Section 115WH: Notice Where Fringe Benefits Have Escaped Assessment
Section 115WH prescribed the notice, recorded-reasons requirement, limitation period and approval conditions for reopening a fringe benefit tax (FBT) assessment under the former Chapter XII-H of the Income-tax Act, 1961.
Legal status: Under Section 115WM, Chapter XII-H does not apply to assessments beginning on 1 April 2010 or thereafter. Section 115WH is therefore a historical FBT reassessment provision, not a present-day notice procedure for ordinary income-tax assessments. Its former time limits should not be treated as current reopening deadlines.
What was Section 115WH?
Fringe benefits were specified benefits and deemed benefits provided by employers and taxed under Chapter XII-H during the former FBT regime. Escaped assessment meant fringe benefits chargeable to tax that had not been assessed, or had been assessed at an insufficient value. Section 115WG authorised assessment or reassessment where the Assessing Officer had reason to believe that such benefits had escaped assessment, subject to statutory safeguards.
Section 115WH dealt with the notice required before that reassessment. It linked the return furnished in response to a reopening notice to the return requirements under Section 115WD.
Requirements for a notice under Section 115WH
| Provision | Historical rule |
|---|---|
| Sub-section (1) | The Assessing Officer had to serve a notice requiring a return of fringe benefits in the prescribed form within the period specified in the notice, before reassessment under Section 115WG. |
| Sub-section (2) | Reasons for issuing the notice had to be recorded before the notice was issued. |
| Sub-section (3) | The outer limit for issuing a notice was six years from the end of the relevant assessment year. |
| Explanation | The deemed cases of escaped assessment in the Explanation to Section 115WG applied. |
| Sub-section (4) | Where an assessment under Section 115WE(3) or 115WG had been made, a notice issued after four years required the specified senior authority's satisfaction on the recorded reasons. |
These are the rules stated in the historical text reproduced below; their operation is subject to the cessation of the FBT regime and the law governing any particular historical proceeding.
Section 115WH - statutory text
Issue of notice where fringe benefits have escaped assessment
(1) Before making the assessment or reassessment under section 115WG, 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 the fringe benefits in respect of which he is assessable under this Chapter 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 Chapter shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 115WD.
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.
(3) No notice under sub-section (1) shall be issued for the relevant assessment year after the expiry of six years from the end of the relevant assessment year.
Explanation. In determining fringe benefits chargeable to tax which have escaped assessment for the purposes of this sub-section, the provisions of the Explanation to section 115WG shall apply as they apply for the purposes of that section.
(4) In a case where an assessment under sub-section (3) of section 115WE or section 115WG has been made for the relevant assessment year, no notice shall be issued under sub-section (1) by an Assessing Officer, after the expiry of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.
Legislative amendment notes
The references to Principal Chief Commissioner and Principal Commissioner in sub-section (4) were introduced by the Finance (No. 2) Act, 2014 (Act 25 of 2014), section 4, with retrospective effect from 1 June 2013, replacing the earlier references to Chief Commissioner and Commissioner respectively. The wording above follows the uploaded historical provision, with editorial footnote numbers removed for readability.
How the historical procedure operated
For example, if an employer had understated the value of fringe benefits for a year in which FBT applied, the Assessing Officer could consider reassessment under Section 115WG. Before doing so, Section 115WH required the officer to record reasons and serve a notice requesting a return. The officer also had to comply with the six-year outer limit and, where applicable, the additional approval safeguard after four years.
Important distinction: The six-year and four-year periods in Section 115WH were historical FBT-specific conditions. They are not a substitute for checking the provisions and transitional rules applicable to present-day income-tax reassessment notices.
Does Section 115WH apply to current employer benefits?
No new FBT liability arises under Chapter XII-H for assessment years beginning on or after 1 April 2010. Employee benefits may nevertheless be relevant under the applicable salary, perquisite, withholding and other income-tax provisions. The tax treatment depends on the nature of the benefit and the law applicable to the relevant tax year.
Related sections and official legal resources
Read the connected historical provisions: Section 115WG (escaped assessment), Section 115WD (return of fringe benefits), Section 115WE (assessment), and Section 115WM (cessation of Chapter XII-H).
For official legislation and updates, consult the Income Tax Department, India Code, and e-Gazette of India. These external references are included in the article, not in the website sidebar.
This article explains the historical provision for legal reference. For a particular notice or dispute, check the assessment year, the text and amendments applicable on the relevant date, and any governing judicial decisions.