assessment procedures
TRANSCRIPT
Section 2(8) -"assessment" includes reassessment
2
Types of assessments : Self assessment Summary assessment Scrutiny assessment Best Judgment assessment Protective assessment
Where any tax is payable on the basis of any return required to be furnished under section 115WD /115WH / 139 / 142 / 148 / 153A as the case may be, section 158BC, after taking into account,— (i) the amount of tax, if any, already paid
(ii) any tax deducted or collected at source; (iii) any relief of tax or deduction of tax claimed u/s 90 or 91(iv) any relief of tax claimed under section 90A and (v) any tax credit claimed to be set off in accordance with the provisions of section 115JAA,
liable to pay such tax together with interest for any delays
3
If the assessee fails to pay such tax or interest , he shall be deemed to be an assessee in default in respect of such tax/interest.
Penalty proceedings may be initiated u/s 221
4
For the purpose of making an assessment, the AO can : Serve a notice u/s 142(1)(i) for furnishing the ROI
Serve a notice u/s 142(1)(ii) to produce such
documents or accounts – return must be filed earlier.
Serve a notice u/s 142(1)(iii) to call for information he
may require including statement of assets & liabilities
- return must be filed earlier.
5
AO calls for books of accounts for more than three years. It consists of 2 parts – period beyond three years & within 3 years. Is he justified ?
6
Partly correct. Assessee must produce books for the period falling within 3 years, else he will be liable for default Calcutta Chromotype Pvt Ltd, 95 ITR 595-
Cal
7
After the completion of assessment u/s 143(3) on the status as RNOR, AO issues notice u/s 142, stating that the status of the assessee as RNOR is rejected. Is he justified ?
8
No. Status cant be determined while calling for information u/s 142 Vijay Mallya , 266 ITR 329 -Cal
9
AO issued directions to get the accounts audited after the completion of the assessment. Is he right in doing so ?
10
No. Directions can be issued only during the course of assessment proceedings. Kumar Films Pvt Ltd, 258 ITR 257 -Patna
11
Where the return is made u/s 139(1) or in response to notice u/s 142(1), the TI shall be adjusted for any ‘arithmetical
error’ or an ‘apparently incorrect claim’ Tax & interest will be computed after adjusting
TDS/TCS, advance tax, relief u/s 90 /91 etc…
Intimation shall be sent within 1 year from the end of the financial year in which the return is made.
12
Whether the ‘intimation’ issued u/s 143(1) is an ‘order’ ?
Can the CIT revise the intimation issued under sections 263 & 264 ?
13
Favouring views : Chidambaram Construction Co, 261 ITR 754-
Mad Rajkumar Phade , 249 ITR 520- Bom
Dissenting views : Punjab National Bank, 249 ITR 763 –Del Avasaraja Automation, 269 ITR 163 -Kar
14
Intimation u/s 143(1) is not an assessment order. Intimation issued is without prejudice to the notice u/s 143(2). Rajesh Jhaveri Stock Brothers Pvt Ltd, 291 ITR
500 - SC CIT has no power to revise u/s 263, in
case of summary assessment . P& H High Court in Kartar Singh & Co, 300
ITR 440 after referring to Rajesh Jhaveri case.
15
Can the return be revised after
processing u/s 143(1) ?
16
Yes – Koshti SR , 276 ITR 165 –Guj HC
17
AO may serve a notice for scrutiny assessment if : the assessee has filed a ROI u/s 139 or in response to
a notice issued u/s 142(1) he considers it necessary to do so, in order to ensure
that the assessee has not under-stated the income, or computed excessive loss, or underpaid tax in any manner.
Notice has to be served before the expiry of 6 months from the end of the financial year in which the return is furnished.
18
Notice has to be ‘served’ and mere ‘issue’ is not sufficient
Lunar Diamonds Ltd, 281 ITR 1 – Del HC Vardhaman Estates P Ltd, 287 ITR 368 –
Del HC
19
Can intimation u/s 143(1) be issued after the issue of notice 143(2) ?
20
No, whereas 143(2) notice can be issued after issue of intimation u/s 143(1) . Gujarat Electricity Board, 260 ITR 84 - SC
21
No fresh claims can be made before the AO otherwise than by way of revised return .
Goetze (India) Ltd , 284 ITR 323 – SC
Satisfaction for levy of penalty – insertion of 271(1B) – satisfaction presumed Earlier – recording satisfaction was must
22
142(1) 143(2)
Assessment not possible Assessment only if the notice is served
Books of accounts can be called for 3 years
No such provisions. AO can invoke sec 131 and call for earlier records
Notice can be issued even if the return of income is not filed
Notice can be issued only if the return is filed
Non compliance is an offence liable for prosecution
Non compliance is not an offence
23
Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or(b) not served upon him in time; or(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.
24
Applicability of sec 292 BB – Assessment Year 2008-09 and onwards.
For earlier A Y’s – objections can be raised at any forum Kuber Tobacco Products P Ltd , 117 ITD
273 – ITAT Delhi
25
Best judgment assessment can be made if any person : fails to file ROI u/s 139(1), and has not made a
belated return u/s 139(4) or revised return u/s 139(5)
or fails to comply with all the terms of notice u/s 142 or
fails to comply with the directions for special audit
u/s 142(2A) or having made a return ,fails to comply with all the
terms of notice u/s 143(2)
26
Supreme Court in Buchiah Setty’s case, 77 ITR 539, dealing under the 1922 Act held that the conditions specified are ‘alternative’
Kerala HC in Mubarak Trading Co,174
Taxmann 339, dealing under the present Act has held that the conditions are ‘cumulative’
27
A O has to give the assessee an opportunity of being heard before completing the assessment.
No opportunity required if non-
compliance of all terms of notice u/s 142(1).
28
A O can reject the books of accounts if not satisfied with the correctness/completeness of accounts or
where the method of accounting u/s 145(1) is not followed or
where accounting standards prescribed u/s 145(2) have not been followed .
29
Section 147 has 2 limbs – Income escaping assessment Income deemed to have escaped
assessment
The A O must have reason to believe that the income chargeable to tax has escaped assessment for any assessment year.
30
If assessment is made u/s 143(3), no proceedings shall be taken under this section after the expiry of four years from the end of the relevant AY in case the assessee has – furnished ROI u/s 139(1) /142(1) / 148 disclosed fully and truly all material facts
necessary for assessment for that AY
31
if no ROI is furnished though the TI exceeded the maximum amount not chargeable to tax
if ROI is furnished, but no assessment is made and it is noticed by the A O that the assessee has o understated his income or o has claimed excess loss /deduction / allowance /
relief in the return where assessment is made but the
income chargeable to tax has been under assessed, assessed at a too low rate, excessive relief claimed, excess loss / depn has been computed
32
Before proceeding u/s 147, the AO shall serve a notice on the assessee u/s 148.
The A O shall record his reasons before the issuance of notice u/s 148
33
Situation Time limitIf the income, which has escaped assessment amounts to or likely to amount to Rs. 1 lakh or more for that year
Within 6 years from the end of the relevant assessment year.
Any other case Within 4 years from the end of the relevant assessment year.
Agent of non – resident – sec 149(3) Within 2 years from the end of the relevant assessment year.
34
Notice u/s 148 can be issued at any time for assessment / reassessment in consequence of ,to give effect to ,any finding or direction contained in an order passed by – any authority in any proceeding by way of
appeal, reference or revision or a court in any proceeding under any other law
Exceptions - if action could not have been taken u/s 147 when the original order was passed, no action can be taken by taking recourse to finding / direction
35
assessee can claim that proceedings u/s 147 be dropped if he has not filed any appeal u/s 246A / 248 or
any revision application u/s 264 against the assessment order for that year
he shows that he had been assessed on an amount not lower than what he would be rightly liable even if –
income alleged to have escaped assessment had been taken into account
assessment or computation was properly made36
Assessment Time limitu/s 143(3) / 144 21 months from the end of the
relevant A Y33 months if referred to TPO
FBT – u/s 115WE / 115WF 21 months from the end of the relevant A Y
FB escaping assessments 9 months from the end of the financial year in which notice u/s 115WH was served
Income escaping assessment - sec 147
9 months from the end of the financial year in which notice u/s 148 was served
Fresh assessment order due to order u/s 250 /254/ 263 /264
9 months ( 21 months if after 1-4-06) from the end of the financial year in which -order u/s 250 /254 is received or order u/s 263 / 264 is passed
37
issue of notice to furnish ROI for 6 assessment years immediately preceding the AY in which search takes place.
existing assessments for those 6 A Y’s shall abate
assessments to be revived if search is annulled
38
21 months ( 33 months if referred to TPO) from the end of the F Y in which the last of the authorisations for search was executed
or 9 months (21 months if referred to TPO)
from the end of the F Y in which the books of account or documents seized are handed over to the jurisdictional AO
39
for rectifying any ‘mistake apparent from the record’, the IT authority – may amend any order passed by it may amend any intimation or deemed
intimation u/s 143(1) for matters decided in appeal, the authority
may consider those matters not decided in appeal also.
action suo –moto or by motion by assessee
40
assessee to be given a notice , incase the amendment increases the liability
opportunity of being heard to be given the assessee
order must be passed in writing notice of demand u/s 156 to be served if
amount payable no amendment to be made after the
expiry of four years from the end of the F Y in which the original order was passed.
41
no concept of protective assessments envisaged under the Act.
to prevent leakage of income, courts resort to protective assessments - Constitution Bench of Supreme Court in Lalji Haridas, 43 ITR 387
protective recovery and imposition of protective penalty are not allowable.
42
When any tax, interest, penalty, fine or any other
sum is payable in consequence of any order passed
under this Act, the A O shall serve upon the assessee a
notice of demand in the prescribed form specifying the
sum so payable.
Provided that where any sum is determined to be
payable by the assessee u/s 143(1), the intimation shall
be deemed to be a notice of demand for the
purposes of this section.
43
