WEALTH TAX ACT,1957WEALTH TAX ACT,1957Shankar BoseInspector of Income-taxMSTU, Puri
Return Of WealthReturn Of Wealth Sec 14 : filing of wealth Tax ReturnSec 14 : filing of wealth Tax Return A belated or r...
Charge Of TaxCharge Of Tax Wealth tax is charged on the net wealth ofWealth tax is charged on the net wealth ofthe follow...
HoweverHowever Sec.45Sec.45 excludes the followingexcludes the followingfrom the charge of wealth tax:from the charge of w...
IndividualsIndividuals Individual includes members of AOPIndividual includes members of AOPwhere members’ shares are dete...
What Is An AssetWhat Is An Asset Sec 2(e)-Upto AY 92-93Sec 2(e)-Upto AY 92-93 Sec 2(ea)- from 93-94Sec 2(ea)- from 93-94...
What Is An Asset [Section 2(ea)]What Is An Asset [Section 2(ea)] Any building or land appurtenant theretoAny building or ...
What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Jewellery, bullion & furniture, utensils orJewellery, bull...
What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Yachts, boats & aircraft(Not asset whenYachts, boats & air...
What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Motor cars (other than stock in trade orMotor cars (other ...
House PropertyHouse Property used forused for residential or commercialresidential or commercialpurposes orpurposes or m...
House Property- exceptionsHouse Property- exceptions 1. HP exclusively for residential1. HP exclusively for residentialpu...
House Property- exceptionsHouse Property- exceptions 2.. Any house2.. Any house allotted by aallotted by acompanycompanye...
House Property- exceptionsHouse Property- exceptions 3.. Any residential house or3.. Any residential house orcommercial h...
House Property- exceptionsHouse Property- exceptions 4. Any house occupied by the4. Any house occupied by theassessee for...
House Property- exceptionsHouse Property- exceptions 5. Any residential house let out for5. Any residential house let out...
House Property- exceptionsHouse Property- exceptions6. commercial complex.6. commercial complex.
Urban LandUrban Land populationpopulation 10000 or more10000 or more
Urban LandUrban Land WithinWithin 8 kilometres8 kilometres of municipalityof municipalityareas .areas .
Urban LandUrban Land Folowing lands are not Urban Land andFolowing lands are not Urban Land andhence not wealths : Where-...
Cash in handCash in hand For individual or HUF- in excess of 50000For individual or HUF- in excess of 50000 For other pe...
Deemed Assets(Sec 4)Deemed Assets(Sec 4) Assets transferred from one spouse toAssets transferred from one spouse toanothe...
Deemed Assets(Sec 4)Deemed Assets(Sec 4) Asset held by minor child,Asset held by minor child, Asset transferred by an in...
Deemed Assets(Sec 4)Deemed Assets(Sec 4) Asset transferred to a person or AOP forAsset transferred to a person or AOP for...
Deemed Assets(Sec 4)Deemed Assets(Sec 4) House allotted under scheme from a co-House allotted under scheme from a co-oper...
Deemed Assets(Sec 4)Deemed Assets(Sec 4) When possession of building etc. is takenWhen possession of building etc. is tak...
Assets exempt from wealth taxAssets exempt from wealth tax( sec 5 )( sec 5 ) Property held under a trustProperty held und...
Assets exempt from wealthAssets exempt from wealthtax ( section 5)tax ( section 5) Any one building in the occupationAny ...
Assets exempt from wealthAssets exempt from wealthtaxtax Assets acquired from foreign moneyAssets acquired from foreign m...
Assets exempt from wealthAssets exempt from wealthtaxtax One house ,orOne house ,orpart of the house, orpart of the house...
Exclusion of assets and debtsExclusion of assets and debtsoutside India- Sec 6outside India- Sec 6STATUS R & OR R but NOR ...
Net WealthNet Wealth According to sec 2(m), net wealth meansAccording to sec 2(m), net wealth meansAggregate value ofAggr...
Steps for charging Wealth taxSteps for charging Wealth tax Ascertain “Ascertain “AssetsAssets”” AscertainAscertain “Deem...
Valuation Date, Section 2(q)Valuation Date, Section 2(q) It is the last day of the previous year forIt is the last day of...
Tax Rate, Section 3Tax Rate, Section 3 at the rate ofat the rate of 1% of the amount by1% of the amount by which the net...
Valuation of assets(Sch-III)Valuation of assets(Sch-III) Valuation of immovable property - Part BValuation of immovable p...
Immovable property stepsImmovable property steps Step I – Gross Maintainable RentStep I – Gross Maintainable Rent Step I...
Gross Maintainable RentGross Maintainable Rent When let outWhen let out ––( 1)Annual rent recd/recble or( 1)Annual rent r...
Gross Maintainable RentGross Maintainable Rent WhenWhen notnot let outlet out ––( 1 ) Local Authority valuation, or( 1 ) ...
Gross Maintainable RentGross Maintainable Rent AddAdd municipal taxmunicipal tax if borne by tenant,if borne by tenant, ...
Net Maintainable Rent( step -2)Net Maintainable Rent( step -2) From Gross Maintainable Rent deduct theFrom Gross Maintain...
Capitalise NMR( Step -3)Capitalise NMR( Step -3) The NMR is to be multiplied by-The NMR is to be multiplied by- 12.512.5...
Add Premium: (Step - 4)Add Premium: (Step - 4)The excess of unbuilt area overspecified areaPremiumNot more than 5% of aggr...
Specified Area :Specified Area :( 1 ) 60 % of Aggregate Area ( Kol, Del ,( 1 ) 60 % of Aggregate Area ( Kol, Del ,Chennai....
Step V – Deduct unearned incrementStep V – Deduct unearned increment In case ofIn case of Govt lease of landGovt lease of...
When valuation to be done by Rule 20When valuation to be done by Rule 20of Sch IIIof Sch III Not practicable(with approva...
Valuation of jewellery- Rule 18, Sch-IIIValuation of jewellery- Rule 18, Sch-III It is estimated to be the price that it ...
Valuation of jewellery- Rule 18, Sch-IIIValuation of jewellery- Rule 18, Sch-III When AO is of the opinion that value soW...
Business Asset- Rule 14 Sch IIIBusiness Asset- Rule 14 Sch III Step-I – Determine value as per B SheetStep-I – Determine ...
Valuation of interest in firm/AOPValuation of interest in firm/AOPRules 15,16 Sch-IIIRules 15,16 Sch-III Step I – Determi...
Assessment - IntimationAssessment - Intimation Sec. 16(1):Sec. 16(1): Where is return has been made either u/s 14Where is...
Scrutiny NoticeScrutiny Notice Sec. 16(2):Sec. 16(2): Where a return has beenWhere a return has beenmade either u/s 14 or...
Scrutiny orderScrutiny order Sec. 16(3):Sec. 16(3): then after hearing thethen after hearing theevidences as the assessee...
Wealth Escaping Assessment,Wealth Escaping Assessment,Section 17Section 17 If the assessing officer has reason to believe...
Time Limit For Completion OfTime Limit For Completion OfAssessment Or Reassessment, Sec 17AAssessment Or Reassessment, Sec...
Reference to Valuation OfficerReference to Valuation Officer
Audit check pointsAudit check points Most of the Audit objections originatesMost of the Audit objections originatesfrom I...
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Wealth tax act,1957.bose

  1. 1. WEALTH TAX ACT,1957WEALTH TAX ACT,1957Shankar BoseInspector of Income-taxMSTU, Puri
  2. 2. Return Of WealthReturn Of Wealth Sec 14 : filing of wealth Tax ReturnSec 14 : filing of wealth Tax Return A belated or revised return at any timeA belated or revised return at any timebefore the expiry of one year from the endbefore the expiry of one year from the endof the relevant assessment year or beforeof the relevant assessment year or beforethe completion of assessment, whicheverthe completion of assessment, whicheveris earlier.is earlier.
  3. 3. Charge Of TaxCharge Of Tax Wealth tax is charged on the net wealth ofWealth tax is charged on the net wealth ofthe following type of assessee.the following type of assessee. IndividualIndividual HUFHUF CompanyCompany
  4. 4. HoweverHowever Sec.45Sec.45 excludes the followingexcludes the followingfrom the charge of wealth tax:from the charge of wealth tax: Any company registered under section 25 of theAny company registered under section 25 of theCompanies Act 1956.Companies Act 1956. Any Co-operative SocietyAny Co-operative Society Any Social clubAny Social club Any political partyAny political party Any mutual fund specified u/s 10(23D) of the ITAny mutual fund specified u/s 10(23D) of the ITAct.Act.
  5. 5. IndividualsIndividuals Individual includes members of AOPIndividual includes members of AOPwhere members’ shares are determinate.where members’ shares are determinate. HUF includes Sikh and Jain families.HUF includes Sikh and Jain families.
  6. 6. What Is An AssetWhat Is An Asset Sec 2(e)-Upto AY 92-93Sec 2(e)-Upto AY 92-93 Sec 2(ea)- from 93-94Sec 2(ea)- from 93-94 Earlier it was property of all descriptionEarlier it was property of all descriptionwith few exceptionswith few exceptions Now only some specified assetsNow only some specified assets
  7. 7. What Is An Asset [Section 2(ea)]What Is An Asset [Section 2(ea)] Any building or land appurtenant theretoAny building or land appurtenant theretoWhether used for residential or commercialWhether used for residential or commercialPurpose / guest house / firm house.Purpose / guest house / firm house.
  8. 8. What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Jewellery, bullion & furniture, utensils orJewellery, bullion & furniture, utensils orany other article made wholly & partly ofany other article made wholly & partly ofgold, silver, platinum or any othergold, silver, platinum or any otherprecious metal. Except stock in trade.precious metal. Except stock in trade.
  9. 9. What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Yachts, boats & aircraft(Not asset whenYachts, boats & aircraft(Not asset whenused for commercial purpose).used for commercial purpose). Urban land.Urban land.
  10. 10. What Is An Asset [SectionWhat Is An Asset [Section2(ea)]2(ea)] Motor cars (other than stock in trade orMotor cars (other than stock in trade orused for running on hire).used for running on hire). Cash in handCash in hand
  11. 11. House PropertyHouse Property used forused for residential or commercialresidential or commercialpurposes orpurposes or maintained as a guest housemaintained as a guest houseandand includes a farm houseincludes a farm housesituated within 25 kms from the local limitssituated within 25 kms from the local limitsof a municipality, corporation orof a municipality, corporation orcantonment boardcantonment board but does not includebut does not include :-:-
  12. 12. House Property- exceptionsHouse Property- exceptions 1. HP exclusively for residential1. HP exclusively for residentialpurposespurposes
  13. 13. House Property- exceptionsHouse Property- exceptions 2.. Any house2.. Any house allotted by aallotted by acompanycompanyexclusively forexclusively for residentialresidential purposespurposestotoitsits employee, /officer /or a wholeemployee, /officer /or a wholetimetimedirectordirector having gross annual salaryhaving gross annual salary
  14. 14. House Property- exceptionsHouse Property- exceptions 3.. Any residential house or3.. Any residential house orcommercial house held ascommercial house held as stock instock intradetrade..
  15. 15. House Property- exceptionsHouse Property- exceptions 4. Any house occupied by the4. Any house occupied by theassessee for his ownassessee for his own business orbusiness orprofession.profession.
  16. 16. House Property- exceptionsHouse Property- exceptions 5. Any residential house let out for5. Any residential house let out foraaperiod ofperiod of 300 days or more300 days or more during theduring theP.Yr.P.Yr.
  17. 17. House Property- exceptionsHouse Property- exceptions6. commercial complex.6. commercial complex.
  18. 18. Urban LandUrban Land populationpopulation 10000 or more10000 or more
  19. 19. Urban LandUrban Land WithinWithin 8 kilometres8 kilometres of municipalityof municipalityareas .areas .
  20. 20. Urban LandUrban Land Folowing lands are not Urban Land andFolowing lands are not Urban Land andhence not wealths : Where-hence not wealths : Where- Construction is not permissible under lawConstruction is not permissible under law Unused land held forUnused land held for industrial purposesindustrial purposes forformore than 2 yrsmore than 2 yrs Held as stock in trade for > 10 yrsHeld as stock in trade for > 10 yrs
  21. 21. Cash in handCash in hand For individual or HUF- in excess of 50000For individual or HUF- in excess of 50000 For other persons any amount notFor other persons any amount notrecorded in booksrecorded in books
  22. 22. Deemed Assets(Sec 4)Deemed Assets(Sec 4) Assets transferred from one spouse toAssets transferred from one spouse toanother spouse without adequateanother spouse without adequateconsideration / agreement of living apart.consideration / agreement of living apart.
  23. 23. Deemed Assets(Sec 4)Deemed Assets(Sec 4) Asset held by minor child,Asset held by minor child, Asset transferred by an individual to sonsAsset transferred by an individual to sonswife or sons minor child ( + step child ),wife or sons minor child ( + step child ),
  24. 24. Deemed Assets(Sec 4)Deemed Assets(Sec 4) Asset transferred to a person or AOP forAsset transferred to a person or AOP forthe benefit of Son’s Wife,the benefit of Son’s Wife,
  25. 25. Deemed Assets(Sec 4)Deemed Assets(Sec 4) House allotted under scheme from a co-House allotted under scheme from a co-operative housing society when assessee isoperative housing society when assessee ismembermember
  26. 26. Deemed Assets(Sec 4)Deemed Assets(Sec 4) When possession of building etc. is takenWhen possession of building etc. is takenunder part performance of contract u/sunder part performance of contract u/s53A of T.P.Act.53A of T.P.Act.
  27. 27. Assets exempt from wealth taxAssets exempt from wealth tax( sec 5 )( sec 5 ) Property held under a trustProperty held under a trust The interest of an assessee in theThe interest of an assessee in theproperty of an HUFproperty of an HUF
  28. 28. Assets exempt from wealthAssets exempt from wealthtax ( section 5)tax ( section 5) Any one building in the occupationAny one building in the occupationof a former ruler- under someof a former ruler- under someconditionsconditions(If GOI declares it Official(If GOI declares it OfficialResidence )Residence ) Jewellery in possession of a ruler-Jewellery in possession of a ruler-under some conditionsunder some conditions( If kept in India /same( If kept in India /sameshape/inspection.)shape/inspection.)
  29. 29. Assets exempt from wealthAssets exempt from wealthtaxtax Assets acquired from foreign moneyAssets acquired from foreign moneyby persons of Indian origin whoby persons of Indian origin whoordinarily lived abroad- now settlesordinarily lived abroad- now settlesin india-in india- exempt for seven yearsexempt for seven years
  30. 30. Assets exempt from wealthAssets exempt from wealthtaxtax One house ,orOne house ,orpart of the house, orpart of the house, or a plot of land comprising an areaa plot of land comprising an areaof 500 sqmts or less.of 500 sqmts or less. (belonging to an individual or an(belonging to an individual or anHUF)HUF)
  31. 31. Exclusion of assets and debtsExclusion of assets and debtsoutside India- Sec 6outside India- Sec 6STATUS R & OR R but NOR & N.R.Individual (Indian Citizen)HUF & CO.All assets - all debtswherever locatedIndian assets - IndiandebtsIndividual (Foreign citizen) Indian assets - IndiandebtsIndian assets - Indiandebts
  32. 32. Net WealthNet Wealth According to sec 2(m), net wealth meansAccording to sec 2(m), net wealth meansAggregate value ofAggregate value of all assetsall assets belonging tobelonging tothe assesse on the valuation date,the assesse on the valuation date,(MINUS )(MINUS )aggregate value ofaggregate value of all the debtsall the debts owed byowed bythe assessee on the valuation date.the assessee on the valuation date. The debt must be incurred in connectionThe debt must be incurred in connectionwith procurement of the asset.with procurement of the asset.
  33. 33. Steps for charging Wealth taxSteps for charging Wealth tax Ascertain “Ascertain “AssetsAssets”” AscertainAscertain “Deemed Assets“Deemed Assets”” Consider “Consider “Exempt Assets”Exempt Assets” ValueValue assets as perassets as per “Schedule III”“Schedule III” ComputationComputation of Wealth Taxof Wealth Tax
  34. 34. Valuation Date, Section 2(q)Valuation Date, Section 2(q) It is the last day of the previous year forIt is the last day of the previous year forincome tax assessment.income tax assessment.
  35. 35. Tax Rate, Section 3Tax Rate, Section 3 at the rate ofat the rate of 1% of the amount by1% of the amount by which the net wealth exceedswhich the net wealth exceeds Rs. 30Rs. 30lakhslakhs..
  36. 36. Valuation of assets(Sch-III)Valuation of assets(Sch-III) Valuation of immovable property - Part BValuation of immovable property - Part B Assets of business - Part DAssets of business - Part D Interest in firm/AOP - Part EInterest in firm/AOP - Part E Jewellery – Part GJewellery – Part G Valuation in other cases – Part HValuation in other cases – Part H
  37. 37. Immovable property stepsImmovable property steps Step I – Gross Maintainable RentStep I – Gross Maintainable Rent Step II – Net Maintainable RentStep II – Net Maintainable Rent Step III – Capitalise NMRStep III – Capitalise NMR Step IV – Add PremiumStep IV – Add Premium Step V – Deduct unearned incrementStep V – Deduct unearned increment
  38. 38. Gross Maintainable RentGross Maintainable Rent When let outWhen let out ––( 1)Annual rent recd/recble or( 1)Annual rent recd/recble or( 2 ) municipal rent valuation-( 2 ) municipal rent valuation-Whichever is higherWhichever is higher
  39. 39. Gross Maintainable RentGross Maintainable Rent WhenWhen notnot let outlet out ––( 1 ) Local Authority valuation, or( 1 ) Local Authority valuation, or(2) when outside such Local Authority(2) when outside such Local Authorityjurisdiction – Fair Rentjurisdiction – Fair Rent
  40. 40. Gross Maintainable RentGross Maintainable Rent AddAdd municipal taxmunicipal tax if borne by tenant,if borne by tenant, AddAdd 1/91/9ththof actual rentof actual rent if repair done byif repair done bytenant,tenant, AddAdd 15% interest15% interest if deposit taken fromif deposit taken fromtenant(not to charge for upto 3 month’stenant(not to charge for upto 3 month’sadvance rent) .advance rent) .
  41. 41. Net Maintainable Rent( step -2)Net Maintainable Rent( step -2) From Gross Maintainable Rent deduct theFrom Gross Maintainable Rent deduct thefollowing :following : Taxes levied by local auth- whether paid orTaxes levied by local auth- whether paid ornotnot 15% of GMR15% of GMR
  42. 42. Capitalise NMR( Step -3)Capitalise NMR( Step -3) The NMR is to be multiplied by-The NMR is to be multiplied by- 12.512.5 if the land is freeholdif the land is freehold 1010 if the land is on lease for 50 years or moreif the land is on lease for 50 years or more(unexpired period)(unexpired period) 88 if the land is on lease for a period below 50if the land is on lease for a period below 50years(unexpired period)years(unexpired period)
  43. 43. Add Premium: (Step - 4)Add Premium: (Step - 4)The excess of unbuilt area overspecified areaPremiumNot more than 5% of aggregate area NIL5-10 % of aggregate area 20 % of capitalised ( NMR)value10-15 % of aggregate area 30%15-20 % of aggregate area 40%More than 20% of aggregate area Rule 3 not to apply, Rule 20 appliesinstead
  44. 44. Specified Area :Specified Area :( 1 ) 60 % of Aggregate Area ( Kol, Del ,( 1 ) 60 % of Aggregate Area ( Kol, Del ,Chennai., MumbaiChennai., Mumbai( 2 ) 65 % for Ahmedabad Bangalore etc( 2 ) 65 % for Ahmedabad Bangalore etc( 3 ) 70 % for other cities.( 3 ) 70 % for other cities.
  45. 45. Step V – Deduct unearned incrementStep V – Deduct unearned increment In case ofIn case of Govt lease of landGovt lease of land , there, theremay be condition for payment ofmay be condition for payment ofunearned increase for transfer of theunearned increase for transfer of theproperty.property. 2011] 12 taxmann.com499(Delhi)2011] 12 taxmann.com499(Delhi)HIGH COURT OF  DELHIHIGH COURT OF  DELHICommissioner of  Income-tax, Delhi-Commissioner of  Income-tax, Delhi-IXIXVs. Monoflex India (P.) Ltd.*Vs. Monoflex India (P.) Ltd.*
  46. 46. When valuation to be done by Rule 20When valuation to be done by Rule 20of Sch IIIof Sch III Not practicable(with approval of JCIT)Not practicable(with approval of JCIT) Difference between unbuilt area andDifference between unbuilt area andspecified area exceed 20%specified area exceed 20% Lease expires within 15 years and noLease expires within 15 years and noclause to renewclause to renew
  47. 47. Valuation of jewellery- Rule 18, Sch-IIIValuation of jewellery- Rule 18, Sch-III It is estimated to be the price that it wouldIt is estimated to be the price that it wouldfetch if sold in open market on valuationfetch if sold in open market on valuationdatedate With the returnWith the return A statement in prescribed form will beA statement in prescribed form will befurnished when value does not exceed 5 lakhfurnished when value does not exceed 5 lakh Report of registered valuer to be given whenReport of registered valuer to be given whenvalue exceed 5 lakhvalue exceed 5 lakh
  48. 48. Valuation of jewellery- Rule 18, Sch-IIIValuation of jewellery- Rule 18, Sch-III When AO is of the opinion that value soWhen AO is of the opinion that value sodeclared by assessee is less than FMV bydeclared by assessee is less than FMV by33 1/3% or 50000/-33 1/3% or 50000/- When AO is of the opinion that valueWhen AO is of the opinion that valuearrived at by Regd. Valuer is less thanarrived at by Regd. Valuer is less thanFMVFMV He will refer the case to Valuation OfficerHe will refer the case to Valuation Officer Value so decided will be adopted for fourValue so decided will be adopted for fouryearsyears Circular No 646 dated 15.3.1993Circular No 646 dated 15.3.1993
  49. 49. Business Asset- Rule 14 Sch IIIBusiness Asset- Rule 14 Sch III Step-I – Determine value as per B SheetStep-I – Determine value as per B Sheet(Depreciable assets- WDV, others Book(Depreciable assets- WDV, others BookValue)Value) Step-II – Add 20% to such valuationStep-II – Add 20% to such valuation Step-III – Find out individual valuation asStep-III – Find out individual valuation asper Sch IIIper Sch III If Step III is more than step II take step IIIIf Step III is more than step II take step III Otherwise take step IOtherwise take step I
  50. 50. Valuation of interest in firm/AOPValuation of interest in firm/AOPRules 15,16 Sch-IIIRules 15,16 Sch-III Step I – Determine asset value without givingStep I – Determine asset value without givingeffect to sec 5effect to sec 5 Step II – Say this value is Rs 20 and say totalStep II – Say this value is Rs 20 and say totalcapital of partners/members is Rs 8 in the ratiocapital of partners/members is Rs 8 in the ratio2:3:3. Then Rs 8 out of 20 will be distributed in2:3:3. Then Rs 8 out of 20 will be distributed inthe ratio 2:3:3 and balance 12 will be distributedthe ratio 2:3:3 and balance 12 will be distributedin the asset sharing ratio on desolutionin the asset sharing ratio on desolution Step III – Individual assets are valued as usualStep III – Individual assets are valued as usualand exemption is allowed even the assetand exemption is allowed even the assetpertains to the firm/AOPpertains to the firm/AOP
  51. 51. Assessment - IntimationAssessment - Intimation Sec. 16(1):Sec. 16(1): Where is return has been made either u/s 14Where is return has been made either u/s 14or 15 or in response to a notice u/s 16(4)(i).or 15 or in response to a notice u/s 16(4)(i). (i)(i) if any tax or interest is found due on the basis of such returnif any tax or interest is found due on the basis of such returnafter adjustment of prepaid taxes an intimation shall be sent toafter adjustment of prepaid taxes an intimation shall be sent toassessee specifying the amount so payable and such intimationassessee specifying the amount so payable and such intimationshall be deemed to be notice of demand u/s 30.shall be deemed to be notice of demand u/s 30. (ii)(ii) if any refund is found due on the basis of such return theif any refund is found due on the basis of such return therefund shall be granted to the assessee and an intimation to thisrefund shall be granted to the assessee and an intimation to thiseffect shall be sent to the assessee.effect shall be sent to the assessee. In case no sum is payable nor any refund is due theIn case no sum is payable nor any refund is due theacknowledgment of the return will be deemed to be intimation.acknowledgment of the return will be deemed to be intimation. No intimation can be sent after the expiry of two years from theNo intimation can be sent after the expiry of two years from theend of the relevant A.Yr.end of the relevant A.Yr.
  52. 52. Scrutiny NoticeScrutiny Notice Sec. 16(2):Sec. 16(2): Where a return has beenWhere a return has beenmade either u/s 14 or 15 or in responsemade either u/s 14 or 15 or in responseto a notice u/s 16(4)(i), the A.O. If heto a notice u/s 16(4)(i), the A.O. If heconsiders it necessary or expedient toconsiders it necessary or expedient toensure that the assessee has notensure that the assessee has notunderstated his net wealth, may serve onunderstated his net wealth, may serve onthe assessee a notice requiring him tothe assessee a notice requiring him toattend on a specified date and toattend on a specified date and toproduce or cause to be produced suchproduce or cause to be produced suchevidence on which the assessee may relyevidence on which the assessee may relyin support of his return.in support of his return.
  53. 53. Scrutiny orderScrutiny order Sec. 16(3):Sec. 16(3): then after hearing thethen after hearing theevidences as the assessee may produceevidences as the assessee may produceand such other indences the A.O. mayand such other indences the A.O. mayrequire the assessee to produce andrequire the assessee to produce andtaking into account all relevant materialstaking into account all relevant materialswhich the A.O. has gathered, the A.Owhich the A.O. has gathered, the A.Oshall by order in writing assess the netshall by order in writing assess the netwealth of the assessee and determinewealth of the assessee and determinethe sum payable by him.the sum payable by him.
  54. 54. Wealth Escaping Assessment,Wealth Escaping Assessment,Section 17Section 17 If the assessing officer has reason to believe that the netIf the assessing officer has reason to believe that the netwealth of any person has escaped assessment for anywealth of any person has escaped assessment for anyassessment year, he may be subjected to the provisionsassessment year, he may be subjected to the provisionsof the act serve on such person a notice requiring him toof the act serve on such person a notice requiring him tofurnish within such period as specified in the notice, afurnish within such period as specified in the notice, areturn in the prescribed form and prescribed mannerreturn in the prescribed form and prescribed mannersetting forth the net wealth of such person is assessablesetting forth the net wealth of such person is assessableas on the valuation date mentioned in the notice.as on the valuation date mentioned in the notice. No action shall be taken under this sec after the expiry ofNo action shall be taken under this sec after the expiry of4 years from the end of the relevant assessment year.4 years from the end of the relevant assessment year.
  55. 55. Time Limit For Completion OfTime Limit For Completion OfAssessment Or Reassessment, Sec 17AAssessment Or Reassessment, Sec 17A No order of assessment shall be made atNo order of assessment shall be made atany time after the expiry of 2 years fromany time after the expiry of 2 years fromthe end of the assessment year in whichthe end of the assessment year in whichthe net wealth was first assessable.the net wealth was first assessable. No order of assessment or reassessmentNo order of assessment or reassessmentshall be made under sec 17 after theshall be made under sec 17 after theexpiry of one year from the end of theexpiry of one year from the end of thefinancial year in which the notice underfinancial year in which the notice undersec 17(1) was served.sec 17(1) was served.
  56. 56. Reference to Valuation OfficerReference to Valuation Officer
  57. 57. Audit check pointsAudit check points Most of the Audit objections originatesMost of the Audit objections originatesfrom Income tax assessmentsfrom Income tax assessments Assets in IT records to be closely watchedAssets in IT records to be closely watched Rent incomes are to be speciallyRent incomes are to be speciallyconsideredconsidered Exemption for one house- not to be givenExemption for one house- not to be givento companiesto companies Valuation Done under section 55A of ITValuation Done under section 55A of ITTHANKS
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