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    Act RulesIncome Tax
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    Limitation period for tax notices extended in specified cases; possession or information triggers a longer issuance window.
    Section 282 prescribes time limits for notices relating to escaped income: a general four year bar (four years and three months for initiation notices), with an extension up to six years (six years and three months for initiation notices) where the Assessing Officer either has in his possession books of account or other documents/evidence showing substantial escaped income, or where information with the Assessing Officer indicates substantial escaped income; additionally, no notice may be issued within one year from the end of any tax year.
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    Pre-notice hearing requirement: AO must serve show-cause and disclose information before issuing an escape-assessment notice.
    An Assessing Officer with information suggesting escaped income must serve a show-cause notice disclosing the information and allow the assessee to reply; after considering the reply and material on record the AO must obtain the prior approval of the specified authority before issuing a clause 280 notice. The pre-notice procedure is inapplicable where information arises from the scheme under section 260, Approving Panel directions under section 274(6), or findings in orders by an authority, Tribunal or court.
    Act RulesIncome Tax
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    Reassessment powers: AO may assess escaped income and recompute allowances, even when certain procedural steps were not complied with.
    Clause 279 permits the Assessing Officer, in a permissive exercise of discretion, to assess or reassess income escaping assessment and to recompute losses, depreciation and other allowances for the relevant tax year; this authority is framed subject to the procedural framework of sections 280-286. Subsection (2) allows the AO during those proceedings to assess other issues that come to notice subsequently and, in earlier draft text, expressly permits action irrespective of certain procedural non compliance, although the enacted wording narrows that explicit non compliance exception.
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    Hierarchical approval for anti-avoidance: internal review can produce binding, non-appealable determinations affecting assessments and applicable tax years.
    Clause 274 permits an Assessing Officer to refer suspected impermissible avoidance arrangements to the Principal Commissioner/Commissioner, who must issue a reasons-based notice and afford a hearing; if not satisfied, the officer refers the matter to an Approving Panel. The Panel may order inquiries, call for records, specify tax years of applicability and issue binding, non-appealable directions; time limits and specified exclusions apply, and the Board will constitute and support Panels and may make rules for their functioning.
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    Best-judgment assessment: AO may determine income where required returns or responses to notices are not furnished.
    Section 271 empowers the Assessing Officer to make a best-judgment assessment where required returns are not furnished or where the assessee fails to comply with notices under sections 268 or 270(8); the AO must consider all relevant materials gathered and, as a general rule, provide an opportunity of being heard before determining income or loss, with a limited exception relieving the AO from issuing a separate show-cause notice if a earlier section 268(1) notice has been issued.
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    Summary processing of returns permits correction of arithmetical errors and apparent incorrect claims with adjustment of tax or refund.
    Clause 270 authorises summary processing of returns to correct arithmetical errors and certain incorrect claims apparent from any information in the return, compute tax/interest/fee and adjust payments to determine payable or refundable amounts, subject to prior intimation to the assessee and an opportunity to respond; strict post year end timelines and special sequencing protect exempt and non profit entities, and the Act adds an express ground permitting prescribed cross year consistency checks.
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    Tax on updated return requires pre-filing payment of tax, interest and additional levy, increasing compliance obligations.
    Clause 267 requires that where an updated return under section 263(6) results in tax payable the assessee must, before furnishing the updated return, pay the tax, interest, any fee for delay/default and an additional income-tax computed on the aggregate of tax and interest; proof of payment must accompany the updated return. Specified credits, prior payments and interest already paid are to be set off in computing the net liability.
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    Self-assessment requirement: pre-payment of tax, interest and fee before filing specified income-tax returns, with proof attached.
    The clause requires payment of tax, interest and fee before filing specified income-tax returns where tax remains payable after deducting advance tax, source deductions, specified foreign tax reliefs and tax credits; returns must be accompanied by proof of payment, interest under the Act is computed on declared tax reduced by those credits, and a defined "assessed tax" serves as the base for interest on advance tax shortfall.
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    Mandatory filing duties and updated return limits reshape corrective filing eligibility and compliance obligations.
    Section 263 imposes mandatory filing duties for enumerated classes, prescribes due dates by category, empowers the Board to prescribe forms and particulars, and allows the Central Government to exempt classes. It distinguishes late returns, revised returns (both within nine months or before assessment completion), and an updated return remedy within a multi year window that is barred where updated filings would claim losses, reduce tax, produce refunds, duplicate updates, or where assessments, possession of information, international or internal information exchange, prosecutions, searches, surveys, requisitions or specified notices have intervened. Assessing Officers may treat unrectified defective returns as invalid after a short cure period.
    Act RulesIncome Tax
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    Digital evidence parity: seized electronic backups treated as books of account, extending tax search powers into virtual spaces.
    Clause 261 defines terms governing Chapter XIV search, seizure and requisition powers, treating material seized to include books of account, documents, digital data storage devices, computer systems and specialised programme backups and directing that such material be construed as books of account. It broadly defines computer system and virtual digital space to include cloud and remote servers, social media, online financial platforms and application platforms. The clause identifies the classes of approving, authorised and competent officers and ties the operative date for search or requisition to the last panchnama entry or the actual receipt of books, documents, computer systems or assets.
    Act RulesIncome Tax
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    Power to call for information: tax authority may require relevant records for verification, subject to defined scope of proceeding.
    A prescribed income tax authority may issue notices requiring persons to furnish information for verification of information in the authority's possession that is useful for, or relevant to, any inquiry or proceeding under the Act; the authority may specify form, manner and time for compliance and may process and utilise such information under a scheme notified under section 260. The enacted Section 259 adds subsection (3) linking the term "proceeding" to the meaning in section 253, clarifying the definitional scope of notices.
    Act RulesIncome Tax
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    Judicial character of tax proceedings clarified; civil court deeming limited and excludes a specified statutory chapter.
    Section 257 deems proceedings before income-tax authorities to be judicial proceedings for specified provisions of the Bharatiya Nyaya Sanhita, 2023, and deems income-tax authorities to be Civil Courts for the purposes of section 215 of the Bharatiya Nagarik Suraksha Sanhita, 2023, but expressly excludes application of that deeming for the purposes of Chapter XXVIII of the Bharatiya Nagarik Suraksha Sanhita, 2023.
    Act RulesIncome Tax
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    Enquiry powers: specified senior income-tax officers authorised to exercise Assessing Officer powers for statutory enquiries.
    Section 256 vests enquiry authority in specifically listed senior officers - Principal Director General/Director General, Principal Director/Director, Principal Chief Commissioner/Chief Commissioner, Principal Commissioner/Commissioner and Joint Commissioner - and grants them Assessing Officer-like powers to make enquiries under the Act, including summons and document requisition, while the clause contains no procedural provisos or territorial limits and therefore relies on other statutory or subordinate provisions for operational safeguards and delegation mechanics.
    Act RulesIncome Tax
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    Survey powers over electronic records and premises enable inspection, technical access and limited impoundment for tax compliance verification.
    Survey powers authorise entry into premises where business, profession or charitable activities are carried on to inspect books, documents, electronic media and computer systems and to require necessary technical and other assistance including access codes; officers may verify assets and stock, make extracts or copies, record statements on oath, prepare inventories and impound or retain records or computer systems after recording reasons, with retention beyond the initial statutory period requiring prior approval and temporal limits on entry applicable to business and other premises.
    Act RulesIncome Tax
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    Retention limits for seized material clarified, with supervised copying rights and an administrative remedy to challenge extensions.
    Clause 251 requires transfer of seized assets and material to the territorial Assessing Officer where the seizing authorised officer lacks jurisdiction, mandates supervised opportunity for the person to make copies or extracts, prescribes statutory retention limits tied to assessment or recomputation events with written reasons and approving authority approval for extensions, and preserves a right to apply to the Board against approvals for extended retention.
    Act RulesIncome Tax
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    Application of seized assets: assets may be applied to recover tax liabilities, subject to explanation-based release and distraint.
    The provision authorises recovery from assets seized or requisitioned under search or requisition to satisfy tax liabilities, including penalty and interest (excluding advance tax), aggregating liabilities arising before, during assessments consequent to the search, and those connected to settlement proceedings; the enacted text expressly includes block-period assessments under Part B of Chapter XVI. Release within the statutory period requires the Assessing Officer to be satisfied on the basis of the explanation furnished about nature and source, recovery of existing liabilities, and prior commissioner-level approval, while non-monetary assets are deemed under distraint and may be realised as prescribed.
    Act RulesIncome Tax
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    Power to requisition: tax officers may compel delivery of materials and electronic evidence held by other authorities.
    Clause 248 empowers an approving authority to authorise specified tax officers to require delivery of assets, books, documents, electronic information or computer systems held by officers or authorities under other laws where persons served with summonses or notices fail to produce material, where material will be useful to tax proceedings and would not be returned, or where custody assets represent undisclosed income; post-delivery, designated procedural seizure, custody and preservation provisions apply with the requisitioning officer substituted for the authorised officer.
    Act RulesIncome Tax
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    Search and seizure powers expanded to include virtual digital spaces, compelled access and evidentiary presumptions for tax investigations.
    Clause 247 authorises income tax officers to enter and search physical premises and virtual digital spaces when records or assets relevant to tax proceedings or undisclosed income are believed to be present, including compelled technical assistance, overriding access codes, copying electronic data, inventory and seizure (excluding stock in trade), and deemed seizure where removal is impracticable; it cross references IT law, applies evidentiary presumptions to found material, and provides limited procedural timelines and approvals while leaving detailed safeguards and rules to be prescribed.
    Act RulesIncome Tax
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    Discovery and production powers: tax authorities may compel evidence and attendance, subject to limited retention safeguards.
    The provision confers court-like powers on enumerated income-tax authorities to compel discovery, attendance, examination on oath, production of books and issuance of commissions for tax purposes; it allows certain authorities to exercise these powers even absent pending proceedings, ties investigative authority for senior officers to a jurisdictional nexus and suspicion of concealment, and authorises impoundment and, in the Act, explicit custody and retention of documents subject to a fifteen-day initial limit, recorded reasons and prior sanction for extensions.
    Act RulesIncome Tax
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    Case transfer power: authorities may transfer tax cases with recorded reasons and limited hearing requirements, preserving continuity of proceedings.
    A specified income-tax authority may transfer any case between Assessing Officers under its control or, where authorities differ, by agreement or by an order of the Board (or an authority the Board specifies by notification). The authority must record reasons and, "wherever it is possible to do so," afford the assessee a reasonable opportunity to be heard, except for transfers between officers in the same city/locality/place; transfers may occur at any stage and notices already issued need not be re issued. The enacted text consolidates the temporal definition of "case" and makes minor drafting refinements.

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      Amendments to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      9 June, 2022

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      2002 (10) TMI 796 - Supreme Court

      Amendments  to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      Certain writ petitions have been filed seeking to challenge Amendments made to the Code of Civil Procedure, by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002.

      Writ Petition (civil) 496 of 2002 was filed by Salem Advocate Bar Association and after notice was issued the petitioner sought leave of this Court to withdraw the writ petition. The court declined the request to withdraw the writ petition. The petition had been filed in public interest.


      The amendments sought to be made by the above amendment acts (Amendment Act 46 of 1999 and Amendment Act 22 of 2002) have been challenged but the hon'ble apex court refused to strike down the aforesaid amendments on the ground that there was no infirmity in the same.

      Summons to the Defendant within 30 days.

      A clarification was sought on an amendment made to Section 27 dealing with summons to the defendant. It has to be done within 30 days from the date of the institution of the suit. The hon'ble court clarified that object of this section is to avoid long delay in issue of summons for want of steps by the plaintiff. If all that is required to be done by a party is duly performed then compliance has been done by the party and no fault can be attributed to the party. The objective being, if a party concerned has taken steps to file the process fee along with completing the other formalities which are required to enable the court to issue the summons then such a party is not at fault.

      Arbitration, Conciliation, Judicial Settlement and Mediation.

      Section 89 introduced in the Code of civil procedure, 1908:

      It speaks of settlement of disputes outside the court through arbitration,conciliation, judicial settlement including settlement through Lok Adalat and mediation. Held that it being imperative that resort should be had to Alternative Dispute Resolution Mechanism with a view to bring to an end litigation between the parties at an early date. The parties shall follow the procedures as provided by the mechanism and accordingly appropriate rules be framed with regard to mediation.

      The ADR mechanism is successful in most of the countries but if a matter is not settled through conciliation or mediation or judicial settlement despite efforts being made, the case will ultimately go to trial.

      Section 89 is a new provision and even though arbitration or conciliation has been in place as a mode for setting the disputes, this has not really reduced the burden on the courts. Thus the court suggested that certain modalities have to be framed to make this amendment work. It being suggested to form a Committee to ensure that the amendments made become effective and result in quicker dispensation of justice.
      Any creases which require to be ironed out can be identified and apprehensions which may exist in the minds of the litigating public or the lawyer's clarified.

      A model case management formula as well as rules and regulations which should be followed while taking recourse to the ADR (Alternative Dispute Resolution) is referred to in Section 89. The model rules, with or without modification, which are formulated may be adopted by the High Courts concerned for giving effect to Section 89(2)(d).

      Intra Court Appeal.

      Section 100A which deals with intra-court appeals was absolutely fine as opined by the hon'ble court. No prejudice would be caused to the litigants by not providing for intra-court appeal, even where the value involved is large. The High Court by Rules, can provide that the Division Bench will hear the regular first appeal. A further right of appeal where the amount involved is nominal to a Division Bench will be increasing the workload of courts unnecessarily.

      Rejection of the Plaint.

      Order 7 Rule 11 to which Clauses (e) and (f) have been added which enable the court to reject the plaint where it is not filed in duplicate or where the plaintiff fails to comply with the provisions of Rule 9 of Order 7. There may not be an automatic rejection of the plaint at the first instance. The court should give an opportunity to rectify the defect and if the same not being done the court will have the liberty or the right to reject the plaint.

      Examination of Chief of the Witnesses.

      Order 18, Rule 4 has been substituted and Sub-rule (1) provides that in every case examination-in-chief of the witnesses shall be on affidavits and copies thereof shall be supplied to the opposite parties by the party who calls them for evidence.

      It being contended that it may not be possible for the party calling the witness to compel the witness to file an affidavit. It often happens that the witness may not be under the control of the party who wants to rely upon his evidence and that witness may have to be summoned through court.

      Order 16 Rule 1 provides for list of witnesses being filed and summons being issued to them for being present in court for recording their evidence. Rule 1A, on the other hand, refers to production of witnesses without summons where any party to the suit may bring any witness to give any evidence or to produce documents.

      Held by the apex court, reading the provisions of Order 16 and Order 18 together it appears to us that Order 18 Rule 4(1) will necessarily apply to a case contemplated by Order 16 Rule 1A, i.e. where any party to a suit, without applying for summoning under Rule 1 brings any witness to give evidence or produce any document. In such a case, examination-in-chief is not to be recorded in court but shall be in the form of an affidavit.

      Held that whether a witness shall be directed to file affidavit or be required to be present in court for recording of his evidence is a matter to be decided by the court in its discretion having regard to the facts of each case.

      Evidence of a witness to be taken by the Court or by the Commissioner.

      Order 18 Rule 4(2) gives the court the power to decide as to whether evidence of a witness shall be taken either by the court or by the Commissioner.

      An apprehension was raised to the effect that the court has no discretion and once it decides that the evidence will recorded by the Commissioner then evidence of other witnesses cannot be recorded in court.

      The hon'ble bench did not agree to the above contention. The Court has a discretion to either record the evidence in Court or through Commissioner or either of them.

      Order 18 Rule 4(3) provides that the evidence may be recorded either in writing or mechanically in the presence of the Judge or the Commissioner. The use of the word 'mechanically' indicates that the evidence can be recorded even with the help of the electronic media, audio or audio-visual, and whenever the evidence is recorded by the Commissioner it will be advisable that it should be done simultaneously,at least an audio recording of the statement of the witnesses so as to obviate any controversy at a later stage.

      Held by the court that Rule 17A has been deleted by the Amendment Act, 2002 with a view that unnecessarily applications are not filed primarily with a view to prolong the trial. The contention of the counsel as to deletion may cause hardship to the litigants was not accepted by the hon'ble court.

      Memorandum of Appeal.

      Rule 9 which was inserted in Order 41 states of "Registry of memorandum of appeal". The court from whose decree an appeal lies shall entertain the memorandum of appeal and shall endorse thereon the date of presentation and shall register the appeal in a book of appeal kept for that purpose. This book be called the register of appeal.
      It being a clear proposition of law that an appeal is to be filed under Order 41 Rule 1 in the court in which it is maintainable.

      Order 41 Rule 9 contemplates that a copy of memorandum of appeal which has been filed in the Appellate Court should also be presented before the court against whose decree the appeal has been filed and endorsement thereof shall be made by the decreeing court in a book called the Register of Appeals.

      The intention of the Legislature being that the court against whose decree an appeal has been filed should be made aware of the factum of the filing of the appeal which may or may not be relevant at a future date.

      Now just because a memorandum of appeal is not filed under Order 41 Rule 9 will not, to our mind, make the appeal filed in the appellate court as a defective one.

      The hon'ble court  hoped that the amendments made in the Code of Civil Procedure would help in expeditious disposal of cases in the trial courts and the appellate courts.

      The hon'ble apex court further held, that a copy of the judgment of the present matter/writ petition be sent to the Registrars of all the High Court’s so that necessary action can be taken by the respective High Courts and any writ petition pending in those High Courts can be formally disposed of.

      Thus the amendments made to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 were upheld/guarded by the hon'ble apex court in the present Writ Petition (civil) 496 of 2002.

      Procedure is an enabling tool to achieve the objectives of equity and justice. It may not be easy to challenge the same by way of invoking the writ jurisdiction/s.

       

       


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      2002 (10) TMI 796 - Supreme Court

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      ActsIncome Tax