Reopening of assessment
166. (1) The Assessing Officer shall, for reasons to be recorded in writing, reopen a case for reassessment, if he has reason to believe that any tax base liable to tax has escaped assessment for the relevant financial year.
(2) The Assessing Officer shall, for reopening a case, serve on the assessee a notice requiring him to furnish, within thirty days, a return of tax bases for any financial year.
(3) The notice issued under sub-section (2) shall specify the reasons for reopening the case.
(4) The tax base liable to tax shall be deemed to have escaped assessment in the following cases, namely:-
(a) where the tax base for the relevant financial year exceeds the maximum amount not liable to tax but,-
(i) the return of the tax base has not been furnished;
(ii) no notice has been issued under section 151 or section 152; and
(iii) the time limitation for issuing such notice has expired;
(b) where a return of tax bases has been furnished by the assessee, but -
(i) no communication has been received under section 156;
(ii) the time limitation for issuance of such communication has expired; and
(ii) the assessee has understated the tax bases, or has claimed excessive loss, deduction, allowance or relief, in the return;
(c) where a scrutiny assessment has been made under section 162 or section 163, but,-
(i) the tax bases liable to tax has been under-assessed;
(ii) the tax bases have been assessed at too low a rate;
(iii) the tax bases have been made the subject of relief to which the assessee is not entitled to, under this Code;
(iv) excessive loss or depreciation allowance or any other allowance under this Code has been computed;
(v) the assessment has not been made in accordance with any decision, prejudicial to the assessee, rendered by, -
(A) Appellate Tribunal, National Tax Tribunal, High Court or Supreme Court in the case of the assessee or any other person under this Code, the Income-tax Act, 1961; or
(B) a court in the case of the assessee or any other person under any other law;
(vi) the computation or assessment has not been made in accordance with any order, direction, instruction or circular issued by the Board;
(vii)the computation or assessment has not been made by the Assessing Officer in accordance with any order, direction, instruction or circular issued, before making of the assessment, by an authority to whom the Assessing Officer is subordinate;or
(viii)any objection has been raised, or observation made, by the Comptroller and Auditor General of India to the effect that the assessment has not been made in accordance with the provisions of this Code or the Income-tax Act, 1961;
(d) where search and seizure operation has been carried out under section 139, or material has been obtained in pursuance to a requisition under section 140, in the case of the person;
(e) where any material which has been seized, or obtained in pursuance to a requisition, has a bearing on the determination of the tax bases of a person other than the person referred to in clause (d).
(5) The person in receipt of notice issued under sub-section (2) shall furnish the return within thirty days from the date of receipt of the notice and the return shall be furnished and verified, in the prescribed form and manner and setting forth such other particulars as may be prescribed.
(6) The notice under sub-section (2) shall be issued,-
(a) for the seven financial years immediately preeceeding the financial year in which the search and seizure operation has been carried out or the material has been obtained; and
(b) within seven years from the end of the relevant financial year in any other case.
(7) However, the notice under sub-section (2) for any financial year may be issued at any time, if-
(a) the reassessment is to be made in consequence of, or to give effect to, any finding, or direction, contained in an order passed,-
(i) by any authority or Court in any proceeding under this Code by way of appeal, reference or revision;or
(ii) by a Court in any proceeding under any other law; and
(b) the period referred to in sub-section (6) for issue of such notice had not expired at the time the order, which was the subject-matter of appeal, reference or revision was made.
(8) No notice under sub-section (2) shall be issued by the Assessing Officer unless the Chief Commissioner or Commissioner,-
(a) is satisfied on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice; and
(b) he grants his approval for issue of such notice by the Assessing Officer.
(9) Any assessment proceeding relating to any financial year falling within the period of seven financial years referred to in sub-section (6) shall abate if it is pending on the date of the initiation of the search, or on the date of obtaining the material, as the case may be.
(10) The provisions of this section shall also apply in the case of any other person, as if a search and seizure operation has been carried out under section 139 in his case, if any material which has a bearing on the determination of the tax bases of such other person, has been-
(a) seized in the course of search and seizure under section 139 in the case of the person referred to in clause (d) of sub-section (4); or
(b) obtained in pursuance to the requisition under section 140 in the case of the person referred to in clause (d) of sub-section (4).
(11) On receipt of a return in pursuance to a notice under sub-section (2), or after the expiry of time prescribed for furnishing the return in pursuance to such notice, the Assessing Officer shall, by an order in writing, make the reassessment of the total income and the provisions of sections 157 to 164 shall apply accordingly.
(12) For the purposes of this section,-
(a) date of initiation of search, or the date of obtaining the material under subsection (9) to sub-section (11) shall be construed as reference to the date of receiving the material by the assessing officer having jurisdiction over such other person;
(b) reassessment shall include any other part of the tax base liable to tax which has escaped assessment and which comes to the notice of the assessing officer subsequently in the course of reassessment proceeding regardless that the fact of such part of the tax base having escaped assessment has not been included in the reasons recorded for re-opening under sub-section (1); and
(c) reopening a case for reassessment shall include opening a case for assessment where return for a tax base has not been furnished before the issue of notice under sub-section (2).
