Amendment of section 147.
61. In section 147 of the Income-tax Act, with effect from the 1st day of July, 2012—
(i) after the first proviso, the following proviso shall be inserted, namely:—
“Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:”;
(ii) in the second proviso, for the words “Provided further”, the words “Provided also” shall be substituted;
(iii) in Explanation 2,—
(I) after clause (b), the following clause shall be inserted, namely:—
“(ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;”.
(II) after clause (c), the following clause shall be inserted, namely:—
“(d) where a person is found to have any asset (including financial interest in any entity) located outside India.”;
(iv) after Explanation 3, the following Explanation shall be inserted, namely:—
“Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section, as amended, by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.”.
Notes on Clauses:
Clause 61 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment.
The existing provisions of the aforesaid section 147 enable the Assessing Officer to assess or re-assess income which has escaped assessment for any assessment year, after recording reasons for doing so. It is further provided that once an assessment is reopened, any other income which has escaped assessment and which comes to the notice of the Assessing Officer subsequently in the course of the proceeding under this section, can also be included in the assessment.
The first proviso to the aforesaid section provides that if an assessment has been made for the relevant assessment year under sub-section (3) of section 143 or this section, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless the income has escaped assessment due to the failure on the part of the assesse to file a return under section 139 or 142(1) or 148 or to disclose fully and truly all material facts necessary for his assessment.
Explanation 2 to the aforesaid section clarifies the cases which shall also be deemed to be the cases where income chargeable to tax has escaped assessment.
It is proposed to insert a proviso to the aforesaid section so as to provide that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year.
It is further proposed to insert a new sub-clause (ba) to the aforesaid Explanation, so as to include therein the case where the assessee has failed to furnish a report in respect of any international transaction which he was required under section 92E for the purposes of deemed cases where income chargeable to tax has escaped assessment under the aforesaid section.
It is also proposed to insert a new clause (d) to Explanation 2 so as to provide that income shall be deemed to have escaped assessment where a person is found to have any asset (including financial interest in any entity) located outside India.
The provisions of section 147 are procedural in nature. However, it is clarified by inserting a new Explanation 4 to the aforesaid section that the above amendments shall also be applicable to the proceedings initiated under this section for any assessment year beginning on or before 1st April, 2012.
These amendments will take effect from 1st July, 2012.
