Shikhar Garg – [2025] 173 taxmann.com 551 (Article)
The reassessment provisions introduced in the Income Tax Bill, 2025 appear to be a classic case of old wine in a new bottle. After the substantial overhaul brought by the Finance Act, 2021 – which was lauded for streamlining procedures, reducing litigation, and fostering taxpayer confidence—the proposed rollback to earlier mechanisms in the 2025 Bill is both perplexing and concerning.
1. The 2021 Reform – A Promised Shift Toward Efficiency and Fairness
The Finance Act, 2021 ushered in a new era of reassessment jurisprudence. One of its key features was a significant curtailment of the reassessment window-from six years to three years under Section 148—except in cases involving serious tax evasion where income chargeable to tax, represented in the form of assets, exceeded ₹50 lakh. Such cases were allowed to be reopened up to ten years. The post 2021 act aligns with the enhanced access to third-party data under Sections 285BA and 285BB, including Annual Information Statements (AIS) and reports from enforcement agencies electronically and thereby, reducing reassessment notice period.
The Hon’ble Finance Minister had highlighted, in her 2021 Budget Speech, that the reduction in the time limit was necessitated by the digitization and real-time availability of taxpayer information. The goal was clear: reduce uncertainty, curb harassment, and bring reassessment in tune with modern-day data access and compliance norms.
2. 2025 Bill – Reinstating the Past
In a surprising move, the Income Tax Bill, 2025 appears to have reintroduced several elements reminiscent of the pre-2021 reassessment regime.
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