Re-opening of assessment.
159. (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 chargeable 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 a period of thirty days, a return of tax bases for any financial year, in such form, verified in the manner and setting forth such other particulars as may be prescribed.
(3) The tax bases chargeable 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 tax bases has not been furnished;
(ii) no notice has been issued under section 146; 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 assessment has been made; and
(ii) the assessee has understated the tax bases, or has claimed excessive loss, deduction, allowance or relief in the return;
(c) where an assessment has been made under section 155 or section 156, 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 asses-see is not entitled to under this Code;
(iv) excessive loss or capital allowance or any other allowance under this Code has been computed;
(v) the computation or assessment has not been made in accordance with any order, direction, instruction or circular issued by the Board;
(vi) 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
(vii) any objection has been raised by the Comptroller and Auditor General of India to the effect that the assessment has not been made in accordance with the provisions of the Income-tax Act, 1961 or the Wealth-tax Act, 1957 as they stood before the commencement of this Code or this Code and such objection forms part of the report of the Comptroller and Auditor General of India laid before each House of Parliament;
(d) where search and seizure has been carried out under section 135, or material has been obtained in pursuance of a requisition under section 136, in the case of the person;
(e) where any material which has been seized, or obtained in pursuance of a requisition, has a bearing on the determination of the tax bases of a person other than the person referred to in clause (d).
(4) The notice under sub-section (2) shall be issued—
(a) for the seven financial years immediately preceding the financial year in which the search and seizure has been carried out or the material has been obtained; and
(b) within a period of seven financial years from the end of the relevant financial year in any other case.
(5)
Notwithstanding anything in sub-section (4), 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 for the time being in force; and
(b) the period referred to in sub-section (4) 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.
(6) No notice under sub-section (2) shall be issued—
(a) in a case where an assessment has been made under section 155 or section 156 or under this section, by an Assessing Officer below the rank of Joint Commissioner—
(i) within a period of four years from the end of the relevant financial year, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice;
(ii) after the expiry of a period of four years from the end of the relevant financial year, unless the Commissioner is so satisfied;
(b) in any other case, by an Assessing Officer below the rank of Joint Commissioner after the expiry of a period of four years from the end of the relevant financial year, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice.
(7) The Commissioner or the Joint Commissioner, being satisfied on the reasons recorded by the Assessing Officer regarding fitness of a case for the issue of notice under this section, is not required to issue such notice himself.
(8) Any assessment proceeding relating to any financial year falling within the period of seven financial years referred to in sub-section (4) 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.
(9) The provisions of this section shall also apply in the case of any other person, referred to in clause (e) of sub-section (3), as if a search and seizure has been carried out under section 135 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 135 in the case of the person referred to in clause (d) of sub-section (3); or
(b) obtained in pursuance of the requisition under section 136 in the case of the person referred to in clause (d) of sub-section (3).
(10) On receipt of a return in pursuance of a notice under sub-section (2), or after the expiry of time prescribed for furnishing the return in pursuance of such notice, the Assessing Officer shall, by an order in writing, make the reassessment of the total income and the provisions of sections 150 to 158 both inclusive shall apply accordingly.
(11) In any reassessment made under this section, the tax shall be chargeable at the rate or rates at which it would have been charged had the tax bases not escaped assessment.
(12) The proceedings under this section, excluding the proceedings initiated in consequence of the condition specified in clauses (d) and (e) of sub-section (3) shall be dropped, if—
(a) the assessee has not impugned any part of the original assessment order for the relevant financial year under sections 178 and 192;
(b) he establishes that he had been assessed on an amount not lower than what he would be rightly liable for, even if the tax base alleged to have escaped assessment had been taken into account; and
(c) the original assessment order has not been revised under section 161 or section 191.
(13) For the purposes of this section,—
(a) date of initiation of search, or the date of obtaining the material under subsections (8) and (9) shall be construed as a 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 bases chargeable to tax which has escaped assessment and which comes to the notice of the Assessing Officer subsequently in the course of reassessment proceedings, notwithstanding that the reasons recorded for reopening under sub-section (1) do not refer to such part of tax bases; and
(c) reopening a case for reassessment shall include opening a case for assessment where return for a tax bases has not been furnished before the issue of notice under sub-section (2).
