Income Tax Assessment

Every financial year end, people and entities are to file an income tax return by one’s own self calculating the earned income and pay the tax. In short, it is the estimation of an amount assessed while paying Income Tax by assessee himself or by income tax officer. There are seven types of assessment.

1. Self assessment u/s 140A.

2. Summary Assessment u/s 143(1)

3. Scrutiny assessment u/s 143(3).

4. Best judgment assessment u/s 144.

5. Protective Assessment.

6. Income escaping assessment u/s 147.

7. Assessment in case of search u/s 153A

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INCOME TAX ASSESSMENT

This states “140A. (1) Where a return has been furnished under section 139 and the tax payable on the basis of that return as reduced by any tax already paid under any provision of this Act exceeds five hundred rupees, the assessee shall pay the tax so payable within thirty days of furnishing the return.

2. After a provisional assessment under section 141 or a regular assessment under section 143 or section 144 has been made, any amount paid under sub-section (1) shall be deemed to have been paid towards the provisional assessment or regular assessment, as the case may be.

3. If any assessee fails to pay the tax or any part thereof in accordance with the provisions of sub-section (1),he shall, unless a provisional assessment under section 141 or a regular assessment under section 143 or section 144 has been made before the expiry of thirty days referred to in that sub-section, be liable, by way of penalty, to pay such amount as the Income- tax Officer may direct, so however, that the amount of penalty does not exceed fifty per cent, of the amount of such tax or part, as the case may be :

Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard” The assessee calculates the income tax to be paid on his own. The tax department has different forms to be filed for income tax return. The assessee affiliates the self earned income through multiple sources and fits the same against different loss or deductions or other exemptions if there are any left during the year and the total income of the assessee is assessed. Then, the assessee subtracts the TDS and Advance Tax from that amount to determine the tax payable on such income. If the tax is still payable, then it is called as the self assessment tax and must be paid before the person files the return of income. This procedure is said to be Self Assessment.

SUMMARY ASSESSMENT

Summary Assessment is a type of assessment implemented with no human action. Basically, this type of assessment is done by submitting the information by the assessee on his return of income is matched and verified against the information with the income tax department assessed and has approached to. During the process, the prudence and accuracy of the data on return are ensured through verification by the department. The online processing of the return, and management of the arithmetical errors, claim corrections, and rejections are corrected automatically. For instance, taxpayer’s credit for TDS claim is found to be higher than the actual while comparing with his PAN according to the department records. Adjustments are made in this regard to increase the taxpayer ‘s tax liability.

At the completion of aforementioned adjustments, if the assessee is left with tax balance, it has to be paid and an intimation under Section 143(1) will be sent to him. Accordingly, the assessee must respond.

REGULAR ASSESSMENT

The income tax department authorizes the Assessing Officer or Income Tax authority to conduct this assessment. None below the rank of an income tax officer are allowed to carry forward the assessment. The purpose is to ensure accuracy and correct payment collected from the assessee. Also, it verifies the assessee has not understated his income or overstated any expense or loss or underpaid any sort of calculation or tax.

The CBDT parameters based on the taxpayer’s assessment for the scrutiny assessment, follows a set of rules which are as follows but differs according to every case: a. When an assessee is subjected to a scrutiny assessment, the Department’s notice will be received by the assessee well in advance. However, such notice will not be accepted at the return filed Financial year. The time period is upto the 6 months from the end of the Financial year the notice expires.

The assessee will be asked to produce the accounts, and other evidence to validate the income that is stated in the return. After verification of all the available details, the assessing officer passes an order either confirms the return income filed or makes additions. This raises an income tax demand, accordingly the assessee responds.

BEST JUDGMENT ASSESSMENT

1. If the assessee fails to respond to a notice issued by the department instructs him to produce certain information or books of accounts

2. If he/she fails to comply with a Special Audit ordered by the Income tax authorities

3. The assessee fails to file the return within due date or such extended time limit as allowed by the CBDT

d. The assessee fails to comply with the terms as contained in the notice issued under Summary Assessment”

Giving an opportunity to defend, the assessee’s is allowed to put forth his argument following which the assessing officer passes an order and produces all the relevant materials and evidence available with the department. This is said as the Best Judgement Assessment.

Income Escaping Assessment

When the assessing officer provides enough and strong reasons that are believable, the taxable income has been changed to escaped assessment, the officer holds every right to assess or reassess the assessee’s income. The time limit for issuing a notice to reopen an assessment is 4 years from the end of the relevant assessment Year. Some scenarios where reassessment gets slashed are given below.

a. The assessee has taxable income but has not yet filed his return.

b. The assessee, after filing the income tax return, is found to have either understated his income or claimed excess allowances or deductions.

c. The assessee has failed to furnish reports on international transactions, where he is required to do so.

Assessment might end quickly for few taxpayers, while it could require more time and proofs for others. When dealing is proper with income tax officers, it is suggested to take the help of a Chartered Accountant to file and finish off the case at the earliest. Thus....

The aforementioned statements are to be properly referred before filing the tax by one’s ownself for their income.