Insertion of new section 144BA.
59. After section 144B of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2013, namely:—
Reference to Commissioner in certain cases.
“144BA. (1) If, the Assessing Officer, at any stage of the assessment or reassessment proceedings before him having regard to the material and evidence available, considers that it is necessary to declare an arrangement as an impermissible avoidance arrangement and to determine the consequence of such an arrangement within the meaning of Chapter X-A, then, he may make a reference to the Commissioner in this regard.
(2) The Commissioner shall, on receipt of a reference under sub-section (1), if he is of the opinion that the provisions of Chapter X-A are required to be invoked, issue a notice to the assessee, setting out the reasons and basis of such an opinion, for submitting objections, if any, and providing an opportunity of being heard to the assessee within such period, not exceeding sixty days, as may be specified in the notice.
(3) If the assessee does not furnish any objection to the notice within the time specified in the notice issued under sub-section (2), the Commissioner shall issue such directions as it deems fit in respect of declaration of the arrangement to be an impermissible avoidance arrangement.
(4) In case the assessee objects to the proposed action, and the Commissioner, after hearing the assessee in the matter, is not satisfied by the explanation of the assessee, then, he shall make a reference in the matter to the Approving Panel for the purpose of declaration of the arrangement as an impermissible avoidance arrangement.
(5) If the Commissioner is satisfied, after having heard the assessee that the provisions of Chapter X-A are not to be invoked, he shall by an order in writing communicate the same to the Assessing Officer with a copy to the assessee.
(6) The Approving Panel, on receipt of reference from the Commissioner under sub-section (4) shall issue such directions, as it deems fit, in respect of the declaration of the arrangement as an impermissible avoidance arrangement in accordance with the provisions of Chapter X-A including specifying the previous year or years to which such declaration of an arrangement as an impermissible avoidance arrangement shall apply.
(7) No direction under sub-section (6) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, as the case may be.
(8) The Approving Panel may, before issuing any direction under sub-section (6),—
(i) if it is of the opinion that any further inquiry in the matter is necessary, direct the Commissioner to make such further inquiry or cause to make such further inquiry to be made by any other income-tax authority and furnish a report containing the results of such inquiry to it; or
(ii) call for and examine such records related to the matter as it deems fit; or
(iii) require the assessee to furnish such document and evidence as it may so direct.
(9) If the members of the Approving Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members.
(10) Every direction, issued by the Approving Panel under sub-section (6) or the Commissioner under sub-section (3), shall be binding on the Assessing Officer and the Assessing Officer on receipt of the directions shall proceed to complete the proceedings referred to in sub-section (1) in accordance with the directions and provisions of Chapter X-A.
(11) If any direction issued under sub-section (6) specifies that declaration of the arrangement as impermissible avoidance arrangement is applicable for any previous year to which the proceeding referred to in sub-section (1) pertains, then, the Assessing Officer while completing any assessment or reassessment proceedings of the assessment year relevant to such other previous year shall do so in accordance with such directions and the provisions of Chapter X-A and it shall not be necessary for him to seek fresh direction on the issue for the relevant assessment year.
(12) No order of assessment or reassessment shall be passed by the Assessing Officer without the prior approval of the Commissioner if any tax consequences have been determined in the order under the provisions of Chapter X-A pursuant to a direction issued under sub-section (6) or sub-section (3) declaring the arrangement as impermissible avoidance arrangement.
(13) No direction under sub-section (6) shall be issued after a period of six months from the end of the month in which the reference under sub-section (4) was received by the Approving Panel.
(14) The Board shall, for the purposes of this section, constitute an Approving Panel consisting of not less than three members being the income tax authorities of the rank of Commissioner and above.
(15) The Board may make rules for the purposes of the efficient functioning of the Approving Panel and expeditious disposal of the references received under sub-section (4).”.
Notes on Clauses:
Clause 59 of the Bill seeks to insert a new section 144BA in the Income-tax Act relating to reference to Commissioner in certain cases.
The proposed sub-section (1) of the aforesaid new section 144BA provides that the Assessing Officer, if at any stage of assessment or reassessment proceedings considers it necessary to invoke provisions of the newly inserted Chapter X-A, shall refer the matter to the Commissioner.
The proposed sub-section (2) of the aforesaid new section provides that on receipt of reference from Assessing Officer if Commissioner is of the opinion that the provisions of newly inserted Chapter X-A are required to be invoked, he shall issue notice to the assessee seeking objections within the time specified in notice.
It is provided that the time given in notice shall not exceed sixty days and notice shall disclose reasons and basis of proposed action.
The proposed sub-section (3) of the aforesaid new section provides that if the assessee does not object or respond to the notice the Commissioner may issue such directions as he deems fit regarding declaration of an arrangement as an impermissible avoidance arrangement.
The proposed sub-section (4) of the aforesaid new section provides that if the assessee object to invocation of provisions of Chapter X-A and Commissioner is not satisfied with reply of assessee and having heard the assessee, refer the matter to an Approving Panel.
The proposed sub-section (5) of the aforesaid new section provides that if, after hearing the assessee, the Commissioner is satisfied that it is not a fit case for invoking provisions of Chapter X-A, he may pass an order in writing with copy to the Assessing Officer and the assessee.
The proposed sub-section (6) of the aforesaid new section provides that Approving Panel on receipt of reference from Commissioner shall issue such directions as it deems fit in respect of declaration of an arrangement as an impermissible avoidance arrangement. It may also provide in direction the previous year or years to which such direction shall apply.
The proposed sub-section (7) of the aforesaid new section provides that a direction prejudicial either to assessee or revenue shall not be issued unless opportunity of being heard has been granted to assessee or the Assessing Officer, as the case may be.
The proposed sub-section (8) of the aforesaid new section provides that Approving Panel may before issuing directions can call for records or evidences and direct Commissioner to carry out further inquiry and submit report.
The proposed sub-section (9) of the aforesaid new section provides that in case of difference in opinion on an issue the direction shall be issued according to majority opinion.
The proposed sub-section (10) of the aforesaid new section provides that every direction issued by Approving Panel or Commissioner shall be binding on Assessing Officer and Assessing Officer shall complete the proceeding in accordance with such directions and provisions of newly inserted Chapter X-A.
The proposed sub-section (11) of the aforesaid new section provides that if direction is applicable to any other previous year other than in respect of which reference was made, then, while completing assessment or reassessment proceedings for such other previous years, Assessing Officer shall be bound by directions and provisions of Chapter X-A and fresh reference on the issue would not be required.
The proposed sub-section (12) of the aforesaid new section provides that assessment or reassessment order where provisions of Chapter X-A are invoked shall be passed by the Assessing Officer only with prior approval of the Commissioner.
The proposed sub-section (13) of the aforesaid new section provides the limitation of six months from end of month of receipt of reference, by approving panel for issue of directions.
The proposed sub-section (14) of the aforesaid new section provides for constitution of Approving Panel by the Board consisting of income-tax authorities of rank of Commissioner or above and consisting of not less than three members.
The proposed sub-section (15) of the aforesaid new section provides the power to Board to frame rules for purpose of efficient functioning of the Approving Panel.
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.
