PPT is about the Income tax assessment procedure under the Income Tax Act 1961, updated with the amendments provided under the Finance Act , 2021

1. ASSESSMENT
PROCEDURE
By – Akshat Goyal
Gunjan sharma
Harsha Somani

2. WHAT IS ASSESSMENT?
Section 2(8): “Assessment” includes
reassessment

3. TYPES OF ASSESSMENT
Summary
Assessment
Section 143(1)
Scrutiny
Assessment
Section 143(3)
Best Judgment
Assessment
Section 144
Income Escaping
Assessment
Section 147
Search
Assessment
Section 153A*
* Now as per F.A
2021 the same has
been and merged
into 147

4. Self Assessment 140A

5. Inquiry before Assessment -
142(1) Notice u/s 142(1)

6. SPECIAL AUDIT U/S 142(2A)
Assessing
officer
Direction issue
by
PCCIT/PCIT/CIT/
CCIT Special audit can be
performed having regards to:-
•Complexities of Accounts.
•Volume of Accounts.
•Doubt about correctness of
accounts
•Multiplicity of transactions
etc
CA nominated by
PCCIT/CCIT/PCIT/
CIT
Assessee to
conduct
special audit
Audit by CA

7. Following
adjustments will be
made to the income
any arithmetical error in the return
an incorrect claim apparent from
any information in the return
disallowance of loss claimed, if
return filed beyond the due date
disallowance of expenditure [or
increase in income] indicated in
the audit report but not added in
the return
Processing of return u/s 143(1)
disallowance of deduction claimed
u/s 10AA or Chapter VI-A
heading "C.—Deductions in
respect of certain incomes", if the
return filed beyond the due date
addition of income appearing in
Form 26AS/ 16A/ 16 which has not
been included in the return
Tax, interest and fee
shall be computed
on the basis of this
total income
Sum payable by, or the
amount of refund due
to, the assessee shall be
determined
an intimation shall be
prepared or generated
and sent to the
assessee
Assessee can reply
within 30 days
Refund due to the
assessee shall be
granted to the assessee
Adjustment to be
made only after
giving notice to
assessee

8. system auto-generates the intimation u/s
143(1) and communicates to the assessee on
the email entered while filing the income tax
return.
The sender of these email is CPC i.e. Central
Processing Centre, Bengaluru and the sender’s
email is intimations@cpc.gov.in.
The PAN and AY (Assessment Year) would be
different in each case.
The intimation is attached to the email in a pdf
format. It is password protected. It can also be
sent via SMS.

9. Action to Intimation u/s 143(1)

10. Procedure u/s 143(2)
Notice
143(2)
Notice
142(1)
Reply
Draft
Assessmen
t order/
SCN
Reply
Final
Assessmen
t order
143(3)

11. Service of Notice By NEAC u/s143(2)
(scrutiny notice)
Return has been
furnished under section
139, or in response to a
notice under sub-section
(1) of section 142
The Assessing Officer or the prescribed
income-tax authority, as the case may be, if,
considers it necessary or expedient to ensure
that the assessee-
has not
understated
the income
has not
computed
excessive
loss
has not
under-paid
the tax in
any manner
Assessee can either to attend
the office of the Assessing
Officer or to produce, or
cause to be produced before
the Assessing Officer any
evidence on which the
assessee may rely in support
of the return
Provided that no notice under this sub-
section shall be served on the assessee after
the expiry of *[three] months from the end of
the financial year in which the return is
furnished.
*Substituted for 6
months by the finance
act 2021 w.e.f .
1/4/2021.

12. Scrutiny Assessment 143(3)
Based on material and
evidences furnished by
assessee in response to notice
u/s 143(2) or gathered by AO,
he shall determine the income
or loss of assessee, by way of
passing an order along with
determination of tax payable
or refundable to assessee u/s
143 (3).
Any institution to whom
exemption u/s 10(21)/ (22B)/
(23A)/(23B)/(23C) available,
AO cannot disallow such
exemption if any contravention
found without first informing
and taking approval of govt or
prescribed authority.
However disallow
the same if govt
or prescribed
authority has
rescinded the
notification
withdrawing the
exemption.
No order shall be passed after the expiry of 9 months from the end of
AY in which the income was first assessable.

13. Limited scrutiny – This is CASS(computer assisted Scrutiny
selection ) where cases are selected based on the limited
parameters. Scrutiny will be limited to the particular area of
return mentioned in the notice.
Complete scrutiny- will be undertaken on the basis
of return filed and all supporting documents.
Complete scrutiny &
Limited Scrutiny

14. 292BB
where an assessee had appeared in any proceedings or co-operated
in any enquiry relating to an assessment or reassessment, it shall be
deemed that any notice required to be served upon him, has been
duly served upon him in time in accordance with the provisions of
the Act.
And such assessee shall be precluded from raising any objection in any
proceeding or enquiry that the notice was not served upon him or not
served upon him in time or served upon him in an improper manner.

15. The scheme seeks to eliminate the human interface between the taxpayer
and the income tax department. The scheme lays down the procedure to
carry out a faceless assessment through electronic mode. From 13 August
2020, the e-assessment scheme of 2019 stands amended and hence
known as the Faceless Assessment scheme.
What is Faceless assessment?

16. OLD PROCEDURE
AO Assessee
Notice 143(2)
Notice 142 (1)
Response filed by
the Assessee

17. Faceless Assessment 143 (3A)/
(3B)/(3C)
PPT 4

18. Hierarchy
National Faceless Assessment
Centre
Assessment Unit
(AU)
Verification Unit
(VU)
Review Unit (RU)
Technical unit (TU)
Regional Faceless Assessment
Centre

19. PROCEDURE IN FACELESS ASSESSMENT
(Front End)
Assessee
NFEAC
File response in 15 days
Notice u/s 143 (2) to the assessee
Further information and
Documents on request of
AU
Draft Order by AU
If the Assessee fails to comply above notices
than SCN u/s 144
Final Order

20. PROCEDURE IN FACELESS APPEAL
(Back End)
NFEAC Appeal
Unit
(CIT(A))
Forward Info /Report received from assessee.
On the basis of the material obtained – Draft order
Acceptance / Rejection
If rejected – case will be transferred to
Review Unit
Draft Order by RU, if same views as AU.
Allot Assessment
Request for information/report

21. Section 144: Best Judgment
Assessment
Best Judgment
Assessment is
carried out where
 No Cooperation by the taxpayer in furnishing
information/explanation related to his tax assessment
or
 Return of Income is not filed within due date
 Books of accounts of taxpayer are not reliable or are
incomplete
This Assessment is carried out by the AO as per the best judgment on the
basis of the limited material
This Assessment is carried out in case the assessee fails to comply with the
requirements supra

22. As per Section 144 the AO is under obligation to make assessment to the best of his
judgement under the following cases-
If the Taxpayer fails to -
 File the return required to be filed within the due date prescribed u/s 139(1) or,
 File the return u/s 139(4) or,
 File the return u/s 139(5) or,
If the Taxpayer fails to comply with all the terms of the notice u/s 142(1) – Notice to
file return
If the Taxpayer fails to comply with the special directions u/s 142 (2A) – Special
Audit
If after filing the return assessee fails to comply with the notice issued under 143 (2)-
Notice for Scrutiny Assessment
If AO is not satisfied about the correctness or completeness of the accounts of the tax
payer or if no method of accounting (145) has been regularly employed by the
employer.
These circumstances are alternative not cumulative for the purpose of BJA
SCOPE OF BJA

23. Sec
139(1)
Sec
139(4)
Sec
139(5)
Sec 142
(1)
Sec 142
(2A)
Sec 143
(2)
 Filing of Return of Income within specified due date
 Belated Return-to be filed before end of AY or completion of
assessment whichever is earlier
 Revised Return-Above mentioned returns can be
revised before end of AY or completion of assessment
whichever is earlier
 Notice can be issued to assessee to file return of income or
produce documents or furnish specified details, after
acquiring approval of Joint Commissioner
 AO, after giving an opportunity of being heard, will direct the taxpayer,
having regard to complexity, double volume, to get its accounts audited
from a CA nominated by the PCCT or COT or POT or CIT and to
furnish a report of such audit in the prescribed form
 Notice for carrying out scrutiny assessment-it must be
served to the assessee within 3 months from the end of
the FY in which the return was made
BASIS OF SECTIONS FOR BJA

24. Service of Show cause
Notice
• Conditions calling for the BJA are satisfied- AO will
serve a notice on taxpayer to show cause why BJA
should not be conducted.
• AO is not satisfied by the arguments of the taxpayer
and he has reason to believe that the case demands a
best judgment , then he will proceed to carry out the
assessment to the best of his knowledge.
Exception for SCN • Where a Notice is issued u/s 142(1)
After taking into account all relevant materials which the AO has
gathered, and after giving the taxpayer an opportunity of being heard, the
AO shall make the assessment of the total income or loss to the best of
his knowledge/judgment and determine the sum payable by the taxpayer
on the basis of such assessment

25. Assessee who can take
benefit of sec 144C
Non resident or
foreign company
Other than already mentioned if
assessee wants to appeal order
passed by AO of transfer pricing
or 92CA.
Section 144C- Dispute Resolution Panel

26. Final order by AO within 1
month from the end of the
month in which direction form
DRP received.
AO shall forward the
draft copy of order to
Assessee.
Assesse to reply
within 30 days
Or file objection to
AO and DRP
Either accept ;
Final order by AO
within 1 month
from the end of the
month in which
acceptance
received.
DRP to issue direction
within 9 months from
end of month, draft order
received by assessee
Appeal only to
ITAT
Procedure

27. Miscellaneous Issues
 Section 142 A –reference to Valuation Officer
 Section 145- Method of accounting