Sr. No.	Name of Members	Profession	Zone
1	Vaibhav N. Kalbhairav	CA.	South
2	Sudharani G. E.	GSTP.	South
3	Mahesh Patil	TP.	South
4	Keshava M.	GSTP.	South
5	J. Mahadev Prasad	Adv.	South
6	Vinay Samuel	TP.	South
7	Monish P.	GSTP.	South
8	Ambresh Motikar	GSTP.	South
9	Ambadas Ankalkar	Adv.	South
10	Girish Heralgi	GSTP.	South
11	Aravind Minajagi	GSTP.	South
12	Vivekanand Hundekar	Adv.	South
13	Santosh Aleri	GSTP.	South
14	Vishal Nagathan	GSTP.	South
15	Anup Maigond	GSTP.	South
16	Dr. K. Mohanan Nambiar	CA.	South
17	Dwarakesh S.	CA.	South
18	Manoj Ayachit	CA.	Central
19	Gaurav Kumar Gupta	CA.	North
20	Mukul Ranjan Giri	TP.	East
21	Kinshuk Jain	Adv.	Central
22	Ritu Mahajan	CA.	North
23	K. K. Singla	Adv.	North
24	Vivek Agarwal	CA.	North
25	Abhishek Agarwal	CA.	North
26	Durgadas C.	GSTP.	South
27	Amit Goyal	Adv.	North
28	Ankush Jain	Adv.	North
29	Sujala M. B.	GSTP.	South
30	Ramanjan Bhattacharyya	Adv.	East
31	Anil Kumar Israni	CA.	North
32	Santosh Kumar Gupta	Adv.	Central
33	Vikrant Reja	Adv.	Central
34	Sonal Gupta	Adv.	Central
35	Rama Kanta Nayak	CA.	North
36	Pratik Sharma	Adv.	Central
37	Shubham Teotia	CA.	North
38	Sujishma K. U.	GSTP.	South
39	Prateek Tyagi	Adv.	North
40	Sachin Dudeja	Adv.	North
41	Om Bansal	GSTP.	Central
42	Jitendra Kumar Jena	Adv.	East
43	Jatin Arora	Adv.	West
44	Ashish Kumar Khandelwal	Adv.	Central
45	Sanjay Kumar Lakhani	Adv.	North
46	Mukesh Kumar Lakhani	Adv.	North
47	Kamal Bajaj	Adv.	North
48	Anurag Asati	Adv.	Central
49	Niraj Modi	Adv.	East
50	Bhavesh Patel	GSTP.	West
51	North Maharashtra Tax Practitioners Association	Association	West

Sr. No.	Name of Members	Profession	Zone
1	Santosh Ambanna Hatti	T.P	West
2	Pranay Sharma Y.	Adv.	South
3	Rajgopal N. Chandak	T.P	West
4	Aditya R. Chandak	CA.	West
5	Garvit G. Paliwal	CA.	West
6	Ramakant Sharma Surelia	Adv.	East
7	N. Dhanakotti	T.P	South
8	Amol Manan Parikh	CA.	West
9	Abhishek Gupta	Adv.	North
10	Association Of Tax Practitioners	Association	South
11	Tarun Kumar Sharma	Adv.	North
12	Rana Kumar Dutta	Adv.	East
13	Chiranjeevi Matcha	GSTP	South
14	Jawhar Lal Nandi	Adv.	East
15	Y. Sridhar	CA.	South
16	S. Jaikumar	Adv.	South
17	Antaryami Sahu	GSTP	East
18	Pampa Sen	Adv.	East
19	K. Thirunavukkarasu	CA.	South
20	Kalpesh Bhupendrabhai Soni	GSTP	West
21	Sureshkumar Ishwarbhai Prajapati	GSTP	West
22	Ashwani Tiwari	GSTP	North
23	Abhijit Ray	Adv.	East
24	Nidhi Rathi	CA.	South
25	Seethalakshmi A.	CA.	South
26	Suresh C. Agrawal	CA.	North
27	Gaurav Kumar Srivastava	CA.	North
28	Ankur Srivastava	Adv.	North
29	Paras Sharma	Adv.	North
30	Abhishek Sharma	Adv.	North
31	Sham Walve	Adv.	West
32	Suresh J.	Adv.	South
33	Vrushabhnath D. Shetti	CA.	South
34	Yashvant Nijagal	CA.	South
35	Sri Krishna Patel	CA.	South
36	R. Prasanna Kumar	CA.	South
37	Rahul R. Gandhi	CA.	South
38	Prasad Sholapurmath	CA.	South
39	Abhilash P. Lapasia	CA.	South
40	Anil Iranna Ramdurg	CA.	South

Sr. No.	Name of Members	Profession	Zone
1	Rajiv Kumar Bagga	Adv.	North
2	Utsav Hirani	CA.	West
3	Ayyappa Chede	T.P.	South
4	Jitendra Motwani	CS.	Central
5	Mamta Kedia	Adv.	East
6	Ravi Khandelwal	CA.	Central
7	Shilpa Yuval Mangaonkar	CA.	West
8	Krishna Kumar	Adv.	North
9	Alisha Jain	CA.	North
10	Pushparaj Thambu	GSTP	South
11	Rajesh Kumar Mishra	Adv.	East
12	Chandra Prakash Sharma	GSTP	Central
13	Sohanlal Sampatlal Barmecha	GSTP	West
14	Santosh Sagar Kapilavai	Adv.	South
15	Bidhan Chandra Rai	Adv.	North
16	Nikhil Sunil Deshmukh	Adv.	West
17	Shanti Swarup Gupta	CA	East
18	Sushil Kumar Dhanuka	Adv.	East
19	Subhash Kumar Dhanuka	Adv.	East
20	Girish Vakharia	CA.	East
21	Mohit Bhuteria	CA.	East
22	Mahak Bhuteria	CA.	East
23	Rajendra Bhutra	CA.	East
24	Anshuma Rustagi	CA.	East
25	Ashish Rustagi	CA.	East
26	Ashok Kumar Parakh	Adv.	East
27	Ashish Kumar Agrawal	CA.	Central
28	Dinesh Bishnoi	Adv	Central
	Shantanu Kumar Bhua	Adv	East
29	Vikram Ranganathan	CA.	South
30	Subhomay Das	Adv.	East
31	Nitesh Soni	CA.	East
32	Shreya Loyalka	CA.	East
33	Jeyam Prathap S.	Adv.	South
34	Madhusudhan Dutta	Adv.	East
35	Sumit Jha	Adv.	West
36	Krishan Garg	CA.	Central
37	Aman Suman Pirgal	GSTP	South
38	Tushar Gupta	Adv.	North

Sr. No.	Name of Members	Profession	Zone
1	Ashish Bakliwal	CA.	West
2	Tarun Kumar Gupta	CA.	East
3	Subash Chandra Behera	Adv.	East
4	Manish Lohia	CA.	North
5	Prathik Jain B.	GSTP	South
6	Jaya Babu Devuri	Adv.	South
7	Mritunjay kumar	Adv.	East
8	Gyanendra Kumar Singh	Adv.	East
9	Girijesh Sharma		North
10	Ramendra Lal Auddy	Adv.	East
11	Rajesh Kumar Kankaria	CA.	East
12	Prasanta Kumar Dutt	Adv.	East
13	Tarak Chandra Saha	Adv.	East

V. P. Gupta, Advocate 

Finance Bill, 2023 has proposed certain amendments in provisions of TDS and TCS contained in Income Tax Act. The Amendments proposed are being discussed herein.

1. Increase in rate of TCS on certain remittances

   Section 206C provides for collection of tax at source from certain receipts / remittances. Sub-section (1G) was inserted in the Income Tax Act vide Finance Act, 2020 to provide for TCS on remittances made out of India under Liberalised Remittance Scheme of RBI and for the purpose of purchase of overseas tour program package. In case of remittance under LRS Authorised Dealer and in case of overseas tour package the seller, the relevant travel agent has to collect TCS from the person making remittance or purchasing tour package. Presently, rate of TCS is 5% and that is also applicable on remittance in excess of Rs.7 lacs, except in case of overseas tour package in which case TCS @ 5% is to be collected without any threshold exemption. Provisions are proposed to be amended to increase the rate of TCS and also withdraw the threshold limit of Rs.7 lacs in certain cases. The current and proposed position is as under: – 

   Sl. No.	Type of remittance	Present rate	Proposed Rate
   1.	For the purpose of any education, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E.	0.5% of the amount or the aggregate of the amounts in excess of Rs.7 lacs.	No change.
   2.	For the purpose of education, other than the case referred in point no.1 above or for the purpose of medical treatment.	5% of the amount or the aggregate of the amounts in excess of Rs. 7 lacs.	No change.
   3.	Overseas tour package	5% without any threshold limit.	20% without any threshold limit.
   4.	Any other case	5% of the amount or the aggregate of the amounts in excess of Rs. 7 lacs.	20% without any threshold limit.

   In view of the proposed amendment rate of TCS on purchase of overseas tour package would be 20% as against 5% at present. Further in case of remittances under LRS other than for the purposes of education and medical treatment also rate applicable will be 20% without any threshold limit. 

   It may be stated in this regard that rate of 20% is very high and unreasonable. The intention of the government to introduce TCS on these remittances was to bring the same on record and ensure that remittances have been made out of taxable income. The purpose was being fulfilled by the rate of 5% itself. Accordingly, the government should reconsider and rate should continue to be 5% as at present.

   This amendment will take effect from 01.07.2023, meaning thereby remittances made on or after the above date will be subject to the new provisions. 

2. Provision for carry back TDS to relevant earlier year

   Section 199 of the Act read with Rule 37BA provides for grant of credit for TDS in the year in which relevant income has been offered for tax by the assessee. In many cases income is accounted for by an assessee on accrual basis and same is also included in taxable income whereas tax is deducted at source by the payer in a later year. There is no provision in the Income Tax Act to carry back such amount of TDS and allow benefit of the same in earlier year in which income has been offered for tax. It is creating difficulty to the assesses in getting credit for TDS deducted by the payer in later year whereas income has already been offered for tax in an earlier year. Sub-section(20) is being inserted in section 155 of the Act to provide that where an income has already been included in the return furnished by an assessee u/s 139 for an earlier assessment year and tax on such income has been deducted at source and paid to the credit of Central Government in a later year, the Assessing Officer shall on an application made by the assessee in the prescribed form, shall amend the assessment order or the intimation allowing credit for such TDS in the relevant earlier assessment year. Such application, however, is to be made within a period of two years from end of the financial year in which such tax has been deducted at source. It has also been provided that time limit of 4 years provided in section 154 for rectification of the relevant order shall be reckoned not from the date of order but from end of the financial year in which such tax has been deducted.

   Provisions of section 244A are also being amended in this regard. As per above section interest is allowable on any refund on account of TDS from 1st April of the relevant year to the date of grant of refund. In the case of grant of refund as a result of carry back of TDS interest will be allowable not from the 1st April of the relevant year but from the date of making such application till the date of granting the refund.

   The aforesaid amendment will still not resolve difficulty in case of assesses in whose cases deductor has after deducting tax has either not deposited the same or has deposited late. An assessee can claim credit for TDS only for the amounts reflected in 26AS while filing the return of income. Return is also processed and credit is also allowed only for that amount vide intimation or assessment order. In case deductor has either defaulted in depositing TDS or has not deposited till the date return is filed by the assessee he cannot claim credit for TDS. Even if TDS has been deposited subsequently by the deductor he will revise his TDS statement of the relevant year. Accordingly, claim can be made by the assessee only in that relevant year for which the assessment has already been completed or intimation has been issued. The aforesaid case is still not covered by the amended provision. Therefore, further amendment is required also to cover cases for grant of credit of TDS where deductor has deposited the tax belatedly. Credit to assesses should also be granted in all cases where deductor has deducted even if he has defaulted in depositing the tax. It is the responsibility of government to take necessary action against the deductor to ensure that tax deducted by him is deposited with the government. 

3. TDS on online games

   A new section 194BA is proposed to be inserted in the Act to provide for deduction of tax at source on any income by way of winning from online games. Tax is to be deducted on any withdrawal made during the year and also on the balance of net winnings remaining at the end of the financial year. Rate of tax for deduction would be 30% which rate has also been provided for taxability of winnings from online game in section 115BBJ , which section is also proposed to be inserted. New provisions will come into force with effect from 01.07.2023. 

4. Amendments in section 194B and 194BB

   Section 194B provides for deduction of tax at

   source from winnings from lottery, crossword puzzles or card game or other game. Similarly, section 194BB provides for deduction of tax at source from winning from horse race. Tax is required to be deducted @ 30% in case an amount of winning exceeds Rs.10,000/-. Following amendments are proposed to be made in these sections: –

   1. A proviso is proposed to be inserted in section 194B so as to exclude from the scope of this section winning from online game on or after 01.07.2023. This amendment is proposed since a new section 194BA is being inserted to provide for deduction of tax at source on winning from online games.
   2. It is proposed to provide that deduction under both the sections will be made in case aggregate amount from winnings during the year exceeds Rs.10,000/- instead of deducting tax from each winning. 
5. Extending the scope of certificate for low or nil rate of TDS

   Section 197 empowers the Assessing Officer to issue certificate of TDS at the lower or nil

   rate in respect of payments specified in the sections mentioned in above section. Scope of section 197 is being extended to provide that Assessing Officer will also be empowered to issue certificate for TDS at lower or nil rate in the case of interest income payable to non- resident unitholders in case of business trust as per section 194LBA. The above section provides for deduction of tax at source @ 10% in case of certain income and @ 5% in respect of interest income. 

6. Amendment in section 193 to remove exemption for TDS on interest on listed debentures

   Section 193 of the Act provides for deduction of tax at source from interest on securities. Proviso to above section list out certain securities in which cases TDS is not required to be deducted. Clause (ix) of the Proviso to section 193 provides for exemption from TDS payment of interest on any security issued by a company, where such security is in a dematerialised form and is listed on a recognised stock exchange. The government is of the view that provision is being misused and there is under reporting of interest income by the recipients due to TDS exemption. Therefore, clause (ix) is proposed to be deleted with effect from 01.04.2023. As a result, tax will also be required to be deducted u/s 193 of the Act on interest payable on such securities, including listed debentures. 

7. Amendment in section 196A to provide tax treaty benefit

   Section 196A provides for TDS on payment of certain income @ 20%. In view of specific rate provided in section benefit of lower rate of tax provided in tax treaty cannot be allowed by the deductor. With a view to provide relief to non- resident recipients of income section is being amended to provide that tax will be deducted @ 20% or at the rate provided in tax treaty, whichever is lower.  

8. Amendment in Section 192A of the Act providing for TDS on accumulated balance due to an employee

   Section 192A provides for TDS on payment

   of accumulated balance due to an employee under the employees’ provident fund scheme @ 10 % of taxable component of the payment due to the employee. Tax, however, is not required to be deducted in case amount of such payment is less then Rs.50,000/-. It has further been provided in the section that in case employee does not furnish his PAN tax is to be deducted at maximum marginal rate. The aforesaid provision providing for TDS at maximum marginal rate is being deleted. As a result, now general provisions of section 206AA will be applicable in case employee, who does not furnish PAN and accordingly, tax will be deductible @ 20% instead of maximum marginal rate.

9. Amendments in sections 206AB and 206CCA to exclude persons not required to file return from the category of non-filers.

Provisions of sections 206AB and 206CCA provides that tax should be deducted / collected at twice the rate specified in relevant provisions of the Act or rates in force or @ 5%, whichever is higher in the case of the assesses, who have not filed their return of income for immediately preceding financial year in which tax is required to be deducted and time for furnishing the return of income under section 139(1) has already expired. Provisions of sections 206AB and 206CCA are proposed to be amended to exclude the assesses from such category who are not required to file their return of income. In other words, above provisions providing for higher rate of TDS will not be applicable in the case of assessee who have been exempted from filing their return of income.

CA H. N. Motiwalla

1. Valuation of Inventory

   The Finance Bill, 2023

   The Assessees are required to maintain books of account for the purposes of the Income tax Act, 1961. The Central Government has notified the Income Computation and Disclosure Standards (ICDS) for the computation of income. ICDS-II relates to valuation of inventory. Section 148 of the Companies Act 2013 also mandates maintenance of cost records and its audit by cost accountant in some cases.

   In order to ensure that the inventory is valued in accordance with various provisions of law, it is proposed to amend section 142 of the Act relating to Inquiry before assessment to ensure the following:-

   1. To enable the Assessing Officer to direct the assessee to get the inventory valued by a cost accountant, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf. Assessee is then required to furnish the report of inventory valuation in the prescribed form duly signed and verified by such cost accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require.

   2. To provide that the expenses of, and incidental to, such inventory valuation (including remuneration of the cost accountant) shall be determined by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the prescribed guidelines and that the expenses so determined shall be paid by the Central Government.

   3. To provide that except where the assessment is made under section 144 of the Act, the assessee will be given an opportunity of being heard in respect of any material gathered on the basis of such inventory valuation which is proposed to be utilized for assessment.

   4. The “cost accountant” means a cost accountant as defined in clause (b) of sub- section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act.

   1. Further, the following consequential amendments are proposed:-

      1. To amend section 153 of the Act, so as to exclude the period for inventory valuation through the cost accountant for the purposes of computation of time limitation.

      2. To amend section 295 of the Act, so as to include in the aforesaid section, the power to make rules for the form of prescription of report of inventory valuation and the particulars which such report shall contain.

The amendments in section 142 and 153 of the Act will take effect from 1st April, 2023 and will accordingly apply to the assessment year 2023-2024 and subsequent assessment years. The amendment in section 295 of the Act will take effect from 1st April, 2023. 

Inventory

There is no proposal to define “inventory”. For this purpose ICDS II defines inventory excluding certain inventories viz 

1. Work-in-progress arising under ‘construction contract’ including directly related service contract which is dealt with by the Income Computation and Disclosure Standard on construction contracts;

2. Work-in-progress which is dealt with by other Income Computation and Disclosure Standard;

3. Shares, debentures and other financial instruments held as stock-in-trade which are dealt with by the Income Computation and Disclosure Standard on securities;

4. Producers’ inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at net realisable value;

5. Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expected to be irregular, shall be dealt with in accordance with the Income Computation and Disclosure Standard on tangible fixed assets.

    

As per ICDS II “Inventories” are assets:

1. held for sale in the ordinary course of business;

2. in the process of production for such sale;

3. n the form of materials or supplies to be consumed in the production process or in the rendering of services.

 Two Kinds of assessee:

As mentioned above section 148 of the Companies Act, 2013 mandates maintenance of cost records. Thus the companies which are required to maintain cost records under section 148 of the Companies Act, 2013 should try to take the inventory valuation from the cost records maintained, if any, so that in case of any type of enquiry/audit under section 142(2A) of Income Tax Act, the chances of variations in the inventory valuations are minimized. The Finance Bill 2023 seeks to amend section 142 of the Income-tax Act relating to inquiry before assessment. Sub-section (2A) of the said section

provides that if, at any stage of the proceedings before him the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and in the interests of revenue, is of the opinion that it is necessary, he may with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get his accounts audited by an accountant, and to furnish report as per rules.

So, there would be two kinds of assessee”

(a) Companies where section 148 of the Companies Act 2013 is applicable and maintenance of cost records as required

b) Persons other than mentioned in (a) above

The companies which fall in (a) category above must prepare the cost records first, value the inventory as per cost records and consider the same in the financials being finalized for the year. This amendment is applicable for the assessment year 2023-24 therefore companies which are covered under section 148 of the Companies Act should get the costing prepared first before finalization of the financials for the year 2023 so as to identify the value. The persons mentioned in (b) above may start the process of having an exhaustive costing system so that at the end of any year the cost data is available to be used for inventory valuation. Once the specific process of inventory valuation through costing/cost records is adopted, the chances of variances in inventory valuation in case of any special assignment undertaken under section 142(2A) of Income Tax Act will be minimized.

Sum-up

While audit of accounts during an ongoing assessment may not pose much practical difficulties, but valuation of inventory, which is generally an ever-changing item of asset, may pose a lot of practical difficulties especially if the said inventory does not, wholly or partially, exist on the date such an exercise is undertaken or has undergone a change in form, etc. Valuation of inventory of unique items or items involving secret formula, etc. may pose issues of breach of secrecy or IPR, etc.

If inventories of tangible and intangible are valued as per proposed section 142(2A) of the Act,

then there would be very little scope to the Assessing Officer to refer the matter to value the assets by Valuation Officer under section 142A of the Act. 

B. Promoting Timely Payments to MSMEs

Preamble

The objective of promoting timely payments to Micro and Small Enterprises, Finance Minister

Nirmala Sitharaman in her Budget speech has proposed to insert a new clause (h) in section 43B to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of Micro, Small and Medium Enterprises Development Act, 2006, be allowed as deduction under section 43B on payment basis.

As you are aware that MSMEs are the backbones of industrial development in any country. These MSMEs are the main source of generation of employment and act as key supporter to various types of big industrial houses and entities. MSMEs play a key role in economic development. 

Definition of Micro, Small and Medium Enterprises

As per MSMEs Act, the classification of enterprises and limit of investments are as under 

In the case of enterprises engaged in Manufacture or production of goods pertaining to any industry specified in the first schedule to IDRA 1951		In case of enterprise engaged in pertaining or rendering services
	Investment in Plant & Machinery (INR)	Investment in Plant & Machinery (INR)
Micro Enterprises	Not exceeding twenty five lakh	Not exceeding ten lakh
Small Enterprises	More than twenty five lakh but not exceeding five crore	More than ten lakh but not exceeding two crore
Medium Enterprise	More than five crore but does not exceed ten crore	More than two crore but not exceeding five crore

Further it is clarified that in calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded. 

Section 15 of MSMEs

Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) provide for liability of the buyer to make payment of MSME supplier, as is agreed in writing, before the appointed day. The credit period shall in no event (irrespective of the written agreement or otherwise) exceed 45 days from the day of acceptance or the day of deemed acceptance. 

Amendment to section 43B of the Act

In order to enforce timely payment to MSME supplier, it is proposed to amend section 43B of the At and insert clause (h) to provide for deduction of payment to MSME beyond the time specified under section 15 of MSMED Act in the year of actual payment.

CA Sanjeev Lalan

1. Section 241A deals with withholding of refund in certain cases, where a refund becomes due to an assessee under section 143(1) and notice for assessment is issued to him under section 143(2), the Assessing Officer may withhold such refund till the date such assessment is made, if he is of the opinion that the grant of refund is likely to adversely affect the interest of the revenue. Where an assessee had declared huge loss in a given year, refund could not be withheld merely on the ground that in the immediately preceding year huge income was declared and therefor thorough investigation was necessary [(2021) 131 taxmann.com 128 (SC)]. In the instant case department’s SLP was dismissed. In Mcnally Bharat Engineering Company Ltd. vs. ACIT 1(1) Kolkata, it was held that where notice for refund was issued after scrutiny assessment but refund was withheld without assigning any reasons, action on part of department in withholding refund was not sustainable in law and was to be set aside.
2. Such withholding can be done after recording the reasons for doing so and with prior approval of the PCIT / CIT and the said provision is applicable to assessment years on or after 2017-18.
3. Most of the litigation in cases where refund has been withheld, under section 241A, have revolved around the reasons recorded or approval granted. In Trueblue India LLP vs. D/ACIT [(2022) 142 taxmann.com 506 (Del)] it was held that merely because a notice u/s.143(2) was issued to verify the

   claim of deduction, refund payable could not be withheld u/s.241A. In Ericsson India

   (P) Ltd. vs. ACIT [(2022) 136 taxmann.com 228 (Del)] it was held that when assessee was following consistent practice to account for unearned revenue, refund cannot be withheld without taking into account wherewithal of the assessee and such withholding was not founded on cogent ground. Withholding of reund u/s. 241A pursuant to notice u/s. 143(2), without justifiable reasons has been held to be untenable [Cooner Institute of Health Care & Research Centre (P) Ltd. (2020) 118 taxmann. com 69 (Del); Huawei Telecommunications (India) Company (P) Ltd. (2020) 122 taxmann. com 4 (P&H); Corrtech International (P) Ltd. (2017) 86 taxmann.com 156 (Guj)]

4. In Tata Communications Ltd. (2019) 111 taxmann.com 63 (Bom) the assessee had filed ITR as well as a revised ITR. Refund was sought to be withheld without processing the original or revised ITR u/s.143(1). It was held that where refund was sought to be withheld u/s.241A without processing the ITR as well as revised ITR u/s.143(1), said action of Assessing Officer being without authority of law, deserved to be set aside.
5. Section 245 deals with set off of refunds against tax demand remaining payable. It provides that where refund is found to be due to any person under any provisions, the Assessing Officer or other income-tax authorities mentioned in the section, may, in lieu of payment, set-off part or whole of such refund against any sum remaining payable by such person, after giving him an intimation in writing regarding the proposed action.
6. It is now realized that, there is an overlap between the two provisions. Therefore, it is proposed to integrate the two sections by substituting section 245 and omitting section 241A. The proposed amendment is that, where under any of the provisions of the Act, a refund is due to any person, the Assessing Officer or CIT or PCIT or CCIT or PCCIT, may, in lieu of payment of the refund, set-off the amount to be refunded or any part of that amount, against any sum remaining payable under the Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.
7. It is also proposed to provide that where a part of the refund has been set-off under sub-section (1) or where no amount is set- off, and refund becomes due to a person, then, the Assessing Officer, having regard to the fact that proceedings of assessment or reassessment are pending in such case and grant of refund is likely to adversely affect the revenue, and for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, may withhold the refund till the date on which such assessment or reassessment is made.
8. The proposed amendment under section 245 would have an impact on cases referred to in sub-section (1A) of section 244A, i.e., where refund due to the assessee is withheld by the Assessing Officer under section 245(2) till the date of the making assessment or reassessment. It is proposed to amend section 244A(1A), by inserting a proviso, that in case of an assessee where proceedings for assessment or reassessment are pending, the additional interest shall not be payable to the assessee under this sub- section, for the period beginning from the date on which such refund is withheld by the Assessing Officer, till the date on which the assessment or reassessment pending in such case, is made.
9. However, the proposed amendment shall not impact the existing position with regard to all other types of interest which can be paid to an assessee. However, additional interest under sub-section (1A) of section 244A, payable to the assessee as required under the Act shall not be granted, in view of the proposed amendment, for the refund so held back.
10. The Income-tax Simplification Committee, constituted under the Chairmanship of Justice R.V. Easwar had submitted some Recommendations to promote ease of doing business and simplify procedures. One of it’s suggestion was on grant of timely refund with interest and also providing for payment of higher interest in case of delayed refund. Another suggestion was on rationalization of the provisions relating to set off of refunds due to an assessee. While on one hand the scope of TDS provisions is being continuously widened but on the other hand such measures are brought in to withhold refund and also not paying adequate interest on the same. In case of Non-residents this problems gets compounded further.
11. While there may have been gap in the existing provisions, it is necessary to strengthen the faith of public and foreign business community by introducing necessary provisions to give wings to the concept of “Ease of Doing Business in India” by ensuring that-
    1. Refunds are duly processed and paid in time;
    2. Where refunds are withheld on genuine reasons, assessments u/s.143(2) are completed by reducing the existing time barring dates for such cases and
    3. Introducing accountability in all cases where refunds are withheld and at the same time ensuring that there are no high-pitched assessments in such cases.
12. These amendments will take effect from the 1st day of April, 2023.

Aasawari Kadam, Advocate

It is that time of the year, the budget has been announced by the Hon’ble Finance Minister and the income-tax fraternity is dissecting the possible implications of proposed amendments in the Finance Bill, 2023 (“the Bill”). Similarly, this article is an attempt towards studying the possible implications of two penal provisions

i.e. (I) 271C and 276BA of the Income-tax Act, 1961 (“the Act”) which provides for penal and prosecutorial consequences respectively of non- deduction or non-payment of TDS as per the provisions of chapter XVII-B and (II) section 271FAA which provides for penal consequences of furnishing inaccurate information in the statement of financial transactions or reportable accounts as required under section 285BA.

I] Proposed amendments to Section 271C of the Act

• Section 271C & 276B at present

It is known that a person responsible for paying any sum to another person has to withhold or deduct tax, which is called ‘Tax Deducted at Source’ or TDS, before actually making payment to the other person. The tax so deducted has to be remitted to the account of the government by such payer/ deductor before the prescribed due dates and also follow the prescribed compliance requirements. Deduction of tax at source is one of the methods of tax-recovery provided by the Act. So it naturally follows that a person failing to deduct TDS or remitting the TDS so deducted to the account of the Government shall incur a penalty for such failure.

It prescribes for levy of a sum equal to the amount of TDS which such deductor failed to deduct as per provisions of chapter XVII-B or pay the tax deducted on the dividend distributed as per section 115-O, pay the tax deducted as per section 194B i.e. winnings from lottery or crossword puzzle of the Act.

Further section 276B of the Act provides for prosecution proceedings in case of failure to pay the amount of TDS to the account of the government. Section 276B provides for a minimum imprisonment of 3 months up to a maximum of 7 years with a fine. Prosecution proceedings can be initiated in all the above situations specified in section 271C except for failure to deduct TDS in as much as Section 276B provides for prosecution only in case of failure to remit the TDS to the account of the government.

• Proposed amendments to section 271C & 276B

1. The Bill vide clauses 113 and 119, proposes to widen the scope of section 271C and 276B to include non-payment of TDS deducted as per sections 194R and 194S with effect from 1st April, 2023. It further provides that in case section 194BA, as proposed in the Finance Bill 2023, is inserted in the Act, then section 194BA shall also be included within the scope of section 271C and 276B of the Act with effect from 1st July, 2023.

    

2. To begin with, section 194R was introduced with an objective to plug leakages of tax revenues as the revenue department observed that the person receiving such benefits do not often report such transactions in their books. It became effective only from 1st July, 2022 and it provides for deduction of tax at source at 10% by any person who is responsible for providing any benefit or perquisite, which can be wholly or partly in kind, to a resident, arising from such business or profession carried out by the resident. Thus, section 194R requires the existence of a business relationship between the parties and does not concern retail customers or salaried persons, who are covered under section 192. The section is clear that the tax is to be deducted before passing on such a benefit or perquisite. One simple example of a transaction covered under section 194R can be where a company engaged in the manufacture of televisions and other electronic appliances, provides such free electronic appliances to their sellers/ distributors/ retailers for meeting a sales target or simply for promoting their sales.

   No TDS shall be deducted if the aggregate value of transactions does not exceed Rs. 20,000 in a year or if the payer is an individual whose turnover does not exceed Rs. 1 Crore in case of a business or Rs. 50 Lakhs in case of a profession.

   Section 194R being newly introduced does not provide for penalty in case of failure to pay the tax deducted under the section which is proposed to be done through the Bill according to the Memorandum. The Bill proposes to add sub-clause (iii) to clause (b) of section 271C to levy 100% penalty on failure to pay TDS deducted under section 194R on on before the prescribed due date as per Act and it also provides for prosecution by way of amendment to section 276B by inserting sub-clause (iii) to clause (b) thereto in case of the above failure.

   Even though the intent of the legislation is to plug leakages of tax revenue, the legislators cannot go about and impose tax arbitrarily. At the first glance, the section 194R is not clear as to what amounts to perquisites or benefits. The language and intent of section 194R needs reconsideration since it is subjective, vague and open to wide interpretation. CBDT vide circular no. 12/2022 dated 16th June, 2022 has actually created more anomalies than to provide more clarity on the subject. To give a couple of examples, the deduction of tax under section 194R is irrespective of whether it is taxable in hands of the recipient under section 28(iv) or not and also in case a benefit or perquisite is received by an employee of the company then such employee shall be liable to tax under sections 194R as well as 192 at the hands of its employer, which results in double taxation. The section does not cover/ conceal all the four corners which will give wider power to the Assessing Officer to use their discretion for imposing a penalty under section 271C arbitrarily and increase income- tax litigation.

3. Section 194S deals with deduction of tax at source on payment of consideration for transfer of a ‘virtual digital asset’ (“VDA”). The section came into force on 1st July, 2022. A VDA is defined under section 2(47A) of the Act which includes cryptocurrency/ virtual digital currency, Non-Fungible Tokens (“NFT”) and any other digital asset as the Central Government may notify. It is recognised as a movable property under section 56(2)(x). Indians were already dealing in cryptocurrency before 2013 when it was formally acknowledged by RBI for the first time by issuing circular1 prohibiting dealing in cryptocurrencies or other VDAs which was later set aside by the Supreme Court2. Hence after almost 10 years, the legislation to tax income on such transactions is long overdue.

   Section 194S provides for deduction of tax at source at 1% of the income generated on transfer of ‘Virtual Digital Asset’ (“VDA”) which may be in cash or in kind, wholly or partly. There may be a situation where the consideration is wholly in kind

   i.e. exchange of one VDA for another VDA. The CBDT has clarified3, that in such a case both the parties will be buyers as well as sellers and therefore, TDS shall be paid by both the parties before such VDAs can be exchanged.

   Further, the CBDT clarifies4 that if section 194S becomes applicable to a transaction, such income shall not be subjected to any other section of the Act, say 194Q which is applicable on purchase of goods. Speaking of goods, tax shall be deducted under section 194S from the consideration after netting of tax paid as per the Goods and Service Tax Act (“GST Act”) from the same.

   Section 194S also provides that no tax shall be deducted in case the aggregate value of consideration paid does not exceed Rs. 50,000 during a financial year in case of a specified person or Rs. 10,000 otherwise. Specified person is an individual or HUF not carrying any business or profession and in case they are, their total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business and Rs. 50 Lakhs in case of a profession. Thus threshold for non- specified persons i.e. firms, companies, etc. is quite low at Rs. 10,000 only, thereby increasing their compliance burden to that extent.

   By way of sub-clause (iv) to sub-section (1) of section 271C, it is proposed to bring non-payment of TDS deducted as per 194S within the scope of both the sections 271C and 276B of the Act. Similar to section 194R, section 194S came into effect only on 1st July, 2022 therefore, there were no penal provisions in case of failure to pay TDS on the aforementioned transactions, hence the amendment. The due date of deposit of taxes and filing returns thereof is the same as that applicable to the other sections concerning deduction of TDS

4. The aforementioned amendments to section 271C with respect to inclusion of sections 194R and 194S shall take effect from 1st of April, 2023.
5. The Bill has finally proposed to carve out online gaming from the provisions of section 194B concerning winnings from lotteries, crossword puzzles, races including horse races, card games and other games, etc. and insert section 194BA in the Act. While the move is welcome and there is not much hue and cry about it from the gaming community, it also raises a few questions which require clarifications, like “winnings” in context of online gaming is not defined, therefore, clarity is needed as to whether things like referral bonus points, money on signing up with a platform, etc will also be included within the meaning of winnings. The section does not provide for a minimum threshold of Rs. 10,000 which was there under section 194B which can  act as a deterrent to small players making a negligible winnings from such games who will be, irrespective of the amount of winnings, subjected to TDS at 30%. On the other hand a simultaneous amendment to section 115BBJ is proposed, wherein income tax of 30% should be calculated on a user’s net winnings i.e. after deducting the entry fee, for instance, which a gamer must have paid to enter a contest or tournament. It is proposed that TDS shall be deducted at the end of a Financial Year or if there is withdrawal from an online user account during the year, TDS shall be deducted at the time of such withdrawal in the manner prescribed. The deductor has to ensure payment of tax, before releasing net winnings, in a case where the net winnings are wholly in kind or partly in cash and partly in kind. Once again, with the introduction of this new section the due diligence and compliance burden of the online gaming platforms will increase.

If section 194BA is inserted in the Finance Act, 2023, as a consequent effect thereof sub-clause (v) to clause (b) shall be inserted in section 271C for failure to pay TDS which is deducted under section 194BA and by extension the default shall also be subject to prosecution proceedings under section 276B of the Act. The proposed insertion of this section, the online gaming sector is clearly under the radar of the department. This amendment shall take effect from 1st July, 2023.

6. In order to cover up any possible escapement of tax revenue, amendments are proposed by adoption of a stronger language in case of sections 271C and 276B to curb tax inasmuch as it provides that the payer/deductor shall ensure the payment of tax as per the relevant sections mentioned therein. The amendments propose that the person responsible to deduct tax shall “ensure the payment of ” which means that the deductor should either himself pay the tax or ensure that the payee has paid the relevant amount of tax.

II. Proposed amendments to section 271FAA dealing with penalty in case of violation of section 285BA

• Section 271FAA at present

  Section 271FAA of the Act came into effect from 1st April 2015 and it provides for levy of Penalty in a case where a specified person furnishes inaccurate statement of specified financial transactions or reportable account as required under section 285BA of the Act. Section 285BA of the Act was introduced to keep a track of high-value transactions undertaken by a person during a year. This statement is to be furnished to the Director or Joint Director of Income-tax (Intelligence and Criminal Investigation). Whereas sub- section (1) specifies persons, responsible for registering or maintaining books of account or other documents, who are required to file the statement. The nature/ type of transactions as well as the minimum threshold value on or above which information has to be submitted in the statement is provided in Rules 114E of the Rules. Rules 114E to 114H provide further clarifications, computation of value of transactions, manner of reporting, etc.

  Self-certifications by reportable persons and the account holders is one of the requirements under the Rule 114H of the Rules for different purposes. There must have been incidences of submission of false self-certifications which is held to be amounting to furnishing inaccurate information and hence the amendment to penalise the same.

  Section 271FA provides for penalty on failure to furnish such statement financial transaction or reportable account whereas section 271FAA provides for penalty in case of furnishing inaccurate particulars in the statement of specified financial transaction or reportable account. Section 271FAA provides for a penalty of flat Rs. 50,000 on account of failure to carry out the due diligence requirements prescribed under sub-section (7) or deliberate furnishing of inaccurate particulars, it also covers situations where it is only at the time of filing the statement or even post filing that a person becomes aware of such inaccuracy but hides it from the income-tax authorities.

• Proposed Amendment

1. The Bill proposes to amend the section to provide that the prescribed authority for levying of penalty under section 271FAA shall be the authority prescribed under section 285BA of the Act.
2. The Bill proposes to introduce sub- section (2) to the present section 271FAA wherein, in case there is a default on the part of prescribed Financial Institutions falling under clause (k) to sub-section

   (1) to provide accurate information on account of furnishing of false or incorrect information by the respective account holder in such financial institution, then the financial institution shall be levied an additional penalty of Rs. 5,000 for every inaccurate specified financial transaction or reportable account over and above the penalty of Rs. 50,000. However, the prescribed financial institution will be entitled to recover the additional penalty of Rs. 5,000 paid by it from the account of such account-holder in the manner prescribed. This amendment shall come into effect on 1st April, 2023.

For what amounts to “inaccurate information” under this section, explanations/ interpretation laid down by the Ld. Courts under section 271(1)(c) have to be borrowed. In PriceWaterhouseCoopers (P.) Ltd. v. CIT [2012] 25 taxmann.com 400 (SC), the Hon’ble Apex Court set aside the penalty levied under section 271(1)(c) on account of a bonafide mistake on the part of assessee by holding that “Notwithstanding the fact that the assessee is undoubtedly a reputed firm and has great expertise available with it, it is possible that even the assessee could make a “silly” mistake”. However, section 271FAA has made it clear that the furnishing of inaccurate information should be deliberate on the part of the person responsible or if he becomes aware of the correct information subsequently, he fails to inform the income-tax authorities about the same, this gives some elbow room for pleading bonafide mistake or an inadvertent error on the part of such person. Therefore, the actual account holder, being the person responsible for furnishing any alleged inaccurate information, should also be given an opportunity to explain his case.

Conclusion

Therefore, the Bill is progressive piece of legislation where the Legislature has brought the present provisions up to date with the latest developments and technologies in the world, while imposing stricter norms on non- compliance thereof. It will therefore also increase the due-diligence and compliance requirement of an assessee. While avoidance of tax cannot be permissible but there is a need to strike a balance with arbitrary levy of penalty and initiation of prosecution proceedings under the guise of non-compliance.

---

1. “Statement on Developmental and Regulatory Policies” on April 5, 2018
2. Internet and mobile association of India v. RBI (2020) 10 SCC 274,
3. Circular no. 13 of 2022 dated 22nd June, 2022
4. Ibid footnote 3

Rahul Hakani, Advocate

1. Introduction of the authority of Joint Commissioner (Appeals) – A much needed move.

   CURRENT PROVISIONS.(LEGISLATIVE HISTORY)

   Chapter XX-A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) deals with “Appeals to the Deputy Commissioner (Appeals) and Commissioner (Appeals) “. Section 246 deals with Appealable orders before Deputy Commissioner (Appeals) and Commissioner (Appeals) and Section 246A deals with Appealable orders before Commissioner appeals.

   Prior to 1978, Appellate Assistant Commissioner was the first Appellate Authority under the Act and Section 246 provided for Appealable orders before him. Thereafter, Finance (No 2) Act, 1977 created another first Appellate Authority called the “ Commissioner of Income Tax (Appeals)”. Accordingly Section 2(16A) was inserted w.e.f 10-7-1978 defining Commissioner (Appeals). Thus, first Appeals came to be filed either before the Appellate Assistant Commissioner or the Commissioner (Appeals) based on the nature of Assessee, quantum involved and other factors. Section 246 also made provision for transfer of pending appeals from the Appellate Assistant Commissioner to Commissioner (Appeals). Appeal before both the authorities was governed by only Section 246. Chapter XX-A read as “Appeals to the Appellate assistant commissioner and Commissioner (Appeals).“

   Thereafter the Direct Tax Amendment Act, 1987 redesignated Appellate Assistant commissioner as Deputy Commissioner (Appeals). Section 246 was also amended in it’s scope of Appealable orders before Deputy Commissioner (Appeals) and Commissioner Appeals by Direct tax Amendment Act, 1987 and Direct tax Amendment Act, 1989. Chapter XX-A w.e.f 1/4/1999 read as “Appeals to the Deputy Commissioner (Appeals) and Commissioner (Appeals)”. The changes were explained in Circular No 545 dated 21/9/1989 [181 ITR (st) 198], Circular No 549 dated 31/10/1989 [192 ITR (st) 1] and Circular No 551 dated 23/1/1990 [183 ITR (St) 7]. The relevant portion is as under :

   “Substitution of a new section 246 by the Amending Act, 1987 and further amendments therein by the Amending Act, 1989 14.1 Under the old provisions of section 246, various orders passed under the Income- tax Act were enumerated against which assessees could file appeal before the Appellate Assistant Commissioner or the Commissioner (Appeals). Since the Amending Act, 1987 inserted several new provisions under the Income-tax Act, including the new scheme of assessment of firm and partners, omitted certain old provisions and also changed the designations of various income-tax authorities, the said section 246 was required to be overhauled. The Amending Act, 1987 has, therefore, substituted a new section 246 in the Income-tax Act. The Amending Act, 1989 has further made amendments in the said new section 246 to set right certain anomalies and remove omissions and also to reverse the changes incorporated therein pursuant to the new scheme of assessment of firm and partners, as the said new scheme itself was withdrawn by the Amending Act, 1989. The provisions of the old section 246 and the new section 246, as it has emerged after amendments by the Amending Act, 1987 and the Amending Act, 1989, are discussed in the following paras :……………”

   Thereafter, by virtue of Finance (No. 2) Act, 1998, Section 246A was inserted w.e.f 1/10/1998 which provided for appealable orders before Commissioner (Appeals) only. The institution of Deputy Commissioner (Appeals) was closed. Said provision was explained in Circular No 772 dated 23/12/1998 [ 235 ITR (St) 35] as under :

   “Abolition of the appellate level at Deputy Commissioner (Appeals)

   1. 1. Under the existing provisions of Income- tax Act, Deputy Commissioner (Appeals) are hearing appeals in very small cases. The Commissioner (Appeals) are also doing the identical functions. In the same case, appeal in one year may be pending before Deputy Commissioner (Appeals) and in the other year before the Commissioner (Appeals) depending upon the quantum of addi- tion. Presently, only a few posts of Deputy Commissioner (Appeals) are functioning in the country.
      2. A new section i.e., section 246A has been inserted to provide for filing of appeals before the Commissioner (Appeals) against all order where appeals earlier lay either with Deputy Commissioner (Appeals) or

         Commissioner (Appeals). It also provides that every appeal which is pending before the Deputy Commissioner (Appeals) would stand transferred to the Commissioner (Appeals) on the appointed date. Vide Notification SO 811(E) dated 14-9-1998, 1st day of October, 1998 has been notified as the appointed date for the purpose of the above section.

      3. Similar amendments have also been made in the Wealth-tax Act and Gift-tax Act.
      4. This amendment takes effect from the 1st day of October, 1998.”

   The Finance Act, 2000 made Section 246 non- functional after 1/6/2000 and thus appeals could not be decided by Deputy Commissioner (Appeals). Circular No 794 dtd 9/8/2000 [245 ITR (St) 21] explained the provisions as under :

   “Sunset clauses to sub-sections (1) and (2) of section 246 of the Income-tax Act

   1. 1. Section 246 of the Income-tax Act in sub-sections (1) and (2) lists out the orders passed by the Assessing Officer against which appeal may be filed before the Deputy Commissioner (Appeals) and the Commissioner (Appeals), respectively. Section 246A providing appeals before the Commissioner (Appeals) was introduced by the Finance (No. 2) Act, 1998 with effect from 1st October, 1998 in respect of the appeals against orders made before or after the appointed day. The appointed day was notified as 1-10-1998. The introduction of a new section was necessitated by the decision to do away with one appellate level at the level of Deputy Commissioner (Appeals).
      2. When section 246A, came into effect from 1-10-1998, no terminal clauses were provided to sub-section (1) and sub-section (2) of section 246 to take care of the pending matters, if any. The Act amends these sub- sections now by making them inapplicable to appeals filed on or after 1-6-2000. It is also clarified that any appeal made under section 246 of the Income-tax Act on or after 1-10- 1998 and before 1-6-2000 shall be deemed to be the appeal filed under section 246A. Similar amendments are made in section 23 of the Wealth-tax Act, 1957.
      3. These amendments take effect from the 1st day of June, 2000.”

   Thus, presently the Commissioner of Income Tax (Appeals) act as the only first appellate authority against majority of the orders passed by the assessing Officer as provided u/s 246A of the Act. Commissioner (Appeals) was consciously made the only first appellate authority for the reasons stated in Circular No 772 dated 23/12/1998 (supra).

   PROPOSED AMENDMENT

   The Finance Bill, 2023 proposes to substitute section 246 of the Act to provide for appeals to be filed before Joint Commissioner (Appeals).

   Sub-section (1) of the proposed section seeks to provide that any assessee aggrieved by any of the following orders of an Assessing Officer (below the rank of Joint Commissioner) may appeal to the Joint Commissioner (Appeals) :

   1. an order being an intimation under sub-section (1) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;
   2. an order of assessment, reassessment or recomputation under section 147;
   3. an order being an intimation under sub- section (1) of section 200A;
   4. an order under section 201;
   5. an order being an intimation under sub- section (6A) of section 206C;
   6. an order under sub-section (1) of section of section 206CB;
   7. an order imposing a penalty under Chapter XXI; and
   8. an order under section 154 or section 155 amending any of the orders mentioned in (i) to (vii) above:

      It is proposed to insert a proviso under sub- section (1) that an appeal cannot be filed before the Joint Commissioner (Appeals) where an order referred to under this sub-section is passed by or with the approval of an income- tax authority above the rank of Deputy Commissioner.

      Sub-section (2) of the proposed section seeks to provide that where any appeal filed against an order referred to in sub-section (1) is pending before the Commissioner (Appeals), the Board or an income-tax authority so authorised by the Board in this regard, may transfer such appeal and any matter arising out of or connected with such appeal and which is so pending, to the Joint Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before it was so transferred. This will enable transfer of certain existing appeals filed before the Commissioner (Appeals) to the Joint Commissioner (Appeals).

      Sub-section (3) of the proposed section seeks to provide that notwithstanding anything contained in sub-section (1) or sub-section (2), the Board or an income-tax authority so authorised by the Board in this regard, may transfer any appeal which is pending before a Joint Commissioner (Appeals) and any matter arising out of or connected with such appeal and which is so pending, to the Commissioner (Appeals) who may proceed with such appeal or matter, from the stage at which it was before it was so transferred.

      Sub-section (4) of the proposed section seeks to provide that where an appeal is transferred under the provisions of sub-section (2) or sub- section (3), the appellant shall be provided an opportunity of being reheard.

      Sub-section (5) of the proposed section seeks to provide that for the purposes of disposal of appeal by the Joint Commissioner (Appeals), the Central Government may make a Scheme, by notification in the Official Gazette, so as to dispose appeals in an expedient manner with transparency and accountability by eliminating the interface between the Joint Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible and direct that any of the provisions of this Act relating to the jurisdiction and procedure for disposal of appeals by Joint Commissioner (Appeals) shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.

      Sub-section (6) of the proposed section seeks to provide that for the purposes of subsection (1), the Board may specify that the provisions of that sub-section shall not apply to any case or any class of cases.

      It is also proposed to insert an Explanation in this section to define “status” to mean the category under which the assessee is assessed as “individual”, “Hindu undivided family” and so on.

      CONSEQUENTIAL AMENDMENTS

      It is also proposed to amend section 2 of the Act by inserting a definition for Joint Commissioner (Appeals) and to amend section 116 of the Act to make Joint Commissioner (Appeals) an income- tax authority under the Act.

      Further, consequential amendments are proposed in relevant provisions of the Act in order to ensure that functioning of the Joint Commissioner (Appeals) is aligned with that of the Commissioner (Appeals). Thus provisions

      relating to filing of appeals as well as provisions dealing with powers of Commissioner (Appeals) are amended to include Joint Commissioner (Appeals). Further, penalty provisions and other provisions where the Commissioner (Appeals) could exercise powers are now amended to include Joint Commissioner (Appeals).

      LEGISLATIVE INTENT

      It has been noted that as the first authority for appeal, Commissioner (Appeals) are currently overburdened due to the huge number of appeals and the pendency being carried forward every year. In order to clear this bottleneck, a new authority for appeals is being proposed to be created at Joint Commissioner/ Additional Commissioner level to handle certain class of cases involving small amount of disputed demand. Such authority has all powers, responsibilities and accountability similar to that of Commissioner (Appeals) with respect to the procedure for disposal of appeals.

      IMPLICATIONS

      Joint Commissioner (Appeals) would include Additional Commissioner (Appeals) also. This change will increase the quantum of Officers who can decide Appeals.

      The Joint Commissioner (Appeals) will not be able to decide appeals where Assessment Order is passed pursuant to his directions under Section 144A. Further in search assessment where approval of Joint commissioner is taken u/s 153D or an order is passed by him, he will not be able to decide appeals arising therefrom. Also, where reopening is done pursuant to sanction by Additional Commissioner or Joint Commissioner it appears that validity of consequent reassessment orders could not be decided in appeal by Joint/Additional Commissioner (Appeals).

      The memorandum explaining the provisions do not give details of the no of Appeals pending and how many of such appeals would be transferred. Hence, one is not certain whether

       

      the desired objective would be achieved or not by the proposed amendment.

      The amendment does not provide for any opportunity of hearing to the assessee whose case is transferred from Joint Commissioner (Appeals) to Commissioner (Appeals) and vice versa. Opportunity of hearing should be provided.

      One of the reason for abolition of Deputy Commissioner (Appeals) was that in the same case, appeal in one year was pending before Deputy Commissioner (Appeals) and in the other year before the Commissioner (Appeals) depending upon the quantum of addition. Care should be taken that same scenario is not repeated.

      The Joint/Additional Commissioner (Appeals) have over the years acted as an Assessing Officer. It is important for the success of the institution of appeals that an Appellate authority has a different way of looking at an Income tax issue compared to an Assessing Officer. It is well known that our mind makes us hesitant towards change — modifying prior beliefs or behaviours. As humans we often hold on to stubborn ideas, biases and prejudices. It must be ensured that the Assessee before the Joint/ Additional Commissioner (Appeals) should not get the impression that he is subjected to an extended assessment proceedings. Appeal should not become an empty formality. Hence, before Joint Commissioners accept the role of Appellate authority proper training must be given to the officers.

2. Rationalisation of Appeals to the Appellate Tribunal – Appeal By AO against Order of DRP?

   CURRENT PROVISIONS

   Section 253 of the Act contains provisions relating to filing of appeals to the Appellate Tribunal (ITAT). Sub-section (1) of the said section details the types of orders passed under various sections of the Act, against which an aggrieved assessee may appeal to the Appellate Tribunal. The said sub-section provides that any assessee aggrieved by any order passed by a Commissioner (Appeals) under section 154, section 250, section 270A, section 271, section 271A, section 271J or section 272A may appeal to the Appellate Tribunal. Therefore, the Appellate Tribunal is the first level of appeal for such orders of the Commissioner (Appeals).

   PROPOSED AMENDMENT

   1. It has been proposed to amend the provisions of section 253 of the Act to provide that appeal against penalty orders passed by Commissioner (Appeals) under the sections 271AAB, 271AAC and 271AAD shall be made to the Appellate Tribunal.
   2. It has been proposed that section 253 of the Act may be amended so that appeal against an order passed under section 263 of the Act by Principal Chief Commissioner or Chief Commissioner or an order passed under section 154 of the Act in respect of any such order shall be made to the Appellate Tribunal.
   3. It is proposed that an amendment may be made in sub-section (4) of section 253 by substituting the words “against the order of Commissioner (Appeals)” with “against an order”.

      LEGISLATIVE INTENT

      Sections 271AAB, 271AAC and 271AAD are penalty provisions under Chapter XXI of the Act for imposition of penalty. Section 271AAB of the Act provides for imposition of penalty by the Assessing Officer in a case where search has been initiated under section 132 of the Act. Section 271AAC of the Act provides for imposition of penalty by the Assessing Officer in a case where income determined includes any income referred to in section 68, 69, 69A, 69B, 69C or 69D of the Act for any previous year. Section 271AAD of the Act contains provisions for imposition of penalty by the

      Assessing Officer if during any proceedings under the Act it is found that in the books of account maintained by any person there is a false entry or an omission of any entry which is relevant for computation of total income of such person to evade tax liability. Vide Finance Act, 2022, sections 271AAB, 271AAC and 271AAD were amended to enable Commissioner (Appeals) also to pass an order imposing penalty under the said sections. However, as the reference to the same has not been inserted in sub-section (1) of section 253 of the Act, an aggrieved assessee cannot appeal against such penalty orders passed by Commissioner (Appeals) which may lead to taxpayer grievance. Therefore the proposed amendment.

      Further, vide Finance Act, 2021, section 263 of the Act was amended to enable Principal Chief Commissioner and Chief Commissioner to also pass an order of revision under the said section. However, in the absence of any reference to such orders passed under section 263 of the Act in sub-section (1) of the section 253 of the Act, an assessee aggrieved by any order under section 263 of the Act by a Principal Chief Commissioner and Chief Commissioner or an order under section 154 of the Act rectifying such order under section 263 of the Act cannot appeal against such orders to the Appellate Tribunal. Therefore, the proposed amendment.

      Sub-section (4) of the section 253 of the Act allows the respondent in an appeal, against an order of Commissioner (Appeals), to file a memorandum of cross-objections before the Appellate Tribunal. However, it is pertinent to note here that appeal can be made to the Appellate Tribunal against orders of authorities other than Commissioner (Appeals) also, like Principal Commissioner or Commissioner or Principal Director or Director etc. As a result, the respondent, whether it is Revenue or the assessee, cannot file memorandum of cross-objections against an appeal before the

      Appellate Tribunal by virtue of the provisions of sub-section (4) of section 253 of the Act. This creates grievances as well as reduces the fair and equitable dispensation of judgement in such cases. Therefore, it is proposed that an amendment may be made in sub-section (4) of section 253 to enable filing of memorandum of cross-objections in all classes of cases against which appeal can be made to the Appellate Tribunal. For example, where the assessee files an appeal to the appellate tribunal against an order passed by the Assessing Officer in consequence of an order of the Dispute Resolution Panel the Assessing Officer would be able to file a cross objection to such appeal which cannot be filed presently.

      IMPLICATIONS.

      Section 253(4) reads as under :

      “(4) The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Commissioner (Appeals), has been preferred under sub- section (1) or sub-section (2) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub- section (3).”

      The example given in the memorandum explaining the provisions whereby on account of proposed amendment in Section 253(4) an Assessing Officer can file cross-objection where an order of DRP is under challenge before the ITAT by the Assessee has created lot of controversy. This is because it is well settled that Cross objection is nothing but an Appeal. As per Section 144C(10), every direction issued by the DRP is binding on the Assessing Officer. Hence, the question of Assessing Officer manifesting his grievance against the order of DRP by filing a cross objection i.e. an appeal is impermissible and also in the teeth of provisions of Section 144C and the scheme of Section 253.

      Section 253 (1) provides various orders against which Assessee can file an Appeal to ITAT. Section 253(2) provides for appeal to be filed by the Income tax department against the order passed only by Commissioner (Appeals). Sub-Section (4) of Section 253 provides that cross-objection can be filed only if a party has failed to file appeal as per Section 253(1) or

      253(2). Thus, income tax department can only file cross-objection where an Assessee has filed Appeal against the order of commissioner (Appeals) u/s 154 or 250. Hence, amendment of Section 253(4) without amending Section 253(2) providing various orders against which income tax department can file appeal, it will not be possible for income tax department to file cross-objections against those orders. Thus, even orders passed by Commissioners, principal commissioners etc which are intended to be covered by Section 253(4) should also be incorporated in Section 253(2).

      In-fact, Sub-Section (2A) was specifically introduced by Finance Act, 2012 which permitted the income tax department to file appeal against the directions of DRP. This amendment was omitted by Finance Act, 2016.

      Thus, merely by substituting “against the order of Commissioner (appeals)” with “against the orders” will not expand the coverage of orders beyond those passed by Commissioner (Appeals) for filing cross-objection by the Assessing officer.

3. RATIONALIZATION OF PROVISIONS OF PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988

1. 1. Amendment to Section 46 CURRENT PROVISIONS

      Under the existing provisions of section 46 of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), any person, including the Initiating Officer (IO), aggrieved by the order of the Adjudicating Authority, may prefer an appeal to the Appellate Tribunal within a period of 45 days from the date of the order.

      PROPOSED AMENDMENT

      The provisions of section 46 of the PBPT Act may be amended to allow the filing of appeal against the order of the Adjudicating authority within a period of 45 days from the date when such order is received in the office of the Initiating Officer or the aggrieved person as the case may be.

      LEGISLATIVE INTENT

      The order often takes time to reach the office of the Initiating Officer or the approving authority and, it is difficult to file an appeal within the prescribed time limit and leads to delay in such filing.

      IMPLICATIONS

      Even under the Income Tax Act, 1961, as per Section 254(2) a Miscellaneous Application to rectify mistakes apparent in the order passed u/s 254(1) has to be filed within six months from the end of the month in which the order is passed. However in following decisions it is held that date of passing of order means the date on which the order is received:

      Techknoweledgy Interactive Partners P. Ltd. v. ITO [2021] 190 ITD 643 (Mum)(Trib)

      For workability of scheme of section 254(2), limitation period is to be counted from date of service of order and not from date of order

      Golden Times Services (P.) Ltd. v. Dy. CIT (2020) 422 ITR 102 (Delhi)

      Starting point of limitation provided under section 254(2) has to commence from date of actual receipt of judgment and order passed by Tribunal which is sought to be reviewed.

      Daryapur Shetkari Sahakari Ginning and Pressing Factory v. ACIT (2021) 277 Taxman 155 (Bom) (HC)

      Period of limitation prescribed in section 254(2) would commence from date when affected party got knowledge of decision in question and it would not commence from date when order was passed.

      The proposed amendment to Section 46 is a welcome decision as it has brought certainty and will avoid legal disputes on the issue of limitation.

   2. Amendment to Section 2(18).

CURRENT PROVISION

Under the existing provisions of section 2(18) of the PBPT Act, the ‘High Court’, for the purpose of filing appeal against the order of the Appellate Tribunal, have been defined as Jurisdiction of such High Court within which either the aggrieved party ordinarily resides or carries on business or personally works for gain, or if the aggrieved party is Government then, jurisdiction of the High Court within which the respondent, or any respondent in case of multiple respondents resides, or carries on business or works for gain.

PROPOSED AMENDMENT

To modify the definition of ‘High Court’ by inserting a proviso so as to provide that where the aggrieved party does not ordinarily reside or carry on business or personally work for gain in the jurisdiction of any High Court or where the Government is the aggrieved party and any of the respondents do not ordinarily reside or carry on business or personally work for gain in the jurisdiction of any High Court, then the High Court shall be such within whose jurisdiction the office of the Initiating Officer is located.

LEGISLATIVE INTENT

It had been observed that the non-residents against whom proceedings under PBPT Act have been initiated and who does not fall in the category of appellant or respondent mentioned in the definition, do not fall under the jurisdiction of any High Court. Hence, to enable the determination of High Court jurisdiction for the non-resident appellants or respondents, it is proposed to amend section 2(18) of the PBPT Act.

The amendment will provide certainty to the non-residents who are aggrieved by the order of the Appellate Tribunal regarding the appropriate High Court wherein they will have to file appeal.

CA Kinjal Bhuta

1. Alignment of time line provisions u/s. 153:
   1. Extension of time period to complete assessments from 9 months to 12 months.

      Section 153 specifies various time limits for completion of assessment and re-assessment and re- computation proceedings under the Income Tax Act, 1961. This section is amended quite often in last few years from Finance Act, 2016 to bring down the time limit to complete assessments and thereby being more. The sub- section ( 1 ) of this section provides the time limit for order of assessment under section 143 or section 144 of the Act. Prior to Finance Act, 2016 the time limit was 21 months from the end of the assessment year in which the income was first assessable. This time period of 21 months was gradually reduced to 18, 12 and 9 months. Currently, the time period for all assessments of AY: 2021-22 and thereafter is 9 months from the end of the assessment year in which the return is first assessable.

      Finance Act, 2022 introduced a new sub- section ( 1 A) in section 153 of the Act to provide that in case of updated returns which are filed u/s. 139 (8A), an order of assessment or reassessment under section 143 or section 144 of the Act to be passed before the expiry of 9 months from the end of the financial year in which such return was furnished. Whereas for the normal assessments u/ s. 143 ( 3 ) and 144

      the time period is counted from the end of the assessment year in which return is first assessable, for updated returns, the assessments needs to be completed within 9 months from the end of financial year in which return is filed.

      However, one thing is common in both of the above mentioned assessment completion limits, which is the period is computed as 9 months from the end of relevant assessment or financial year as the case may be. The first step-stone for commencing the assessment proceedings is issuance of notice u/s. 143(2) which can be served to the assessee upto 3 months from the end of the relevant assessment year. With the overall reduced time limits, effectively in many situations the actual period to conduct and complete assessment proceedings was reduced to 6 months after excluding 3 months available to issue notice u/s. 143(2). To complete the entire proceedings within 6 months was a challenge especially under the faceless regime where there are layers of authorities are prescribed. In the recent past, it has been observed that there are several cases where the assessment orders passed are not well reasoned or the assessee is not given sufficient opportunity to make replies to notices due to paucity of time and rush to complete assessments before the stipulated due dates. A lot of grievances and appeals were filed in the past regarding this issue of providing sufficient opportunity to response.

      Therefore, the time available for completion of assessment relating to the assessment year commencing on or after the 1st day of April, 2022 shall be twelve months from the end of the assessment year in which the income was first assessable. Consistent with the above, the time available for completion of assessment proceedings in the case of an updated return is also proposed to be increased to 12 months from the end of the financial year in which such return is furnished.

   2. Amendment to provide timeline for orders passed by PCCIT and CCIT u/s. 263.

      Section 263 of the Act was amended to enable Principal Chief Commissioner (PCCIT) and Chief Commissioner (CCIT) to also pass an order of revision under the said section like CIT. However, the current section which provides time line in section 153 to pass an order of assessment or reassessment or order under section 92CA by the Transfer Pricing Officer does not refer to the orders so passed by PCCIT or CCIT u/s. 263 or 264. Therefore, Section 153 is amended to provide that the provision of sub-sections (3), (5) and (6) shall also be applicable to such revision orders passed by PCCIT or CCIT also.

   3. Extension of time period by 12 months for assessments in case of search and seizures.

      The Finance Act, 2021 brought a paradigm shift in re- assessment proceedings by providing a complete new set of provisions for such assessments. One significant change made is that even the assessments pursuant to search and seizure operations is now also covered under the ambit of Section 147 i.e. reassessments. Earlier, these assessments post search and seizure were covered by a complete code from sections 153A to 153C. As per section 153A and 153C, if there was

      any assessment which was pending on the date of initiation of search, the same was abated. Abated assessments are carried on as a regular assessment taking into account the information available as a result of search operations. However, these sections 153A and 153C cease to operate now as the same are covered u/s. 147.

      The current provisions of the Act relating to reassessment do not provide for abatement or revival of any assessment or reassessment proceedings pending on the date of search under section 132 of the Act or requisition under section 132A of the Act. As a result, the information available in a search, which has a bearing on the pending scrutiny proceedings may not be effectively used due to the limitation of such proceedings. It takes some time to transfer the relevant files of search operations and seized material to the Assessing officer who shall be authorized to conduct the assessment proceedings. Further, the Assessing Officer also needs to carry out investigation and gather evidence to compute the income of the assessee as a result of the search or requisition proceedings. Therefore, so as to give enough time to the Assessing Officer to conduct such scrutiny assessments, a new sub- section 3( A) is introduced to section 153, which provides that the period available for completion of assessment or reassessment, under the said sub-sections (1), (1A), (2) and (3) of the said section shall be extended by twelve months in a case of an assessee where such search is initiated under section 132 or such requisition is made under section 132A or in the case of an assessee to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to or in the case of an assessee to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to.

   4. Reference of assessments in case of updated returns:

      The updated returns were introduced in the last Finance Act. A parallel amendment was also brought to ascertain time limits for completions of assessments of such updated returns. However, reference of the said assessments was not evenly given in the entire section 153. To align this anomaly, reference to sub-section (1A) is now provided in sub-sections (3), (4), (6) as well as in the first proviso to Explanation 1 of section 153.

      These amendments will take effect from the 1st day of April, 2023.

2. Rationalisation of reassessment proceedings:

   The Finance Act, 2021 amended the procedure for assessment or reassessment of income in the Act with effect from the 1st April, 2021. The said amendment modified, inter alia, sections 147, section 148, section 149 and also introduced a new section 148A in the Act.

   1. Extension in filing return of income in pursuance to notice u/s. 148:

      Under the existing provisions, the period to file return of income in pursuance to notice under section 148 is subjective as ‘specified in the notice’ issued for re-opening, which is generally one month from the date of the receipt of the notice as per current practice. This period to file return of income is increased to three months from the end of the month in which the notice is issued or such period as may be allowed by Assessing Officer on basis of application made by the assessee. It is also provided that if the return of income is filed under this section beyond the time period allowed, then it shall not be deemed to be return under section 139.

      In the current scenario, many a times the re- assessment procedures were delayed

      because the assessee would not have filed a return of income. Unless the return of income was not filed, the notice u/s. 143(2) which is mandatory to begin re-assessment provisions could not be issued. This would delay the entire process and drag the matter towards the due date. As a consequence of this amendment, it would mean that no notice under section 143(2) shall be required to be issued for such returns filed beyond the time limit. However, there may be also be perceived that, section 234A regarding interest for default in furnishing of return of income, would also not apply in such cases.

   2. Extending time limit by 15 days in case of search and survey related assessments:

      In cases where search is initiated under section 132 of the Act or books of account, other documents or any assets are requisitioned under section 132A of the Act, assessment or reassessment is now made under section 147 of the Act. Under the existing provisions, the Assessing Officer is required to conduct a procedure of enquiry as prescribed in section 148A prior to issuance of notice under section 148. The provisions of section 148A is not applicable in case of search initiated under section 132 or where assets, documents or books are requisitioned under section 132A. However, for survey under section 133A, the proceedings under section 148A are required to be conducted prior to issuance of notice.

      When such search, requisition or survey proceedings are conducted after 15th March of a financial year, there is very little time to collate the information and issue a notice under section 148 or show cause notice under section 148A(b) of the Act. Moreover, the search is conducted by the Investigation Wing and the notice is required to be issued by the Assessing Officers. However, evidence of tax evasion may be reflected

      in the statements recorded or documents seized or impounded etc. during such action before 31st March, but issuance of notice related to such information or search may go beyond the time limitation provided due to the procedure involved. As mentioned in the explanatory memorandum to the Finance Bill, that due to these practical time crunch, important information related to revenue leakage cannot be proceeded on for searched conducted and information obtained as a consequence of these searches in the last few days of any financial year.

      Therefore, Section 149 (1) is amended to add a proviso to extend time limits by 15 days in the following two scenarios:

      1. In case where the search, requisition or survey proceedings are conducted after 15th March of a financial year expiring as on 31st March of the said financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation for issuance of notice under section 148 of the Act and it will be deemed that the notice is issued on 31st March of such financial year.
      2. In cases where the information emanates from statement recorded or documents impounded under section

         131 or section 133 A on or before 31st March of the financial year, in consequence of search or search for which last authorisations is executed or under search requisition which is done so after 15th March of such year, a period of fifteen days shall be excluded from computing the time l imit for issuance of notice under section 148 and also for show cause notice under section 148A(b) shall be deemed to be issued as on 31st March of the financial year.

   3. Increasing the authorities for sanction u/s. 151:

      Section 151 provides the sanctioning authority for the issue of notice under section

      148. Under the existing provisions, sanction is required from PCCIT or PDGIT in case re-opening is beyond three years from the end of the relevant assessment year. Only in a case where PCCIT or PGDIT is not available, sanction from CCIT or DGIT could be obtained. Now it is provided that, re- opening can be done by CCIT or DGIT also when re-opening is beyond period of three years along with PCCIT and PGDIT.

      In arriving at the time limits of period of three years for sanction under section 151(i), the provisions to section 149(1) regarding extended period of 15 days or extensions owing to stay or injunction of any court shall be excluded.

      These amendments will be effective from 1st April, 2023.

3. Assistance to authorized officer during Search & Seizure.
   1. Section 132 of the Act makes provisions

      related to search and seizure. The section makes detailed provisions for powers of income-tax authority during the search and seizure proceedings, procedure to be followed, requisition of services of other officers for assistance, examination of books of account or other documents, procedure for custody of evidence, provisional attachment etc. The section also provides the timelines to be followed by the income- tax authority during and post search proceedings.

      Under the existing provisions of section 132 , it is provided that authorised search officers may requisition services of police officer or any officer of

      Central Government to assist him during the search. Due to digitisation of transactions with advent of technology in the current times, the search process has become complex and requires specific domain experts. Therefore, the amendment substitutes sub-section

      (2) of section 132 to provide that the authorised officers can also requisition services of any other such person as may be approved by PCCIT or CCIT or PDGIT or DGIT in accordance with procedures to be prescribed.

   2. Under the existing provisions of sub- section (9D), the authorised officer can make a reference to valuation officer under section 142A. The sub-section is substituted to provide that reference can be also made to any other person or entity or valuer registered under any law in force as may be approved by PCCIT, CCIT, PDGIT or DGIT for

      estimating the fair market value of the property in the prescribed manner and to submit a report of such reference within 60 days.

      Due to the limitation of using same administrative officers, there was limitation in case of investigations and related requirements during search and seizure. The need of these amendments was felt perhaps with the innovative ways in which the details, documents and other evidences are stored by organisations. These provisions are definitely in l ine with the modern economy and the newer structures in which businesses operate these days. In the coming time, one can predict better outcomes of search operations with these operational liberties offered under

      the Act. These above two amendments will be effective from 1st April 2023.

   3. With the amendment made in Finance Act, 2021, the assessment for the search cases are now covered under the new section 147 and section 153A and 153B are no more applicable. Section 153B provides for execution of the ‘last of authorisation for search’ based on which the time l imit of conclusion of re- assessments are determined. An explanation has been added to section 132 to bring the provisions of last authorisation in its ambit as it was provided in section 153B. This is the same explanation which was earlier in section 153B which states that last authorisation in case of search would be the last panchnama drawn in relation to any person in whose case the warrant of authorisation of search has been issued. Further, in a case where requisition is made u/s.132A, the last authorisation would be the accrual receipt of the books of account or other documents or assets by the authorisation officer.

      This amendment is effective retrospective from 1st April, 2022.

4. Modification of direction related to faceless Schemes and e-proceedings.

   Various e-proceedings and faceless schemes

   were introduced in the last few years under the powers given by the provisions introducing such schemes. These sections had incorporated time l imits to issue directions under such schemes for timely implementation.

   Section	Schemes introduced	Limitation period to bring directions under existing law
   135A- Faceless collection of information	E-Verification Scheme, 2021	31.03.2022
   245MA- Dispute Resolution Committee	E-Dispute Resolution Scheme, 2022	31.03.2023
   245R- E-advance rulings	E-advance rulings Scheme, 2022	31.03.2023
   250- Faceless Appeals	Faceless Appeal Scheme, 2021	31.03.2022
   275-Faceless Penalty	Faceless Penalty Scheme, 2022	31.03.2022

   Any amendment or adjustments which may be required in the schemes announced could not be made due to the limitation period specified in the section. To overcome any such implementation issue, a proviso is added in all the above sections enabling Central Government to amend any directions issued under these sections if it was issued before the limitation period.

   These amendments are retrospectively effective from 1st April, 2022 for sections 135A, 250 and 274 and from 1st April, 2023 for sections 245MA and 245R.

5. Clarification regarding advance tax for filing updated returns.

   The Finance Act, 2022 inserted sub-section (8A) in section 139 of the Act enabling the furnishing of an updated return by taxpayers

   up to two years from the end of the relevant assessment year subject to fulfilment of certain conditions as well as payment of additional tax. For the determination of the amount of additional tax on such updated return section 140 B was inserted in the Act. The sub-section (4) of the section 140B provides for the computation of interest under section 234B of the Act on the tax on updated return. The said sub-section

   (4) provides that interest payable under section 234B of the Act shall be computed on an amount equal to the assessed tax or the amount by which the advance tax paid falls short of the assessed tax. This had an implication, that interest was payable only on the difference of the assessed tax and advance tax.

   Further, the sub-clause (i) of the clause (a) of the sub-section (4) provides that advance tax which has been claimed in earlier return of income shall be taken into account for computing the amount on which the interest was to be paid. Therefore, in order to clarify the provisions of the sub-section (4) of section 140B of the Act, amendment has been made that interest payable under section 234B shall be computed on an amount equal to the assessed tax as reduced by the amount of advance tax, the credit for which has been claimed in the earlier return, if any. This amendment will take effect retrospectively from the 1st day of April, 2022.

   Overall most of the above amendments made in the Finance Bill, 2023 are to provide clarifications or to rationalize the existing provisions so as to enable better administrative functions. However, one thing which can be ascertained from these amendments, is that the authorities are aware of various intricate issues pertaining to ground realities and practical difficulties. An attempt to clarify and simply the law, is an effort in right direction.