RECENT CHANGES IN INCOME TAX ACT, 1961

[Mr. M. GOVINDARAJAN]

Recent Changes

From 28.03.2022 to 01.04.2022 the following notifications have been issued by the Central Board of Direct Taxes (CBDT) and the Central Government-

• Notification No. 15/2022, dated 28.03.2022 by the Central Government - The Faceless Jurisdiction of Income-tax Authorities Scheme, 2022.
• Notification No. 16/2022, dated 28.03.2022 by the Central Government – Modification of Notification Nos. 93/2020, 10/2021, 20/2021, 38/2021, 74/2021, 113/2021 and 16/2022;
• Notification No. 17/2022, dated 29.03.2022 by the CBDT – Income Tax (Third Amendment) Rules, 2022;
• Notification No. 18/2022, dated 29.03.2022 by Central Government - e-Assessment of Income Escaping Assessment Scheme, 2022;
• Notification No. 19/2022, dated 30.03.2022 – by the Central Government – The Faceless Inquiry or Valuation Scheme, 2022
• Notification No. 20/2022, dated 30.03.2022 – by the Central Government – Non application of Section 206C (1G) to an individual who is nonresident;
• Notification No. 21/2022, dated 30.03.2022 – by the CBDT – Income Tax (Fourth Amendment) Rules, 2022;
• Notification No. 23/2022, dated 01.04.2022 – by the CBDT.

Faceless jurisdiction of income tax Authorities

Section 130(1) of the Income Tax Act, 1961 (‘Act’ for short) provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of-

• exercise of all or any of the powers and performance of all or any of the functions conferred on, or, as the case may be, assigned to income-tax authorities; or
• vesting the jurisdiction with the Assessing Officer; or
• exercise of power to transfer cases; or
• exercise of jurisdiction in case of change of incumbency.

Section 130(2) provides that the Central Government may, for the purpose of giving effect to the scheme made by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.

In exercise of the powers conferred by sub-sections (1) and (2) of section 130 of the Income-tax Act, 1961 (43 of 1961), the Central Government made a scheme called as ‘The Faceless Jurisdiction of Income-tax Authorities Scheme, 2022’, vide Notification No.15/2022, dated 28.03.2022.  The notification came into effect from 28.03.2022. 

According to this scheme all or any of powers and functions may be assigned to the Income Tax Officers under section 120 of the Act.  The jurisdiction of the Assessing Officers under section 124 of the Act shall be in a faceless manner.  The cases will be allocated through automated allocation in accordance with and to the extent provided in-

•  section 144B of the Act with reference to making faceless assessment of total income or loss of assessee;
•  the Faceless Appeal Scheme, 2021 notified under sub-sections (6B) and (6C) of section 250 of the Act with reference to the disposal of appeals;
• the Faceless Penalty Scheme, 2021 notified under sub-sections (2A) and (2B) of section 274 of the Act with reference to imposition of penalty under Chapter XXI of the Act;
• the e-Verification Scheme, 2021 notified under sub-sections (1) and (2) of section 135A of the Act with reference to the calling for of information under section 133 of the Act, collecting certain information under section 133B of the Act, or calling for information by prescribed authority under section 133C of the Act, or exercise of power to inspect register of companies under section 134, or exercise of power of Assessing Officer under section 135 of the Act;
•  the e-Settlement Scheme, 2021 notified under sub-sections (11) and (12) of section 245D of the Act with reference to the settlement of pending applications by the interim Board;
• the e-advance rulings Scheme, 2022 notified under sub-sections (9) and (10) of section 245R of the Act with reference to dispute resolution for persons or class of persons, as specified by the Board, who may opt for dispute resolution under the Chapter XIX-AA of the Act with reference to dispute arising from any variation in the specified order fulfilling the specified conditions.

Modification of notifications

Section 3(1) of the Taxation and other Laws (Relaxation and amendment of certain provisions) Act, 2020 provides that where, any time-limit has been specified in, or prescribed or notified under, the specified Act which falls during the period from the 20.03.2020 to the 31.03.2020 or such other date after 31.03.2020, as the Central Government may, by notification, specify in this behalf, for the completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval, or such other action, by whatever name called, by any authority, commission or tribunal,  filing of any appeal, reply or application or furnishing of any report, document, return or statement or such other record, by whatever name called, under the provisions of the specified Act.

By various Notifications the following acts are notified as specified acts by the Central Government-

• Direct Tax Vivad Se Vishwas Act, 2020;
• Income Tax Act, 1961;
• Prohibition of Benami Property Transaction Act, 1988;
• Chapter VIII of Finance Act, 2016;

By various notifications the Central Government extended the dates to some other dates.  Vide Notification No. 16/2022, dated 28.03.2022 the said date has been extended to 30^th September 2022.

Income Tax (Third Amendment) Rules, 2022

The CBDT amended the Income Tax Rules vide Notification No. 17/2022, dated 29.03.2022.    The amendments in the said Notification shall come into force with effect from 01.04.2022.  This amendment inserted Rule 114 (5A).  The new Rule provides that if any person fails to intimate the Aadhaar number to the prescribed authority is liable to pay fine ₹ 500/- if the same is done within three months from the date referred to in sub-section (2) of section 139AA such person shall pay a fee of ₹ 500/-  In any other case the fee payable is ₹ 1000/-.

e-Assessment of Income Escaping Assessment Scheme, 2022

Section 151A of the Act provides the procedure for conducting faceless assessment of income escaping assessment.  Section 151A(2) gives powers to the Central Government to make a scheme by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.

Vide Notification No. 19/2022, dated 30.03.2022 the Central Government made ‘the e-assessment of Income Escaping Assessment Scheme, 2022’.  This scheme comes into effect from 29.03.2022. 

Clause 3 of the Scheme provides that the assessment, re-assessment or re-computation of income under Section 147 of the Act, issuance of notice under section 148 shall be made through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.

Faceless Inquiry or Valuation Scheme, 2022

Section 142B of the Act provides the procedure for faceless inquiry or valuation.  Section 142B(2) gives powers to the Central Government to notify that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.

Vide Notification No. 19/2022, dated 30.03.2022 the Central Government made ‘the Faceless Inquiry or Valuation Scheme, 2022’  This scheme comes into effect from 30.03.2022.  The scheme provides that-

• issuing notice under sub-section (1) of section 142 of the Act,
• making inquiry before assessment under sub-section (2) of section 142 of the Act,
•  directing the assessee to get his accounts audited under sub-section (2A) of section 142 of the Act,
• estimating the value of any asset, property or investment by a Valuation Officer under section 142A of the Act,

shall be in a faceless manner, through automated allocation, in accordance with and to the extent provided in section 144B of the Act with reference to making faceless assessment of total income or loss of assessee.

Notification No. 20/2022

Vide Notification No. 20/2022, dated 30.03.2022 the Central Government notified that the he provisions of sub-section (1G) of section 206C shall not apply to an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act, and who is visiting India shall come into effect from 30.03.2022. 

Income Tax (Fourth) Amendment Rules, 2022

The CBDT made the Income Tax (Fourth Amendment) Rules, 2022, Vide Notification No.21/2022, dated 31.03.2022, with effect from 01.04.2022.  In this the CBDT introduced the new income tax substituting the old forms as detailed below-

• Forms SAHAJ ITR-1
• ITR-2
• ITR-3
• SUGAM ITR-4
• ITR-5
• ITR-6
• ITR-V
• ITR- Ack

Income Tax (Fifth Amendment) Rules, 2022

The CBDT made the Income Tax (Fifth Amendment) Rules, 2022,   vide Notification No.23/2022, dated 01.04.2022, with effect from 01.04.2022 with effect from 01.04.2022.  In this amendment a new ITR-7 form has been substituted for the old one.