As per section 147 of the income tax act; where the AO has reason to conclude that any income liable to tax has escaped the assessment for any AY; he may, subject to the provisions of section 148 to 153, assess or reassess such income. He may also evaluate any other income chargeable to tax; which has escaped the assessment and came to his notice consequently in the course of the proceedings. He may recompute the loss or the depreciation allowance or any other allowance for the AY concerned.
Section 147-Income Escaping Assessment
Where an assessment under this section or 143(3) has been made for the relevant AY; the assessing officer shall take no action under this section after four years from the end of the relevant AY, unless any income imputable to tax has escaped the assessment for such AY by reason of the failure on the part of the assessee to make a return U/S 139 or in response to a notice issued U/S 142(1) or 148(1) or to disclose fully and honestly all material facts necessary for his assessment, for that AY.
However, the above provision shall not apply where any income from any asset (including financial interest in any entity) resided outside India, imputable to tax, has escaped the assessment for any AY. The AO may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.
The following cases shall be the cases, where income chargeable to tax has escaped assessment:
Where the assessee has not furnished ITR although his total income in the PY exceeded the maximum amount which is not liable to tax.
Where the assessee has furnished the ITR, but no assessment has been made; and the assessing officer notices that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
In case, where the assessee has failed to furnish a report in respect of any international transaction; which he was so required U/S 92E.
Where a person is found to have any asset (including financial interest in any entity) located outside India.
Where the assessee has not furnished the return of income or has furnished the return of income and on the basis of information or document received from the prescribed income tax authorities under 133C (2), the AO notices that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
In case, an assessment has been made, but;
-Income liable to tax has been under-assessed;
-Such income has been assessed at too low rate;
-Such income has been made the subject of excessive relief under this act;
-Excessive loss or depreciation allowance or any other allowance under this act has been computed.
For assessment or reassessment, the AO may assess or reassess the income in respect of any issue; which has escaped the assessment, and such issue comes to his notice subsequently in the course of the proceedings; notwithstanding that the reasons for such issue have not been included in the reasons recorded U/S 148(2).
The provisions of this section shall apply to any AY starting on or before the 1st April 2012.
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