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 >>
CBDT extends cut off date for investment by Twelve sovereign wealth funds / Pension Funds from 31st March 2024 to…
Appeal against inadequacy of sentence passed by special court in income tax prosecution cases dismissed by High Court In a…
ICSI launches CS Mitr Scheme to give incentive for getting student registered in Executive Programme ICSI has launched CS Mitr…
CPC order u/s 143(1) is appealable and hence the doctrine of merger with order u/s 143(3) do not arise -…
Under GST Act, there is no specific provision which bounds selling dealer to disclose route to be taken during transportation…
Restrictions on use of words Nidhi Limited unless declared as such under section 406(1). Nidhi (Amendment) Rules 2024 MINISTRY OF…