The 2021-22 Budget has lowered the time limit for reopening of tax cases to 3 years from 6 years earlier. While for serious tax fraud cases involving income concealment of Rs 50 lakh and above 10 years old cases can be reopened.
“The issue about reopening…. the assessee would not know why his tax return has been opened up again for scrutiny. We have made a provision for that the reasons would be disclosed to him upfront and only on receipt of non-satisfactory reply or non-reconciliation of issues that the case gets reopened,” Mody said at a CII event.
The Chairman of Central Board of Direct Taxes (CBDT), the apex decision making body for income tax, said the rationalisation of reopening of cases announced in Budget would bring in more certainty to taxpayers.
“What was a heavily litigated area, we have tried to rationalise it to the extent that it is no longer left to the discretion of assessing officer. It would be more of information-based attempt to reopen the cases. It would be primarily based on data analytics and risk assessment which the system throws up which would lead to reopening of assessment,” Mody said.
With regard to the Dispute Resolution Committee announced in the Union Budget, Mody said since majority of the tax disputes are at the lower end, hence accordingly the threshold for approaching the panel has been decided.
Finance Minister Nirmala Sitharaman in her 2021-22 Budget speech said a Dispute Resolution Committee would be set up to help reduce litigation for small taxpayers. Taxpayer with a taxable income up to Rs 50 lakh and disputed income up to Rs 10 lakh can approach the committee.
“Majority of the disputes are at the lower end of the spectrum and that’s why the threshold has been proposed at what they are. Majority of disputes fall in that category.
“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 or not. But to begin with these were thresholds that were thought of,” Mody added.
He also said that the CBDT has extended the deadline for filing declaration under Vivad Se Vishwas scheme till February 28, while the date for making payment to settle the dispute is March 31 and there would be no further extension.
“It has already been extended up to February 28. I suppose that should be the last extension. The payment date is already prescribed at 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 for settlement of disputed tax, disputed interest, disputed penalty or disputed fees in relation to an assessment or reassessment order on payment of 100 per cent of the disputed tax and 25 per cent of the disputed penalty or interest or fee.
The taxpayer is granted immunity from levy of interest, penalty and institution of any proceeding for prosecution for any offence under the Income-tax Act in respect of 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 forum.