No re-opening of earlier years cases due to digital payments leading to increased turnover in a particular year.
Circular No. 40/2016
Government of India
Ministry of Finance
Department of Revenue (CBDT)
North Block, New Delhi, the 9th of December, 2016
Subject: – Directions under section 119 of the Income-tax Act, 1961-regd.-
Recent initiatives of the Government to curb the black economy in the country has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts. Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years’ cases involving lower turnover u/s 147 of the Income-tax Act, 1961 (‘Act’) by the Assessing Officer causing undue harassment to tax payers.
2. It is hereby clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing Officer “has reason to believe that any income chargeable to tax has escaped assessment for any assessment year” and not merely on the basis of any reason to suspect . Mere increase in turnover, because of use of digital means of payment or otherwise , in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year’s turnover has increased.
3. The above may be brought to the notice of all for necessary and strict compliance.
4. Hindi Version to follow.
(Rohit Garg)
Director ITA.II, CBDT
F. No. 225/326/2016/ITA.II
Download Circular 40/2016 Click Here >>
Once assessee filed ITR, in response to the notice u/s 148 of the Act, even beyond time prescribed, Assessing Officer…
Petitioner was not disqualified in tender for submitting EMD by way of Fixed Deposit in place of Demand Draft -…
State Bank of India in its General Meeting of the Shareholders elected four Directors to the Central Board. The meeting…
Voluntary declaration of additional income by increasing WIP was not proper, as assessee will take the additional benefit in the…
Cash payment for purchase of land or property cannot be treated as violation of provisions of section 269SS or 269T…
Income Tax Department has released excel Utility for e-filing ITR-1 and ITR-4 for AY 2026-27 Excel utilities of ITR-1 and…