The action of the Income Tax Department often creates an atmosphere of concern among the people. Investigation of the department in cases of tax evasion or financial disturbances is very strict, but the Delhi High Court has recently given an important verdict for taxpayers regarding these actions.
Big relief from High Court’s decision
The Delhi High Court has made it clear in its order that the Income Tax Department cannot reopen cases older than three years in normal condition. This order of the High Court has brought great relief to the taxpayers, as they will no longer need to be worried about old cases.
How long can the department open old cases?
According to the Delhi High Court, in general cases, the Income Tax Department can open old cases for re-assessment only up to the limit of 3 years. In only certain cases this limit can be increased to 10 years.
In which cases will the limit of 10 years be applicable?
If the amount of tax evasion in a case is Rs 50 lakh or more, or there are cases of severe fraud (serious fraud), then the Income Tax Department can also reopen 10 years old cases.
Important remarks of the High Court
The decision was given by a bench of Justice Rajiv Shakdhar and Justice Girish Kathpalia in the Delhi High Court. The court clarified that notice cannot be issued three years after the assessment year ends under normal circumstances. This period can be increased to 10 years only in serious cases or large tax evasion conditions.
Decision given under which section?
This decision was given on the validity of the notice issued under Section 148 of the Income Tax Act. The court said that according to the old rules, the department could open old cases for 6 years, but later the government amended the rules.
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