Short Overview of the amendment in the Finance Bill – 2025 while moving from Loksabha
FM has further proposed following major amendments relating to search assessments:
1. It is being clarified that search related special assessment procedure is for “undisclosed income” and not “total income”.
2. Formula correction for determination of undisclosed income under section 158BB has been made.
3. An extension of 30 days has been provided to file return under section 158BC for the year preceding the search year where due date of ITR has not expired and there is requirement to file tax audit and such tax audit has not been conducted on the date of issue of notice under section 158BC.
4. In the case of other person, abatement will take place on the date of handing over of documents. However the block period for searched and non-searched assessee will be the same.
5. Further, it is being clarified that in case incriminating material of the other person been recovered in multiple searches on different persons, the block period of non-searched person will be as that of the searched person whose block period ends on later date.
This linking of block period of the other person with that of block period of the last person searched may lead to exclusion of an assessment year from the block period. There is a possibility in such a case that an assessment year of the other person may be getting covered in respect of incriminating material recovered from the first person searched but may not be covered in the block period of last person searched.
6. Omission of section 158-BI with from 01.09.24 has been proposed. This section provides that the special chapter for search asstt. will not apply to search carried out prior to 01.09.24. One reason for deleting this section may be Clarificatory, i.e. as section 152(3) already provides that where search has taken place prior to 01.09.2024, reassessment procedure will apply and hence, this section 158BI was endorsing that position only. However, at the same time, the proposed omission of Section 158-BI may also apparently be in consequence to another amendment being proposed in section 158BD, whereby in case of incriminating material of other person being found from multiple searches on different searched person, the block period has been defined as that of the person last searched. Now, with the omission of this section 158-BI, if there is a material from a search prior to 1.9.2024 and also from a search post 1.9.2024, the reassessment of other person may be under new block period procedure only.
However, the interplay of this omission read with section 152 may have some bearing on this issue whereby as per this section 152, old provisions shall continue to apply for searches prior to 01.09.24.
7. Another issue that will need clarity in the new search regime is that the new provisions essentially provide for taxability of undisclosed income while providing for abatement of all pending proceedings. If that be so, how will the AO make regular additions dehors any incriminating material in case of abated Assessment?
8. FM proposes to remove the 6% equalization levy on online advertising in the FinanceBill2025, reducing the tax burden on digital ad consumers and lowering costs on platforms like Google and Meta. Section 163 of Finance Act, 2016 levying Equalization levy not to apply on or after 1st April,2025 relevant for A. Year 2026-27. Correspondingly, income tax exemption in respect of transaction liable for Equilisation levy has been deleted u/s 10(50).
9. Another change is that in newly introduced s. 44BBD for electronics manufacturing ( 25% presumptive income ) a proviso has been inserted that s. 44DA and 115A shall not be applicable. Hence no controversy like on 44BB where Revenue still contesting provision of Section 44DA to override section 44BB of the Act.
10. One more clause has been proposed to be added in list of permissible adjustments by CPC under Section 143(1)- any inconsistency on the basis of previous year ITR can also be subject matter of adjustment by CPC while processing ITR.
