Income Tax Assessment

Income Tax Assessment

Income Tax Assessment

Every year all the citizens in India are expected to submit their income tax return furnishing their income details, tax information along with the Investment details to the Income Tax Department. After the submission of IT returns, the Income Tax Department starts processing the return to check on its accuracy, which is called “Assessment”, under the Income Tax Law. As per section 144, this Assessment also includes re-assessment and best judgement assessment.

The various forms of assessment are as follows:

  1. Self-Assessment
  2. Summary Assessment
  3. Regular Assessment
  4. Best Judgement Assessment
  5. Income Escaping Assessment


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 of the returns should be paid within 31st July of every year.

 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 or online NSDL website.

Assessee can pay tax online through different websites.


Summary Assessment u/s 143(1)

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.

Summary Assessment”, it is not an actual assessment. Under this section, the Return of Income filed by assessee will not be scrutinized, however whatever, is claimed by assessee in his ROI will be accepted by assessing officer after only confirming arithmetical accuracy.

1. The total income or loss shall be computed after making the following adjustments, namely:—

(i) Any arithmetical error in the return; or

(ii) An incorrect claim, if such incorrect claim is apparent from any information in the return;

(iii) Disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139;

(iv) Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;

(v) Disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or

(vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return. However no adjustment shall be made under this  in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018

However no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:

The response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made.

2 .the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a);

3. the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest and fee, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest and fee;

4. an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and

5. The amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:

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.


Regular Assessment (Section 143)

Regular 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.

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.
  • 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:

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

(1) If any person—

(a)  fails to make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or

(b)  fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under sub-section (2A) of that section, or

(c)  Having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143,

The Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment:

Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment :

Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.

(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.

Also keep in mind, after giving a chance to the assessee of being heard, then only best judgment assessment can be made.


Income Escaping Assessment

If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned.

Time Limit - Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.

Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:

Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.