Grant of extended time limit for assessment order only if AO can produce additional data

The general time give to the assessing officer to complete the assessment of  an ITR filing is 2 years from the date of filing of ITR. However the AO may ask for the extension of such time under section 149 showing sufficient reason for such extension and reassessment. 

The high court of Delhi  on the 25th of February 2014 gave an order, against the AO, saying that the extension can only be granted if the AO is able to produce sufficient evidence for concealment of atleast Rs. 100,000.

• Extended time limit of 6 years under section 149(1)(b)to initiate proceedings to bring to tax income escaping assessment can’t be availed by AO without getting hold of data which prima facie supports computation of quantum of income escaping assessment at more than Rs.1,00,000.

• The Assessing Officers may be handicapped in such cases but there are sufficient provisions in the Act to get hold of the said data before proceedings are initiated or reasons are recorded. The AO must obtain such data for relevant assessment year and cannot even use data of subsequent or other assessment years as figures for every year will alter or change.

Reassessment proceedings will be invalid in case an issue or query is raised
and answered by the assessee in original assessment proceedings but
thereafter the Assessing Officer does not make any addition in the assessment
order. In such situations it should be accepted that the issue was examined but
the Assessing Officer did not find any ground or reason to make addition or
reject the stand of the assessee. He forms an opinion.

Click Here to view the full order.

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