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No Income Tax Records beyond 3 years can be called by tax authorities.
No records beyond 3 years can be called by the tax authorities if the amount is not exceeding Rs. 50 Lakh or if the amount is not represented by any assets.
In short, the following incomes escaping assessment, after the expiry of 3 years from the end of the relevant assessment year cannot be called for:
1. Income not represented by any asset.
2. Income which is not likely to amount to Rs. 50 lakhs or more per year.
3. Any Bogus expenditure claims which are not represented by any asset.
4. Any Bogus Purchases
4. Disallowable expenses/deductions claimed which are not represented by any asset.
5. Acquisition of assets (e.g. land or building, etc.) for less than Rs. 50 lakhs per year.
6. Foreign tour expenses
7. Expenses incurred in the marriage
8. Non-compliance with TDS/TCS provisions beyond 3 years.
All above is possible as a result of amendment by the FA-2021 which has amended section 149 prescribing for the time limit for issue of notice for reassessment of income escaping assessment. The nre section 149 reads as under:
Time limit for notice.
149. (1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.