Law

1. How Much did you earn ? File your ROI Checking your ITR by Dept
What is Assessment Procedure ?
• Every Person, who is earning, which is chargeable to tax, has to furnish his return of income to the
Income Tax Department. ... The process of examination of the return by the Income Tax Department
Is called "Assessment"
• Assessment simply means determination of Tax
• It is Procedure for determining of Tax Liability and Recovery of Tax
• This is determined as per Taxation law existing in that particular Assessment Year

2. Various Sections under which ITR is filled
139 (1) - Normal Return
139 (3) – Return of Loss
139 (4) – Belated Return
142(1) – Directions by AO to file the ROI
148 – Re-assessment of Income U/s 147
153 A/C – Block Assessment in case of Action U/s 132
139 (5) – Revised Return

3. Various Sections of Assessment under Income Tax Act
140 (A) - Self Assessment
143 (3) - Regular Assessment
147 - Re- Assessment
153 (A)/(C) Block Assessment
144 – Best Judgement
Limited Scrutiny
Complete Scrutiny
143 (1)- Summary Assessment

4. 140 (A) Self Assessment
• In this Kind of assessment the Income Tax
Department had given the Opportunity to
the assessee to disclose his income truthfully
• The department assumes the income
declared by the assesse to be true but also
keeps an eye on the transactions that the
assesse is making
• Since the assesse himself computes his
income and tax liability therefore it is called
self assessment

5. Summary Assessment U/s 143(1)
In this type of assessment, the information submitted by the assessee in his return of income
is cross-checked against the information that the income tax department has access to
It is a type of assessment carried out without any human intervention
If there arises tax liability/Refund on summary assessment an intimation U/s 143(1) will be sent to assessee
through e-mail. These intimation should be treated as Demand Notice U/s 156(1) or refund order.
No separate demand notice will be issued
The acknowledgement of return shall be deemed to be the intimation in a case where no sum is
payable by, or refundable to, the assessee and where no adjustment is required
Time limit- Within 6 months from the end of the financial year in which return of income was filed

6. 143 (3) Regular Assessment - Scrutiny
Return has been Filed
Yes - Filed Not Filed
Issue of Notice U/s 142(1)(i)
Issue of Notice U/s 143(2)
Issue of Notice U/s 143(2)
Time limit for issue of notice U/s 143(2)
Notice should be Served on the Asseesssee within
SIX months from the end of the Financial year in
which Return U/s 139(1) Or U/s 142(1) has been filed

7. Mandatory issue of Notice U/s 143(2)
Shri Rishav Prakash Jain, New ... vs Ito, New Delhi on 18 February, 2019
Income Tax Appellate Tribunal - Delhi
The ld. counsel for the assessee, referring to various decisions including the
decision of the Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT reported
in 229 ITR 383 (SC), submitted that the above ground is purely a legal ground and
goes to the root of the matter and does not require fresh facts to be investigated
and therefore, should be admitted. Referring to the information received under RTI Act,
the ld. counsel for the assessee submitted that in the instant case, no notice u/s 143(2)
of the Act was issued subsequent to filing of the return by the assessee in response to
notice u/s 148 of the IT Act. Only notice u/s 142(1) of the Act was issued and served on
the assessee. Therefore, in view of the various decisions including the decision of jurisdictional
High Court in the following cases the assessment order has to be quashed:-

8. Mandatory issue of Notice U/s 143(2)
Shri Rishav Prakash Jain, New ... vs Ito, New Delhi on 18 February, 2019
Since, in the instant case, admittedly, no notice u/s 143(2) of the Act was issued
and served on the assessee after the return in response to notice u/s 148 of the
Act was filed by stating that the original return filed may be treated as return filed
in response to notice u/s 148, therefore, the reassessment order passed by the
Assessing Officer is not sustainable in law. We, therefore, accept the additional
ground raised by the ITA No.2061/Del/2012 assessee and quash the order passed
u/s 143(3)/147 for non-issuance of notice u/s 143(2) of the Act which is mandatorily
required. The additional ground raised by the assessee is accordingly allowed.
Since the assessee succeeds on this legal ground, the other grounds being academic
in nature are not being adjudicated.

9. Section 292BB – Effect of Assessment
Where an Assessee has appeared in any Proceeding or co-operated in any inquiry
relating to an assessment or re-assessment, 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-
(1) Not served upon him; or
(2) Not served upon in time; or
(3) 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.

10. Limited Scrutiny U/s 143(3)
The Central Board of Direct Taxes (‘CBDT’),Vide Instruction No.7/2014 Dated 26-9-2014 had clarified
the Extent of enquiry in certain category of cases Specified there in, Which are selected for Scrutiny
through CASS.
AO Should communicate the Reasons/issues for which the file has been selected in CASS
The Questionnaire under section 142(1)(ii) of the act in ‘Limited Scrutiny’ Cases shall remain confined only
To the specific reasons/ issues for which case has been picked up for scrutiny. Further, the scope of enquiry
Shall be restricted to the ‘Limited Scrutiny’ issues.
CASS- Computer Assisted Scrutiny Selection
Recent Circulars and Notifications – Instruction No. 20/2015 Dated 29/12/2015
Reasons for selection of case under CASS are – mismatch of ITR Data with AIR information/CIB/26AS

11. Limited Scrutiny Complete Scrutiny
 It comes to the notice of the Assessing officer that there is potential escapement of income exceeding Rs.5 Lac/10
Lac ( for metro cities ) requiring substantial verification on any other issue (S), then, the case may be taken up for
‘Complete Scrutiny ‘ with the approval of the Pr. CIT/CIT Concerned.
During the course assessment proceedings in ‘limited Scrutiny’ cases, if:
 The AO has to take approval of Pr. CIT/CIT in writing after being satisfied about merits of the issue [ S ] necessitating
‘complete Scrutiny ‘ in that particular case.
‘Metro cities ‘ would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad.
CONVERT

12. Procedure for Assessment Proceedings under section 143(3)
Mandatory issue and service of Notice U/s 143(2)
Issue of Notice U/s 142(1) (ii) calling for
information required to complete the assessment
Issue of Show cause notice if AO intends to make certain
additions/disallowance to the income of the Assessee
Issue of Assessment order U/s 143(3) within time
limit prescribed U/s 153(1)
Referral to
Valuation Officer
(142A) or
Direction for
audit u/s.
142(2A)if
required
Section 133 - Power of
AO to call information
from any person for
completing the
assessment
• The Assessing officer shall not require the production of any accounts relating to a period more than 3 years prior to the previous year

13. Referral by AO to Valuation Officer
U/s. 142A for valuation
 AO may make a reference to a valuation officer to estimate the value including fair market value of any asset,
Property or Investment.
 Valuation Officer shall estimate the value after taking into account such evidences as Assessee may produce
and any other evidence in his possession.
 Valuation officer shall send a copy of report of the estimation of value to the AO and Assessee within a period
of Six Months from the end of the month in which reference is made.
 AO after giving the Assessee an opportunity of being heard, take into account the report of Valuation officer in
making the assessment or reassessment.

14. Direction by AO U/s. 142 (2A) to get the
accounts audited.
 AO if at any stage of proceedings before him having regard to
1. Nature and Complexity of the accounts
2. Volume of the accounts
3. Specialized nature of business activity of the Assessee.
4. doubts about the correctness of the accounts
And in the interests of the revenue, is of the opinion to get the accounts audited then he will direct the
Assessee to do so.
 Prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner is required to obtain by AO.
 AO shall not Direct the Assessee to get the accountants so audited unless the Assessee has been given a
reasonable opportunity of being heard
 Assessee Shall obtain the Audit report from a Chartered Accountant in such Form as may be prescribed,
within a period of Maximum 180 days.

15. Best Judgment Assessment U/s. 144
 AO Can make Best Judgment Assessment in the following cases: -
1. Assessee has not filed return of income u/s. 139 (1) or has not made return or a revised return u/s.
139(4) or 139 (5).
2. Assessee fails to comply with all the terms of a notice issued u/s. 142(1) or fails to comply with direction
issued u/s. 142(2A).
3. Assessee fails to comply with all the terms of notice issued u/s. 143(2).
 AO will determine the total income or loss to the best of his judgement and determine the sum payable by the
Assessee after taking into Account all relevant material which AO has gathered.
Cont….

16.  AO shall give Assessee an opportunity of being heard before making the best judgment
assessment.
 Opportunity of being heard shall be given by AO by serving a notice calling upon the Assessee on
the specified date and time to explain the cause.
 Opportunity of being heard is not necessary if notice u/s. 142(1) is issued prior to best judgment
assessment.

17. Time limit for completion of assessment U/s 143(3)
& 144
Section 153(1) prescribes time limit for completion of assessment U/s 143(3), 144, 148
• Up to AY 2017-18 , Assessment shall be completed before expiry of 21 months from
the end of financial year in which return was filed
• For AY 2018-19 it will be Eighteen Months from end of Assessment year (30-Sept- 2020)
• For AY 2019-20 it will be Twelve Months from end of Assessment year (31-March- 2021)

18. Assessment
By Assessee By Department
Self Assessment
U/s 140(A) Regular Assessment
Summary Assessment U/s 143(1)
Best Judgement U/s 144
Scrutiny Assessment U/s 143(3)
Income Escaping Assessment U/s 147
Power of AO
1) 142(1)(i)
2) 142(1)(ii)
3) 142(2A)
4) 142A
5) 133

19. Income Escaping Assessment
U/s. 147
 Basic condition for the assessment under this section is ;
‘ Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment
for any assessment year he may, subject to provision of section 148 to 153, assess or reassess such
income
 and also any other income chargeable to tax which has escaped assessment which comes to his notice
subsequently in the course of proceedings under this section.’
 Meaning of Reason to believe: - It Means some tangible material should have on record either from
assessment or any other source which comes to the notice of Assessing Officer while opening the case.

20. Judicial Pronouncement on ‘Reason to Believe’ for Income escaping
assessment
M/s. Kargwal Products Pvt. Ltd. Vs. DCIT (ITAT Mumbai) : -
Assessee filed the ROI for AY 2009-10 on 31.03.2010 and the assessment was processed u/s 143 (1). However,
assessment was reopened u/s 147 on 29th March, 2014 and accordingly notice u/s 148 was issued on 29th March,
2014.
Assessee contended that the reasons recorded by the AO were not valid to invoke section 148. The reopening is
without tangible material available with Assessing Officer for doubting the receipt of share application money.
There was no evidence before the Assessing Officer at the time of recording the reasons which could prove that
some income had escape assessment. Unless any tangible evidence is referred and relied upon while recording the
reasons, the Assessing Officer have no jurisdiction to reopen the assessment
Held –
We have noted that the Assessing Officer nowhere mentioned in the reasons recorded that any tangible material
either from assessment record or from other source has come in the notice of Assessing Officer for his reason to
believe that any income has escape assessment. Therefore, the basic requirement of reopening of the assessment
i.e. reason to believe was not fulfilled at the time of recording the reasons of reopening.
Accordingly case was quash.

21. Khubchandani Healthparks Pvt. Ltd. Vs. ITO
(Bombay High Court) : -
Also in the above case dated 10th of February, 2016
Bombay High Court has held that the notice
issued under section 148 would be without
jurisdiction for absence of reason to believe that
income had escaped assessment even in case
where assessment has been completed earlier by
intimation under section 143(1).
Absent

22. Time Limit for issue of Notice Under section 148 ( Section 149): -
Particulars Time Limit U/s 149 Approval U/s 151
Income escaping
assessment if any amount
Up to 4 years from the
end of the relevant AY
From Principal Chief Commissioner,
Chief Commissioner or Principal
Commissioner or Commissioner
If the amount of income
which has escaped
assessment is more than Rs.
1,00,000
Beyond 4 years but up
to 6 years from the end
of the relevant AY
From Joint Commissioner
For any income in relation
to any asset located outside
India
Beyond 4 years but up
to 16 years from the
end of the relevant AY
From Joint Commissioner

23. Procedure for Assessment Proceedings U/s. 147
Assessing Officer should have ‘Reason to Believe’ and record it to assess or re-assess income escaping assessment
Assessing Officer should have ‘Reason to Believe’ and record it to assess or re-assess the income escaping
assessment
Issue of notice under section 148 for income escaping
assessment within the time limit
Time Limit for issue of notice under
section 148 is specified under section 149
Assessee is required to file return of income in pursuance to notice under section 148
Assessee should seek for the reasons recorded by the Assessing Officer
Assessing officer should issue notice under section 143(2)

24. Assessing Officer Should issue notice under section 142(1)(ii)
Assessing Officer Should complete and pass the final
assessment order under section 147 r. w. s. 143(3)
within the time limit
Time limit for passing the assessment
order is specified under section 153 (1)
i.e within 12 months from the end of
the Financial year in which notice U/s
148 was issued

25. Explanation 2 to section 147 : - Income Escaping Assessment
For the purpose of Sec. 147, the following shall be deemed to be cases where income chargeable to tax has escaped
assessment: -
a) No Return of Income is furnished during the previous year in which income exceeded the Basic exemption limit.
b) Return of Income is furnished but no assessment has been made and it is noticed by AO that Assessee has
understated the income or claimed excessive loss, deduction, allowance or relief.
c) Assessee has failed to furnish a report from accountant in respect of any international transaction under section
92E of Income Tax Act, 1961.
d) An Assessment has been made, but-
i) Income has been underassessed or
ii) income has been assessed at low rate or
iii) excessive relief granted or
iv) excessive loss or depreciation or any other allowance has been computed
e) Person is found to have any asset located outside India (Includes Financial Interest in any entity).

26. Assessee
Return Filed Return Not Filed
Return Filed Notice U/s 142(1)(i)
143(1)
No Return Filed
143(2)
142(1)(ii) & other Best Judgement - 144
Response No Response
143(3)
Re-assessment - 147
148

27. Assessment Under Search and Seizure (Section 132)
Assessee Department
(Investigation)

28. Assessment in case of Search and Seizure :-
(Sec 153A to 153C)
Also known as ‘Block Assessment’
Procedure of Assessment under Section 153A
Search is initiated under section 132
Books of accounts, any document or any
asset requisitioned under section 132A
YES

29. Issue of notice under section 153A(1) for filling of Return of Income
for 6 Assessment years
Assessee is require to file Return of Income for relevant
assessment year and 6 previous assessment year as if return is
under section 139(1) – Return to be filed U/s 153A
Assess or Reassess the total income of relevant assessment year
and 6 previous assessment years after filling Return of Income
Tax is calculated at the rate applicable for the respective
assessment year
U/s 153A -No
notice for
assessment or
reassessment if
income escaped
likely to amount to
be less than Rs. 50
Lakhs in relevant
AY or in aggregate.
153A – All the proceeding of assessment or re-assement (relating to 6 AY)
as on the date of initiating 132 shall abate

30. Assessment of Income of other person ( sec. 153C):-
 IF AO found any money, bullion, Jewellery or other Valuable article or any books of accounts or
documents during the course of search and AO is satisfied that it belongs to other person other than
on whom search is initiated, then AO should handover the documents to Assessing Officer having
jurisdiction over Such Other Person.
 Such Other Person Should file Return of Income for the relevant assessment year and last 6
assessment years relevant to the previous years in which search is conducted.
 AO shall conduct assessment of such other person in line with Sec. 153A.

31. Time Limit for Completion of Assessment Under Section 153A (Sec.
153B):-
Authorization for Search Under Section 132 or Requisition under Section 132A Executed
Before 1st April, 2018
Within a period of 21
Months from the end of FY
in which Authorization for
Search is initiated
During FY Commencing on
1St April, 2018
Within a period of 18
Months from the end of FY
in which Authorization for
Search is initiated
During FY Commencing on 1St
April, 2019
Within a period of 12 Months
from the end of FY in which
Authorization for Search is
initiated

32. Time Limit for Completion of Assessment Under Section 153C (Sec. 153B):-
Authorization for Search Under Section 132 or Requisition under Section 132A Executed
Before 1st April, 2018
Within a period of 21
Months from the end of FY
in which Authorization for
Search is initiated OR
9 Months from the end of FY
in which books of accounts
are handed over to AO
Whichever is LATER
During FY Commencing on
1St April, 2018
Within a period of 18
Months from the end of FY
in which Authorization for
Search is initiated OR
12 Months from the end of
FY in which books of
accounts are handed over to
AO Whichever is LATER
During FY Commencing on 1St
April, 2019
Within a period of 12 Months
from the end of FY in which
Authorization for Search is
initiated OR
12 Months from the end of
FY in which books of accounts
are handed over to AO
Whichever is LATER
Section 153D- No order of Assessment or Re-Assesssment shall be passed by
an Assessing Officer below the rank of Joint Commissioner

33. Substantial Assessment and Protective Assessment
This is a type of assessments that focus on those assessments which are made to ‘protect’
the interest of the revenue
CIT Vs. Latha Chandy(2003)260ITR385(Kerala); according to the provisions of the Income Tax
Act, 1961, the same income cannot be taxed in two hands, but Protective Assessment is
temporarily justified, when there is disputes in whose hand the income is to be taxed to
safeguard the interest of the revenue. When an assessee declares his income in his returned
and Assessing Officers is of the view that the income should be assessed in the hands of
another person and there is disputes in the assessment, then Protective Assessment shall be
valid till final order received from the Appellate Authorities in whose hands the said income will
be assessed.

34. Section 264 – Revision of Order
The Principal Commissioner or Commissioner, on his own or on application made by the
aseesee can revise any order (other than order passed U/s 263) passed by his subordinate
The order of revision can not be prejudicial to the assessee
The Principal Commissioner or Commissioner, can not revise the order on his own after the 12
months of the original order
Assessee should make application under this section with in one year from the date of the
receipt of original order
Order under this section can not be revised if any appeal is pending before any appellate
Authority

35. CMA Arun Agrawal
(Practising Cost Accountant)
JALNA

36. Procedure of E-assessment Scheme 2019
Central Government has initiated faceless assessment whereby the Assessee or Authorized
Representative need not to visit Income Tax Office. This will be possible through E-assessment.
All notices will be served through emails and through self login on income tax portal and all
replies has to be submitted on Income Tax Portal.
Following is the procedure of E-assessment Scheme 2019.