PRINCIPLES OF TAXATION LAW

(WEEK 8)

- By Nikky Jhamtani
DEDUCTIONS
 Deduction covered under sec.80C to 80U

• Chapter VI A contains deductions from gross total income under section 80C to 80U
in respect of certain payments, investments, incomes and other deductions. Deduction
helps in reducing the taxable income. It decreases the overall tax liabilities and helps to
save tax.

• However, depending on the type of tax deduction claim, the amount of deduction
varies.

• Sections 80C to 80U of the Income- tax Act lay down the provisions relating to the
deductions allowable to assessees from their gross total income. The income arising
after deduction under section 80C to 80U is called Total Income

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 Deduction 80C

• Amount paid or deposited towards:

Contribution to
Contribution to PF Recognised approved
Life Insurance
by Govt. Provident Fund superannuation fund
by Assessee

Payment/repayment
Subscription to
for purchase or
National Saving Tuition Fee
construction of
Certificates
residential house

• For full list, please refer to section 80C of the Income‐tax Act. (The aggregate amount of
deduction under section 80C, 80CCC and 80CCD(1) shall not exceed Rs. 1,50,000/‐ )
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 Deduction 80CCC

Deduction in respect of Payment of

Deduction is available upto a
premium for annuity plan of LIC or
maximum of Rs. 150,000/‐.
any other insurer.

The premium must be deposited to

keep in force a contract for an
annuity plan of the LIC or any
other insurer for receiving pension
from the fund

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 Deductions 80CCD

Deduction for contribution in pension scheme notified by the

Government to the extent of 10% of salary in case of employees and
10%of total income in case of others.

Maximum Deduction of Rs. 50,000/- for contribution in National

Pension Scheme. The deduction is in addition to the maximum
deduction of Rs.1,50,000/- available under 80C, 80CCC and 80CCD(1).

Contribution by employer in pension scheme notified by the

Government to the extent of 10% of salary

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 Deduction 80CCG

Under this
deduction person
Deduction is
( Maximum can claim benefit
available upto 50%
Deduction available subject to
of the amount
Rs. 25,000/‐) investment made in
invested
Rajiv Gandhi equity
linked scheme

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 Deduction 80D

Deduction in respect of Medical

Insurance Premium for Self and family
members. Deduction in respect of Medical
Insurance Premium for Parents
(Maximum Deduction available Rs.
30,000/‐ for Senior Citizens and Rs. (Father or mother or both).
25,000/‐ for others. )

(Maximum Deduction available Rs. 30,000/‐ for

Senior Citizens parents and Rs. 25,000/‐ in
other cases.)

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 Deduction 80DD AND 80DDB

80DD‐Deduction in
80DDB‐Deduction to the
respect of maintenance
extent of Rs. 40,000/‐ or
including medical
the amount actually
treatment of dependent
paid, whichever is less
who is a person with
for expenditure actually List of ailment covered
disability. ( Maximum
incurred on self or under IT – ACT only
deduction Rs. 100,000/‐
dependent relative for
in case of severe
medical treatment of
disability. (more than
specified disease or
80%) and Rs.50,000/‐ in
ailment.
other cases)

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 Deduction 80E

Deduction in respect of
interest on loan taken for
pursuing higher Only interest on Loan but Deduction allowed upto 8
education. The deduction Not the principal years from date of
is also available for the Amount. repayment.
purpose of higher
education of a relative.

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 Deduction 80G,GG,GGA,GGC

Deduction in respect of donations to

certain funds, charitable institutions,
Deduction in respect of House Rent
etc. The various donations specified in
Paid. (Maximum Deduction Rs.
Sec. 80G are eligible for deduction upto
24000/‐) in sec.80GG
either 100% or 50% with or without
restriction as provided in Sec. 80G

Deduction in respect of certain Deduction in respect of contributions

donations for scientific research or rural given by any person to political parties
development in sec.80GGA in sec 80GGC

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 Deduction 80RRB,QQB,TTA AND U

Deduction in respect of royalty on Deduction in respect of royalty on

patents. (Maximum Deduction Rs. Books. (Maximum Deduction Rs.
3,00,000/‐) 3,00,000/‐ )

Deduction in case of a person with

Deduction in respect interest
disability. ( Maximum Deduction:
on Savings accounts.
General disability ‐ Rs. 50,000/‐,
(Maximum Deduction Rs. 10,000/‐)
Severe disability ‐ Rs. 1,00,000/‐. )
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RETURN OF INCOME
 Return of Income (Section 139)

Ease in
Availing
Credit
Contribution
to Economic Claiming Tax
Growth Refund
Importance

Avoiding Ease in
Penalty Getting Visa
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 Types of Return of Income

Original Return s. 139(3)

• To be filed within time allowed u/s. 139(1)
• Non-receipt of Notice to file a return u/s. 139(3) is not a valid excuse for not furnishing a Return
Belated Return s. 139(4)
• To be filed in cases where a normal return is not filed u/s 139(3)
• To be filed before end of Relevant AY
Revised Return s. 139(5)
• Filed to Revise any omission or error made in the return filed u/s. 139(3)
• To be filed before end of relevant AY or completion of Assessment by AO, whichever is earlier
Updated Return s. 139(8A)
• To be Filed to rectify return of income in cases where additional tax is payable
• May be filed within 24 months from end of Relevant AY

Defective Return
• To be filed when a notice u/s. 139(9) is received by department because the department has
found discrepancies in the Return filed by the Assessee 15
 Income tax Filing Due Dates for
FY 2023-24 (AY 2024-25)

Category of Taxpayer Due Date for Tax Filing - FY 2023-24

Individual / HUF/ AOP/ BOI

31st July 2024
(books of accounts not required to be audited)

Businesses (Requiring Audit) 31st October 2024

Businesses requiring transfer pricing reports

(in case of international/specified domestic 30th November 2024
transactions)

Revised return 31 December 2024

Belated/late return 31 December 2024
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Income Tax India e-filing Portal

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 Registration on e-filing Portal

Visiting e-filing portal Selection of User type

Provision of additional details-

Provision of basic details-
Current address, password,
Pan, Name, DOB, etc.
contact details, etc.
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 Procedure for e-filing of return

Login to the Income Tax Portal using PAN (user id) and
password

Select AY, ITR form Number, Type of return

Fill the relevant details and Verify the Return via OTP or
Prevalidated Bank/Demat Account
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 Mandator y Filing of ITR- Illustrations

Person having an
Carry forward a
asset or a signing Claim Income Tax
loss under any head
authority outside Refund
of income
India

If the total income

Expenses on
in case of exceeds
A company even if Foreign Travel
maximum amount
it has Nil income exceed Rs. 2 Lacs in
not chargeable to
the Relevant PY
tax
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INCOME TAX AUTHORITIES
 Who are Income Tax Authorities?
(Section - 116)

The Central Board of Direct Taxes. (CBDT)

Directors-General of Income Tax or Chief

Commissioners of Income tax.

Directors of Income Tax or Commissioners of

Income Tax.

Additional Directors of Income Tax or Additional

Commissioners of Income Tax.

Joint Directors of Income Tax or Joint

Commissioners of Income Tax
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 Who are Income Tax Authorities?
(Section - 116)

Deputy Directors of Income Tax or Deputy

Commissioners of Income Tax.

Assistant Directors of Income Tax or Deputy

Commissioners of Income Tax.

Income Tax Officers.

Tax Recovery Officers.

Inspectors of Income Tax.

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 Assessing Officer

Assessing Plays a vital role in the organisational setup.

Officer

Primary Authority who initiates proceedings

and directly connected with public.

Orders passes by him can be challenged on

appeal.
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 Central Board of Direct Taxes

The CBDT is a statutory authority functioning under the Central Board of

Revenue Act, 1963. It functions under jurisdiction of Ministry of Finance
under Department of Revenue.

It compromises of Chairman and six other members. However, the number

of members may change as the Central Government requires. Each
member is assigned a special function. They are assisted by Joint
Secretaries, Directors, Deputy Secretaries, Under Secretaries and
ministerial staff for carrying out their day-to-day functions.

"Control and Supervision of all departments of Income Tax".

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 Powers of CBDT

Power to issue
Power to make rules Power to appoint DG
instruction to
(Sec 295) CBDT (Sec 117(2))
subordinates (Sec 119)

Power to authorize IT
Power to authorize IT
Authorities to admit Power to relax in
Authorities to initiate
application or claim Compliances of
proceedings for
except requirement
penalties
commissioner(Appeal)
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 Powers of CBDT

Power to direct Higher

Authorize Authority for
Authority to perform Dispute regarding
Search and Seizure (Sec
function of lower Jurisdiction (Section 127)
132)
rationale authority

Empowers Principal
Director/commissioner, Order to furnish
Concurrent Jurisdiction Director General/Chief Information to officers
Commissioner for issuing of other debt.
orders against the AO.
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 Director General/Chief Commissioner of
Income Tax

Appointment
By Central Government

Jurisdiction
Determined by CBDT

Functions
CBDT assigns functions by general or
special order
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 Powers of DG

Appoint income tax Make enquiries on

Exercise powers of authorities below investigations into
an assessing officer the rank of assistant concealment -
commissioner Section 131(1A)

Giving instructions
Power to make
to income tax Power of Survey-
enquiry - Section
officers Section 119 Section 133A
135
(2)
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 Director/Commissioner of Income Tax

Appointment
By central Government

Jurisdiction
Determined by central board of direct taxes

Functions
The Board Assigns functions by general or
special order
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 Powers of CIT

Power to transfer any

Commissioner may case from one or more Grant approval for an
exercise powers of an assessing officers to order issued by the
assessing officer any other assessing assessing officer
officer

Prior approval is Power to revise an

required for reopening order passed by an
of an assessment assessing officer

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TYPES OF ASSESSMENT
 Types of Assessments

Self Assessment u/s 140A Income-tax

Processing of Return u/s 143(1) assessment is the
process of collecting
Scrutiny Assessment u/s 143(3) and reviewing the
Best Judgement Assessment u/s 144 information filed by
assessee in their
Re-assessment u/s 147 income tax returns
(ITR).
Search & Seizure based assessments
(Section 153A & 153C- now subsumed
in reassessment)
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PROCEDURE OF ASSESSMENT
 Procedure of Assessment

Assessee
Return filed u/s 139 Return not filed u/s 139

Processing u/s 143(1) Return Filed Notice u/s 142(1)(i)

Notice u/s 143(2)

No Return Filed

142(1)(ii) & other

Best judgment u/s 144

Response No Response

143(3) 36
PRE-2021 VS POST-2021
PROVISIONS
 Pre-2021 Provisions Post-2021 Provisions
• Section 147: Income escaping assessment. • Section 147: Substituted
• Section 148: Issue of notice where income has • Section 148: Substituted
escaped assessment. • Section 148A: Conducting inquiry, providing
• Section 149: Time limit for notice. opportunity before issue of notice under
• Section 150: Provision for cases where assessment section 148 (New Section).
is in pursuance of an order on appeal, etc. • Section 149: Substituted
• Section 151: Sanction for issue of notice. • Section 150: No change
• Section 152: Other provisions. • Section 151: Substituted
• Section 153: Time limit for completion of • Section 151A: Faceless assessment of
assessment, reassessment and recomputation. income escaping assessment (New Section).
• Section 152: Other provisions.
• Section 153: Time limit for completion of
assessment, reassessment and recomputation.
(with changes)

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PRE-2021 PROVISIONS
 Pre-2021 Provisions

Section 147
Income-escaping assessment - If the Assessing Officer has reason to
believe that any income chargeable to tax has escaped assessment for any
assessment year, he may, subject to the provisions of sections 148 to 153,
assess or reassess such income and also any other income chargeable to tax
which has escaped assessment and which comes to his notice subsequently in the
course of the proceedings under this section, or recompute the loss or the
depreciation allowance or any other allowance, as the case may be, for the
assessment year concerned (hereafter in this section and in sections 148 to
153 referred to as the relevant assessment year)
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 Pre-2021 Provisions

Section 148
Issue of notice where income has escaped assessment – (1) Before making the
assessment, reassessment or recomputation under section 147, the Assessing Officer shall
serve on the assessee a notice requiring him to furnish within such period, as may be specified in
the notice, a return of his income or the income of any other person in respect of which he is
assessable under this Act during the previous year corresponding to the relevant
assessment year, in the prescribed form and verified in the prescribed manner and setting
forth such other particulars as may be prescribed; and the provisions of this Act shall, so
far as may be, apply accordingly as if such return were a return required to be furnished
under section 139 :
….
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for
doing so. 41
 Pre-2021 Provisions

AO has Assessee to Assessee to file

AO to Notices u/s 143(2)
reason to file return objections and
provide a and 142(1) to be
believe that Issue notice and seek AO to dispose
copy of issued and income
income has u/s. 148 reasons for the objections
‘reasons to to be assessed u/s
escaped issuance of vide a speaking
believe’ 147 r/w s.143(3)
assessment the notice.* order.*

*GKN Driveshafts (India) Ltd v ITO [2003] 259 ITR 19 (SC)

POST-2021 PROVISIONS
 Memorandum to Finance Bill, 2021

Due to advancement of technology, the department is now collecting all relevant information
related to transactions of taxpayers from third parties under section 285BA of the Act
(statement of financial transaction or reportable account). Similarly, information is also received
from other law enforcement agencies. This information is also shared with the taxpayer through
Annual Information Statement under section 285BB of the Act. Department uses this information
to verify the information declared by a taxpayer in the return and to detect non-filers or those
who have not disclosed the correct amount of total income. Therefore, assessment or
reassessment or re-computation of income escaping assessment, to a large extent, is information-
driven.

It is expected that the new system would result in less litigation and would provide ease of doing
business to taxpayers as there is a reduction in time limit by which a notice for assessment or
reassessment or re-computation can be issued. 44
 Section 147 as amended by Finance Act,
2022

Income-escaping assessment - If any income chargeable to tax, in the

case of an assessee, has escaped assessment for any assessment year, the Assessing
Officer may, subject to the provisions of sections 148 to 153, assess or reassess such
income or recompute the loss or the depreciation allowance or any other allowance or
deduction for such assessment year (hereafter in this section and in sections 148 to 153
referred to as the relevant assessment year).
Explanation.—For the purposes of assessment or reassessment or recomputation under
this section, the Assessing Officer may assess or reassess the income in respect of any
issue, which has escaped assessment, and such issue comes to his notice subsequently in
the course of the proceedings under this section, irrespective of the fact that the
provisions of section 148A have not been complied with.]

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 Section 148 as amended by Finance Act,
2022

Issue of notice where income has escaped assessment – Before making the assessment,
reassessment or recomputation under section 147, and subject to the provisions of section 148A,
the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if
required, under clause (d) of section 148A, requiring him to furnish within such period, as may be
specified in such notice, a return of his income or the income of any other person in respect of
which he is assessable under this Act during the previous year corresponding to the relevant
assessment year, in the prescribed form and verified in the prescribed manner and setting forth
such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be,
apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information
with the Assessing Officer which suggests that the income chargeable to tax has
escaped assessment in the case of the assessee for the relevant assessment year and
the Assessing Officer has obtained prior approval of the specified authority to issue
such notice: 46
 Pre-requisites for issuance of notice u/s
148

Order u/s 148A is passed.

AO is in possession of some information that suggests that income

chargeable to tax has escaped assessment.

Presence of information vs. linkage of information with escaped income

Prior approval of specified authority is obtained. [No approval required if

requisite approval was taken while passing order u/s 148A(d)]
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 Section 148A as amended by Finance Act,
2022

ENQUIRY, if required, with respect to INFORMATION before

issuing notice u/s 148 with approval of specified authority.
[148A(a)]

Opportunity of being heard by Show Cause Notice to assessee

as to why Notice u/s 148 should not be issued. [148A(b)]
Time to assessee for reply: Min. 7 days and Max. 30 days.

AO to consider reply of assessee. [148A(c)]

Order u/s 148A(d) within 1 month of reply by assessee to

communicate whether or not it is a fit case to issue a notice u/s
148. [148A(d)]
 Procedure under Post-2021 Provisions

AO has information Conduct Enquiry with the

Issue SCN to Assessee u/s.
suggesting that Income has prior approval of specified
148A(b)
escaped Assessment u/s 148 authority u/s 148A(a)

Assessee will file a return

Issue Notice u/s. 148 Pass order u/s. 148A(d)
u/s. 148

Assess the income u/s.147

r/w. s.143(3) or s.144
 Section 149 - Time Limit of Issuance of
Notice u/s 148
Old Time Limit New Time Limit
4 Years from the end of relevant A.Y., if income is 3 Years from the end of relevant A.Y.
below Rs. 1 Lakh
6 Years from the end of relevant A.Y if income is Rs. 10 Years from end of relevant A.Y. where income
1 Lakh or more represented in form of asset, expenditure in
respect of a transaction or in relation to an
event or occasion, or any entry or entries in
the books of account is likely to be Rs. 50 Lakh or
more.
4 Years from the end of relevant A.Y where "asset" shall include immovable property, being land
assessment completed u/s 143(3) and assessee has or building or both, shares and securities, loans and
fully and truly disclosed all material facts advances, deposits in bank account.

16 Years if income relates to assets located outside

India 50
 Pre-2021 v Post-2021 Provisions: Analysis
(Contd.)

Approvals required before issuing Notice u/s 148

Before
Before Before Before
issuing show
conducting passing issuing
cause
enquiry u/s order u/s notice u/s
notice u/s
148A(a) 148A(d) 148
148A(b)

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 Pre-2021 v Post-2021 Provisions: Analysis
(Contd.)

Change in Sequence of filing of Return

Old Law

Ask for Get Reasons File

File a return
Reasons Objections

New Law
Get an Get a notice
Get a notice Respond to
order u/s. u/s. 148 and
u/s. 148A(b) the notice
148A(d) File a return

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 Pre-2021 v Post-2021 Provisions: Analysis
(Contd.)

Cases not covered by Section 148A - Remedy

Direct Notice
u/s. 148

Procedure laid
Similar to Old down in GKN
Regime Driveshafts to
Apply

53
 Pre-2021 v Post-2021 Provisions: Analysis
(Contd.)

1. Relevance of “reasons to believe”

2. Power to Review v/s Power to Reassess

3. Relevance of “information”

4. Commissioner must not accord Sanction u/s 151 mechanically

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ANY QUESTIONS?
 THANK YOU
SUMIT LALCHANDANI
NIKKY JHAMTANI