There are different types of Income Tax assessments and in this article, we will discuss few factors related to them from the aspect of time period, scope, sub-type and procedure.
Understanding Various Assessments Under Income Tax Act and What is their Scope
| Section | Assessment Type | Time Limit | Scope | Procedure |
| Section 143 (1) | Also known as Summary Assessment, this is a preliminary assessment type where the assessee or the taxpayer is not called. | Within a period of 1 year since the end of the financial year in which the return of income is filed. | It is an initial checking of the return of income. No detail scrutiny is required. The total income or loss is computed once the following adjustments are done:
i. To check for any arithmetical error in the return. ii. An incorrect claim (if there are any) that is apparent from the information provided in the return. |
· Correction of arithmetical error and the incorrect claim (if any)
· Tax and income is computed on the basis of the correction. · Any payable sum or any due refund by the taxpayer is notified. · Taxpayer is served with an intimation specifying the sum payable or the amount of refund due. · No intimation is required in a scenario where the loss declared by the taxpayer in the return of income is adjusted.
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| Section 143 (3) | Also known as Scrutiny Assessment as detailed scrutiny of the return is carried out. | Within a period of 2 years from the end of the relevant assessment year. | to confirm that the taxpayer have provided genuine information regarding his income, loss, and the paid tax. | · In case of any disputation, the Assessing Officer (AO) can call the taxpayer to attend his office and provide information in support of the return.
· Assessing Officer serves the notice as per Section 143(2). · The taxpayer or his/her representative will have to appear before AO to defend the return. · After deliberation the AO will assess the total income and loss of the taxpayer. |
| Section 144 | Carried by the AO, based on all the information that he/she has gathered. | Within a period of 2 years since the end of the relevant assessment year. | An AO is obligated to make an assessment when:
i. A taxpayer fails to file the return within the due date. ii. A taxpayer fails to comply with all the terms on the notice under Section 142 (1), Section 142 (2A) and Section 143 (2). iii. The AO is unsatisfied with the details of the accounts of the taxpayer.
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· AO can issue a notice of show cause on the taxpayer, detailing his failure to come to an assessment.
· Even if the AO feels like the case needs a better judgment, he is obligated to carry on the assessment, to determine the sum payable by the taxpayer after the assessment.
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| Section 147 | Carried on if the AO believes that any income changeable to tax has escaped assessment for any assessment year. | Within a period of 1 year from the end of the financial year in which the notice under Section 148, was served to the taxpayer. | i. To bring under tax net any income that has escaped the original assessment.
ii. To scrutinize any disputed information provided by the taxpayer regarding his/her income. iii. To find whether the taxpayer owns any asset outside India or failed to provide the report on any transactions carried outside India. |
· The AO will issue a notice to the taxpayer, giving an opportunity to defend him/herself.
· The AO can assess and reassess incomes that he/she feels have escaped assessment and the AO can also recompute the loss or depreciation allowance for the concerned assessment year. · However, the AO can’t cover any items which are subject matters of appeal, reference or revision under Section 147. |