Assttt procedure.bose

Assessment Procedure

Shankar Bose, IIT

MSTU, Puri

Definition of Assessment Assessment is a process of determining

true and correct income of a tax payer. It starts with filing of Income Tax returns and ends in determination of tax payable or refundable.

Assessment ProcedureAssessment Procedure

Assessment procedure:• Filing of return by assessee.• Notice for filing of return.• Issue of notices u/s 142(1) & 143(2).• Causing enquires to collect information.• Determination of income or loss. • Determination of tax payable or

refundable.


Filing of I.T. returns : Sec. 139 Company & Firm compulsory. Others – if gross total income exceeds

the basic exemption limit. Due dates: Company & compulsory audit cases : 30thSept of A.Y.

Others : 31st July of A.Y.


There are provisions for filing loss returns u/s 139(3). Such returns may be filed within the due dates u/s 139(1) to get the benefit of carry forward of loss.

Loss determined can be carried forward to subsequent years for set off against future income, upto a certain time limit.


Returns can be filed even after due dates, u/s 139(4) upto one year from the end of relevant A.Y. but before completion of assessment.


Returns already filed within due dates or filed in response to notice u/s 142(1) can be revised, if some mistakes are detected. This can also be done within one year from the end of A.Y. u/s 139(5) , but before completion of assessment.


If an assessee does not file a return, but the A.O. thinks that he has taxable income, then a notice u/s 142(1)(i) may be issued to him, asking him to file a return within a specified time.

Such notice can be issued only after the expiry of the due date for filing of return.


Where a return is filed u/s 139 or in response to notice u/s 142(1) processing is done by making adjustments of any arithmetical error or any incorrect claim apparent from information in the return

If any tax etc. is found due, an intimation prepared or generated is sent asking the assessee to make payment of tax or if any refund is due, it is granted.


An intimation will also be sent to the assessee where adjustment is made to the returned loss but no tax is payable nor any refund becomes due .

However every intimation must be sent to the assessee within one year from the end of the relevant financial year in which return was filed.


Types of Assessments: Scrutiny Assessment. Best Judgement Assessment. Income Escaping Assessment.

Search Assessment.


Scrutiny Assessment. Some of the cases are selected for scrutiny

assessment u/s 143(3), as per the norms laid down by the Board. In such cases detailed enquiries and investigations are made to ascertain true and correct income.


Notice u/s.143(2) is issued to the assessee asking him to submit documents in support of his return.

Such notice must be issued within one year from the end of the month in which return was filed/six months from the end of F.Y. in which the return was filed.( by F.A. 2008)


Notice u/s.142(1)(ii) is also issued to the assessee asking him to submit certain documents and evidences which the assessing officer may require.


The A.O., after considering the materials gathered on enquiry and the evidences submitted by the assessee, shall pass an assessment order determining the total income or loss and ascertain the tax payable or refundable.


Sec.144- Best Judgement Assessment. If any assessee (a) fails to file return u/s 139. or (b) fails to comply with notices u/s 142()

or 142(2A). or (c) fails to comply with notice u/s 143(2).


The A.O. can make assessment to the best of his judgement, based on the materials he has collected and the materials available on records and determine the tax payable.


Sec.147- Income Escaping Assessment.

If the A.O. has reason to believe that income has escaped assessment he may assess or re-assess the income that has escaped assessment.

The reasons to be recorded in writing and notice u/s 148 is to be issued asking the assessee to file a return.


Restrictions for reopening :• No assessment beyond 6 years can be

reopened.• No assessment beyond 4 years can be

reopened unless there is an escapement of income of Rs.1 lakh or more.

• Approval of higher authorities may have to be obtained in some cases.


Assessments are to be completed within the prescribed time limit. Time limit for completion of assessments u/s 143(3) or 144, assessments re-opened u/s.147 and other assessments following order of the appellate or other authorities.

Penal provision Penal provision Assessment ProcedureAssessment Procedure

Time limit : Sec. 153 Assessments u/s 143(3) or 144 - 21

months from the end of relevant A.Y. Re-opened u/s.147 - 9 months from the

end of relevant F.Y. in which notice u/s 148 was served,

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Set aside by ITAT- 9 months from the end of relevant F.Y. in which the appellate order was received by CIT/CCIT.

Set aside by CIT u/s 263 or 264- 9 months from the end of relevant F.Y. in

which the order was passed by the CIT. No time limit for giving effect to the finding or direction of appellate orders.


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