Notice can be served between 6 months and 6 years. For concealment of income, it can be longer
Taxpayers are often advised that they should keep the records of their income-tax returns for long periods because they might be served a notice or be called in case of a scrutiny.
Usually, the advice is that one should keep it for six years, if it is a normal scrutiny or assessment.
But, in certain cases, it can be as long as 16 years, in the case of individuals with foreign income or concealed income, say experts.
Recently, a tax-payer was served a notice under Section 144 for the Assessment Year 2008-09, with an order to pay Rs 16 lakh (Rs 1.6 million) Income Tax plus interest.
His income was estimated to be Rs 40 lakh (Rs 4 million) in that particular AY.
The question: can a notice be served after so many years and under which sections can it be done?
A scrutiny notice for the AY under question is served under Section 143.
The time period is six months from the end of the AY.
This means, for the current AY, that is 2016-17, you could be served a scrutiny notice till up to September 2017.
A normal assessment notice is served under Section 148 and can be served within a period of four years from the end of the relevant AY. Assuming the current AY, it can be served up to March 2021.
“If the escaped income is Rs 1 lakh or more and certain other conditions are satisfied, then notice can be issued up to six years from the end of the relevant AY,” said Amit Maheshwari, managing partner, Ashok Maheshwary & Associates.
A notice can be issued after four years only if the principal chief commissioner or chief commissioner or principal commissioner or commissioner is satisfied that it is a fit case for the issue of such notice.
“If a notice is served after six years, then it is usually a case of re-assessment,” says Arvind Rao, Founder of Arvind Rao & Associates, chartered accountants. A notice has to be properly served, says Sanjeev Gokhale, a Mumbai-based CA.
“It has to be hand delivered or sent by speed-post with an acknowledgement or pasted on the door of the assessee’s house,’’ he explains.
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