Finance Bill
Amendment To Finance Bill 2024: Ambiguity On Applicability Of Erstwhile Reassessment Procedure

The Finance (No. 2) Bill, 2024 [FB (No. 2) 2024 or Bill] was presented by the Hon’ble Finance Minister Nirmala Sitharaman on 23 July 20241. While moving the Bill for approval by the Lok Sabha on 7 August 2024, the Union Finance Minister introduced amendments to the Finance Bill (No, 2) 2024. The amendments are generally intended to address certain ambiguities/uncertainties arising from the proposals as contained in the Bill.

The Bill clarifies on the ambiguity on applicability of erstwhile reassessment procedure for cases where search was undertaken prior to 1 September 2024 but reassessment proceedings are commenced on or after 1 September 2024 addressed.

The new regime for reassessment of cases [as introduced vide Finance Act (FA) 2021] merged the procedure for carrying out search assessments with the revised procedure for carrying out reassessments leading to staggered proceedings breeding inefficiencies.

Accordingly, FB (No. 2) 2024 introduced a proposal to separate search assessments from the reassessment regime and reintroduced the block assessment mechanism (as was prevalent prior to 2003).

The new block assessment scheme so proposed will apply in respect of searches conducted on or after 1 September 2024.

Separately, the limitation period for reassessment was also reduced in high value cases involving escaped income of INR50L or above from 11 years to 6 years from end of the relevant financial year (FY) sought to be reassessed.

In this backdrop, Finance Bill (No. 2) 2024 also provided for grandfathering of applicability of erstwhile reassessment regime (including the limitation period) as prevalent prior to such amendments vide FB (No. 2) 2024 to:

(a) cases where search action was initiated between 1 April 2021 and 31 August 2024; and

(b) cases where reassessment proceedings are commenced prior to 1 September 2024.

However, the provisions as introduced vide FB (No. 2) 2024 were ambiguous on applicability of erstwhile reassessment regime in a case where search action was initiated prior to 1 September 2024 and proceedings under the erstwhile reassessment regime commenced on or after 1 September 2024.

 The Amended Bill now proposes that such cases would specifically be covered by the erstwhile reassessment regime as prevalent prior to amendments vide Finance Bill (No. 2) 2024.

Juris Hour Team
Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Government Expands Tax Exemptions for Non-Residents in IFSC under Section 10(4E) of Income Tax Act

In a significant move to enhance India’s attractiveness as a global financial…

Section 115 BAC Doesn’t Bar Carry Forward And Set Off Of Losses Under Capital Gains: ITAT

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that…

10 Unique Facts About Indian Union Budget That You Must Know

The Union Budget is one of the most significant financial events in…

TDS Is Deductible On Salaries Of Nuns And Priests Working In Aided Schools: Supreme Court

The Supreme Court while upholding the decision of Madras High Court has…