ANALYSE THE TYPES OF ASSESMENT

UNDER THE INCOME TAX ACT,1961

SUBMITTED TO- SUBMITTED BY-

YASHVEER ABHINAV MALIK
LAW FACULTY 45415210002
B.B.A LL.B
VIIIth semester
 ACKNOWLEDGMENT

I would like to express my special gratitude towards my respected Teacher Mr Yashveer

who gave me the opportunity to do this wonderful project , which helped me in doing

Research and I came to know about so many things. I am really Thankful to him.

Secondly I would also like to thank my family and friends who helped me a lot in completing

the project.

In the end I would like to thank all other people who directly or indirectly assisted me to

accomplish this project work.

 INTRODUCTION
Every taxpayer has to furnish the details of his income to the Income-tax Department. These

details are to be furnished by filing up his return of income. Once the return of income is filed

up by the taxpayer, the next step is the processing of the return of income by the Income Tax

Department. The Income Tax Department examines the return of income for its correctness.

The process of examining the return of income by the Income-Tax department is called as

“Assessment”. Assessment also includes re-assessment and best judgment assessment under

section 144.

Under the Income-tax Law, there are four major assessments given below:

 Assessment under section 143(1), i.e., Summary assessment without calling the

assessee.

 Assessment under section 143(3), i.e., Scrutiny assessment.

 Assessment under section 144, i.e., Best judgment assessment.

 Assessment under section 147, i.e., Income escaping assessment.

 Types of Income Tax Assessment:

 Self Assessment –u/s 140A

 Summary assessment –u/s 143(1)
 Scrutiny assessment –u/s 143(3)
 Best Judgment Assessment –u/s 144
 Protective assessment
 Re-assessment or Income escaping assessment –u/s 147
 Assessment in case of search –u/s 153A

Self Assessment u/s 140A

This type of Income Tax Assessment is the one in which the assessee calculate the tax by
himself, usually to accompany his calculation with payment of the amount he regards as due.

Tax payable is required to be furnished under section 139 or section 142 or section 148 or
section 153A, after taking TDS and deducting Advance tax paid.

Time limit:

There are no specific dates to pay Self Assessment Tax. Payment of Self Assessment Tax and
non-filing of the returns should be paid within 31st July of every year.

Procedure

Direct Mode of Payment

Self Assessment Tax can be paid by filling a tax payment challan, ITNS 280. Challans are
available in the designated branches of banks associated with the Income Tax Department.

Online Mode of Payment

Assessee can pay tax online through different websites.

 Summary assessment u/s 143(1)
Assessment under section 143(1) is like initial checking of the return of income. Under this
section, Income tax department sent intimation u/s 143(1) to the taxpayer. A Comparative
Income Tax computation is sent by the Department. In income tax assessment, total income
or loss incurred is computed.

Time Limit:

Assessment u/s 143(1) can be made within a period of one year from the end of financial year
in which the return is filed.

Scrutiny Assessment u/s 143(3)

Scrutiny assessment is the assessment of the return filed by the assessee by giving an
opportunity to the assessee to substantiate the declared income and expenses and the claims
of deductions, losses, exemptions, etc. in the return with the help of evidence.It is managed
by the Committee through a single work plan. Specific work is undertaken through the
committee and by establishing informal panels (for in-depth activities) or working groups.

The assessing officer gets the opportunity to conduct an inquiry and aims at ascertaining
whether the income in the return is correctly shown by the assessee or not. The claims for
deductions, exemptions etc. are legally and factually.

If there is any omission, discrepancies, inaccuracies, etc. Then the assessing officer makes an
own assessment for the assessee by taking all facts in mind.

Type of cases

 Manual scrutiny cases.

 Compulsory Scrutiny cases.
 Manual scrutiny cases as follows:
 Not filing Income Tax Return.
 State lesser income or more tax as compared to earlier year.
 Mismatch in TDS credit between claim and 26AS.
 Non-declaration of exempted income.
 Claiming for large refunds in return of Income.
  Taking double benefit due to the Job change.
 Compulsory Scrutiny cases as follows:

CASES

Case 1: relating addition in the earlier assessment year of Rs. 10 lakhs/Rs. 10 crore excess on
a substantial and recurring question of law or fact which is confirmed in appeal or is pending
before an appellate authority may come under compulsory scrutiny.

Case 2: CASS (Computer Added Scrutiny Selection) cases are also selected under
compulsory cases. All such cases are separately intimated by DGIT (system) to the
jurisdictional concerned.

Case 3: Where specific and verifiable information pointing on tax evasion is given to
Government Department/ Authorities.

Case 4: Rejection of the approval u/s 10 (23C) of the Act or withdrawing the approval
already is passed by the authority, yet the assessee found claiming tax exemption under the
aforesaid provision of the Act.
 Best Judgment Assessment u/s 144
The best judgment assessment means evaluation or estimation in the context income tax law
of income of the assessee by the assessing officer. In the case of best judgment assessment,
the assessing officer will make the assessment based on best reasoning i.e. they will not act
dishonestly. The assessee will neither be dishonest in assessment nor have a bitter attitude
towards the officer. This is a type of income tax assessment which involves the input of both
the assessee and the officer equally.

Types

Compulsory Assessment: Assessing officer (AO) finds that there is non-cooperation by the
assessee or found to be a defaulter in supplying information to the department.

Discretionary/optional assessment: When AO is dissatisfied with the authenticity/validity of

the accounts given by the assessee or where no regular method of accounting has been
followed by the assessee.

Cases

Case 1: If a person fails to make return u/s 139(1) and has not made a return or a revised
return under sub-section (4) or (5) of that section; or

Case 2: If any person fails to comply with all the terms of notice under section 142(1) or fails
to follow directions mentioned to get account audited u/s section 142(2A); or

Case 3: If a person after filing a return fails to comply with all the terms of notice received
under section 143(2) requiring presence or production of evidence and documents; or

Case 4: If the Assessing Officer is not satisfied with the correctness or completeness of the
accounts or documents.

Case 5: A person has a right to file an appeal u/s 246 or to craft an application for revision u/s
264 to the commissioner.
 Protective assessment
This is a type of assessments that focus on those assessments which are made to ‘protect’ the
interest of the revenue.

Though, there is no provision in the income tax act authorizing the levy of income tax on a
person other than whom the income tax is payable. It is open to the authorities to make a
protective or an alternative assessment if it is not ascertainable who is really liable to pay the
tax among a few possible persons.

For example

If there are doubts on a rental income belongs to Mr. A or Mr. B. Then, the assessing officer
at his own discretion may add the rental income to any one of them on a protective basis.
This is done ensure that finality, the owner of the income has not denied the addition of
income because of limitation of time.

In making a protective assessment, the authorities are simply making an assessment and
leaving it as a paper assessment until the matter is decided. A protective order of assessment
can be passed but not a protective order of penalty.
 Re-Assessment (or) Income escaping assessment u/s 147
Income Escaping Assessment under section 147 is the assessment which is done by the
Assessing Officer if there is a reason for him to believe that income chargeable to tax has
escaped assessment for any assessment year. It gives power to him to re-assess or re-compute
income, turnover etc. which has escaped assessment.

Objective

The objective of carrying out assessment u/s 147 is to bring them under the tax net, any
income which has escaped assessment in the original assessment.

Time limit

Completion of assessment under section 147

Under section 147, notice is issued within 9 months from the end of the financial year in
which notice u/s 148 is also served.

Notice issued under section 148

Under section 148, notice can be issued within a period of 4 years from the end of the
relevant assessment.

Case 1: If escaped income amounts to Rs. 1, 00,000 or more and then notice can be issued for
up to 6 years from the end of the relevant assessment year.

Case 2: If escaped income is associated with any assets (including financial interest in any
entity) i.e. located outside India, and then notice can be issued up to 16 years from the end of
the relevant assessment year.

Notice u/s 148 can be issued by AO only after getting prior approval from the prescribed
authority mentioned in section 151.
 Assessment in case of search u/s 153A
Under this type of Income Tax Assessment, the Assessing Officer will:

Issue notice to such person requires furnishing within such period, as specified in the notice.
Clause (b) referred to the return of income of each assessment year falling within six
assessment years and is verified in prescribed form. 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;

Assessor re-assess the total income of six assessment years immediately preceding the
assessment year relevant to the previous year in which such search is conducted or requisition
is made.

Note: Section 153A issues a notice for 6 years, preceding the search not for the year of search
and no return is required to be filed (for the year of search) u/s 153A. File only a regular
return u/s 139.

Time limit for completion of assessment u/s 153A/153C: [153B]

Case 1: Person searched under section 153A

21 months from the end of the financial year this does not include the last authorization for
search u/s 132 or requisition u/s 132A.

Similar time limits shall apply in respect of the year of search also.

Case 2: Any other person 153C

As provided in above clause (a) or clause (b) or 9 months from the end of the Financial Year
where BOA/documents/assets seized/requisitioned are handed over to the assessing officer
(AO), whatever is latest.