/s 246A
Revision u/s 264
Rectification u/s 154
Income Escaping
Assessment u/s 147
Revision u/s 263

8. Income Escaping Assessment
U/s. 147
 Basic condition for the assessment under this section is ;
Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment
for any assessment year he may, subject to provision of section 148 to 153, assess or reassess such
income
 and also any other income chargeable to tax which has escaped assessment which comes to his notice
subsequently in the course of proceedings under this section. Two views in two case laws:
• Jet Airways (Bom.) and Ranbaxy Labs (del.)- held No, which indicates that reopening is done on certain
grounds and addition is made on other grounds on which re opening was done, then reopeniong is to be set
aside.
• Mehak Finevest Vs CIT –held yes, which mentions that AO can made addition on other points without
making addition on other grounds.
• Govindraju Alias Govinda Vs State by Sriramampura Police- which says if notice u/s 148(2) is validly served
to assessee then addition can be made on all the grounds even found subsequently.

9. Proviso 1: for the benefit of assessee.
Provided that where an
assessment under sub-section (3) of section 143 or this section has been made for the relevant
assessment year,
no action shall be taken under this section after the expiry of four years from the end of the
relevant assessment year,
unless any income chargeable to tax has escaped assessment for such assessment year by
• reason of the failure on the part of the assessee to make a return under section 139 or
• in response to a notice issued under sub-section (1) of section 142 or section 148 or to
disclose fully and truly all material facts necessary for his assessment, for that assessment
year
Not applicable in relation to any asset(having financial interest in the entity) located outside
India.
PROVISO TO SECTION 147

10. Proviso 2:
Provided also that the Assessing Officer may assess or reassess such income, other
than the income involving matters which are the subject matters of any appeal,
reference or revision, which is chargeable to tax and has escaped assessment.
Explanation 1.—
Production before the Assessing Officer of account books or other evidence
from which material evidence could with due diligence have been discovered
by the Assessing Officer will not necessarily amount to disclosure within the
meaning of the foregoing proviso.
Explanation 3.—For the purpose of assessment or reassessment under this section,
the Assessing Officer may assess or reassess the income in respect of any issue,
which has escaped assessment, and such issue comes to his notice subsequently in
the course of the proceedings under this section, notwithstanding that the reasons
for such issue have not been included in the reasons recorded under sub-section (2)
of section 148.

11. Explanation 2 to section 147 : - Income Escaping Assessment
For the purpose of Sec. 147, the following shall be deemed to be cases where income chargeable to tax has escaped
assessment: -
a) No Return of Income is furnished during the previous year in which income exceeded the Basic exemption limit.
b) Return of Income is furnished but no assessment has been made and it is noticed by AO that Assessee has
understated the income or claimed excessive loss, deduction, allowance or relief.
c) Assessee has failed to furnish a report from accountant in respect of any international transaction under section
92E of Income Tax Act, 1961.
d) An Assessment has been made, but-
i) Income has been underassessed or
ii) income has been assessed at low rate or
iii) excessive relief granted or
iv) excessive loss or depreciation or any other allowance has been computed
e) Reference received from the prescribed income tax authority , u/s 133C.
e) Person is found to have any asset located outside India (Includes Financial Interest in any entity).

12. Time Limit for issue of Notice Under section 148 ( Section 149): -
Particulars Time Limit U/s 149 Approval U/s 151
Income escaping
assessment if any amount
Up to 4 years from the
end of the relevant AY
From joint Commissioner
If the amount of income
which has escaped
assessment is more than Rs.
1,00,000
Beyond 4 years but up
to 6 years from the end
of the relevant AY
From Principal Chief
Commissioner, Chief
Commissioner or Principal
Commissioner or Commissioner
For any income in relation
to any asset located outside
India
Beyond 4 years but up
to 16 years from the
end of the relevant AY
From Principal Chief
Commissioner, Chief
Commissioner or Principal
Commissioner or Commissioner

13. Procedure for Assessment Proceedings U/s. 147
Assessing Officer should have ‘Reason to Believe’ and record it to assess or re-assess income escaping assessment
Assessing Officer should have ‘Reason to Believe’ and record it to assess or re-assess the income escaping
assessment
Issue of notice under section 148 for income escaping
assessment within the time limit
Time Limit for issue of notice under
section 148 is specified under section 149
Assessee is required to file return of income in pursuance to notice under section 148
Assessee should seek for the reasons recorded by the Assessing Officer
Assessing officer should issue notice under section 143(2)

14. Assessing Officer Should issue notice under section 142(1)(ii)
Assessing Officer Should complete and pass the final
assessment order under section 147 r. w. s. 143(3)
within the time limit
Time limit for passing the assessment
order is specified under section 153 (1)
i.e within 12 months from the end of
the Financial year in which notice U/s
148 was issued

15. AO has information
suggesting income has
escaped assessment
Conduct enquiry
u/s 148A
Issue SCN to assessee
u/s 148A
Pass order
u/s 148A
Issue Notice
u/s 148
Assessee will file a
return
u/s 148
Assess the income
u/s 147 r.w.s 143(3) or 144
AO has reason to
believe income
has escaped
assessment
Issue Notice
u/s 148
Assessee will
file a return
u/s 148
Assess the
income
u/s 147 r.w.s
143(3) or 144
OLD
NEW
A search has
been
conducted
Issue Notice
u/s 153A
Assessee will
file a return
u/s 153A
Assess the
income
u/s 153A r.w.s
143(3) or 144

16. Explanation —For the purpose of assessment or reassessment under this section, the
Assessing Officer may assess or reassess the income in respect of any issue, which has
escaped assessment, and such issue comes to his notice subsequently in the course of the
proceedings under this section, irrespective of the fact that the provisions of section 148A
have not been complied with.
Except above Explanation-3, three proviso and Explanation 1,2 & 4 are not appearing in
new section
EXPLANATION-

17. Meaning of information Suggesting that Income has escaped
assessment -
Explanation 1.—For the purposes of this section and section 148A, the
information with the Assessing Officer which suggests that the income
chargeable to tax has escaped assessment means—
(i) Any information flagged in the case of
the assessee for the relevant assessment
year in accordance with the risk
management strategy formulated by the
Board from time to time;
(ii) Any final objection raised by the
Comptroller and Auditor General of
India to the effect that the assessment
in the case of the assessee for the
relevant assessment year has not been
made in accordance with the
provisions of this Act.

18. Explanation.3—For the purposes of this section, specified authority means the specified authority referred to in section 151.”.
Deemed Information
Explanation 2.—For the purposes of this section,
where —
A search is initiated under
section 132 or books of
account, other documents or
any assets are requisitioned
under section 132A, on or after
the 1st day of April, 2021, in
the case of the assessee; or
a survey is conducted
under section 133A in
the case of the assessee
on or after the 1st day of
April, 2021; or
the Assessing Officer is satisfied, with
the prior approval of the Principal
Commissioner or Commissioner, that
any money, bullion, jewellery or
other valuable article or thing, seized
or requisitioned in case of any other
person on or after the 1st day of
April, 2021, belongs to the assessee;
or
the Assessing Officer is satisfied, with
the prior approval of Principal
Commissioner or Commissioner, that
any books of account or documents,
seized or requisitioned in case of any
other person on or after the 1st day of
April, 2021, pertains or pertain to, or
any information contained therein,
relate to, the assessee,
The Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three
assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets
are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized
or requisitioned in case of any other person.

19. New Section 148
Before making the assessment,
reassessment or
recomputation under section
147, and subject to the
provisions of section 148A
The Assessing Officer shall
serve on the assessee a notice,
along with a copy of the order
passed, if required, under
clause (d) of section 148A
A return of his income under
this Act during the previous
year corresponding to the
relevant assessment year
The income of any other person in
respect of which he is assessable
under this Act during the previous
year corresponding to the relevant
assessment year
To furnish within such period,
as may be specified in such
notice-
The provisions of this Act shall,
so far as may be, apply
accordingly as if such return
were a return required to be
furnished under section 139
Provided that no notice under this section
shall be issued unless there is information
with the Assessing Officer which suggests
that the income chargeable to tax has
escaped assessment in the case of the
assessee for the relevant assessment year
and the Assessing Officer has obtained
prior approval of the specified authority
to issue such notice

20. New Section 148 A
The Assessing Officer shall, before issuing any notice under section-48, —
a) Conduct any enquiry, if required, with the prior approval of specified authority, with respect to the
information which suggests that the income chargeable to tax has escaped assessment;
b) Provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by
serving upon him a notice to show cause within such time, as specified in the notice, being not less than seven
days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be
extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not
be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in
his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b);
d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit
case to issue a notice under section 148, by passing an order, with the prior approval of specified authority,
within one month from the end of the month in which the reply referred to in clause (c) is received by him, or
where no such reply is furnished, within one month from the end of the month in which time or extended
time allowed to furnish a reply as per clause (b) expires:

21. Section 148A continues…..
PROVISO -148 Not applies-
A search is initiated under
section 132 or books of
account, other documents or
any assets are requisitioned
under section 132A in the
case of the assessee on or
after the 1st day of April,
2021; or
The Assessing Officer is satisfied, with the
prior approval of the Principal Commissioner
or Commissioner that any money, bullion,
jewellery or other valuable article or thing,
seized in a search under section 132 or
requisitioned under section 132A, in the case
of any other person on or after the 1st day of
April, 2021, belongs to the assessee; or
The Assessing Officer is satisfied, with the
prior approval of the Principal Commissioner
or Commissioner that any books of account
or documents, seized in a search under
section 132 or requisitioned under section
132A, in case of any other person on or after
the 1st day of April, 2021, pertains or pertain
to, or any information contained therein,
relate to, the assessee.
Explanation.—For the purposes of this section, specified
authority means the specified authority referred to in
section 151.

22. Section 149
No notice under section 148 shall be issued for the relevant
assessment year,—
(a) if three years have elapsed from the end of
the relevant assessment year, unless the case
falls under clause (b);
b) if three years, but not more than ten years, have
elapsed from the end of the relevant
assessment year unless the Assessing Officer
has in his possession books of accounts or other
documents or evidence which reveal that the
income chargeable to tax, represented in the
form of asset, which has escaped assessment
amounts to or is likely to amount to fifty lakh
rupees or more for that year:
Provided further that the provisions of this sub-section shall
not apply in a case, where a notice under section 153A, or
section 153C read with section 153A, is required to be issued
in relation to a search initiated under section 132 or books of
account, other documents or any assets requisitioned under
section 132A, on or before the 31st day of March, 2021

23. 151. Specified authority for the purposes of section 148 and
section 148A shall be,—
• Principal Commissioner or Principal Director or Commissioner or Director, if
three years or less than three years have elapsed from the end of the relevant
assessment year;
• Principal Chief Commissioner or Principal Director General or where there is
no Principal Chief Commissioner or Principal Director General, Chief
Commissioner or Director General, if more than three years have elapsed from
the end of the relevant assessment year.”.
SECTION 151-

24. How many years can notice be issued in old
law For Search u/s 153A?
Year
Current AY + 6 AYs preceding
current AY
Compulsory opening
4 AYs preceding 6 AYs above Opening only if AO has books etc revealing that income, represented in the form
of asset, not less than 50 lakhs has escaped assessment in aggregate for 4 AYs
Search case – notice u/s 153A

25. How many years can notice be issued in new
law?
Assessment Year
If AO has documents etc, revealing that income,
represented in form of asset, escaped assessment
amounts to (or likely to amount to) 50 lakh or more for
that year
If not more than 10 years have elapsed from the end of
relevant AY
Any other case If not more than 3 years have elapsed from the end of
relevant AY