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Business
Finance Bill: Changes in procedural law
QUESTION: What are the changes brought about in procedural law as regards returns and assessments by the Finance Bill, 2002?
ANSWER: There have been a number of changes as regards assessment procedure.
Return through electronic media possible: It is now possible for salaried employees to file return through electronic media in such form as floppy, diskette, magnetic cartridge tape, CD ROM or any other computer readable media through the employer at the option of the employee.
More compulsory returns by non-taxable persons: Other institutions hitherto exempt under Section 10 would have to file returns under Sec. 139(4B) on the assumption that they are not eligible for exemption. This is intended to enable the assessing officer to check the return and take appropriate action for cancellation of the approval or exemption, where there is a violation of the conditions for such exemption.
Belated filing of TDS certificate permitted: Where claim for credit for tax deduction at source is made without TDS certificate, it will not be treated as a defective return. On the contrary, such certificate filed within two years from the end of the assessment year would enable credit and refund as now proposed under the new sub-section (14) to Sec. 155. The problem however, may persist even after two years for no fault of assessee. This amendment overlooks that no direct demand is permissible under Sec. 205 even where tax is deductible at source and, at any rate, tax was deducted at source.
Prima facie adjustments to be back: A major change is the introduction of the concept of limited scrutiny under Sec. 143(2)(i), where the assessing officer can elicit objection in respect of any "claim of loss, exemption, deduction, allowance or relief" by way of a notice and pass an order on consideration of the reply. The time limit for such issue of notice is 12 months from the end of the month in which the return is filed. Apparently the object of the notice is to retain the right of the assessing officer to take up the case for complete scrutiny under Sec. 143(2)(ii) in due course after treating the same return for limited scrutiny under Sec. 143(2)(i) and also to recompute income in case of any information requiring such recomputation under Sec. 148 without giving the taxpayer scope for objection on the ground that the matter has already been examined and that any different view would tantamount to change of opinion not warranted by law.
(To be continued)
S. Rajaratnam
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