Income Tax Assessment’s

1. Self Assessment under Section 140A

This Income Tax Assessment is the one in which the taxpayer computes the tax on his own and then deposit the same amount to Government.

Amount of tax payable is required to be furnished under section 139 or section 142 or section 148 or section 153A, after considering TDS and deducting Advance tax paid.
Time limit:
Self Assessment Tax shall be paid before the due date of filing of Income Tax Returns which is 31st July of assessment year.

Mode of Payments:

  • Direct Mode -Self Assessment Tax can be paid through a tax payment Challan No./ITNS 280. Challans are available in the designated branches of banks associated with the Income Tax Department.
  • Online Mode – Assessee can pay tax online through different websites.

2. Scrutiny/ Regular Assessment under Section 143(3)

Scrutiny assessment means examination of a return of income by giving an opportunity of heard to the assessee to prove the income and expenses declared, deductions, exemptions, losses, etc. claimed in the return with the help of proper evidence..

For making assessment under Section 143(3) the assessing officer is required to serve a notice under Section 143(2). This notice has to be served within 6 months from the end of the financial year in which return is furnished.

Where the return of income has not been furnished by the assessee, then the notice under section 143(2) cannot be issued to him and thus assessment under section 143(3) is not possible.

The assessing officer will conduct enquiries under scrutiny, wherever required from the assessee to ascertain whether the income in the return is correctly shown by the assessee and whether the claims for deductions, exemptions, etc. are genuine. If any omissions, discrepancies, inaccuracies, etc. has been found in the examination, the assessing officer (AO) makes his own assessment of the taxable income of assessee after taking into consideration all the relevant facts. The scrutiny assessments will be made under section 143(3) of the Income Tax Act.

3. Best Judgement Assessment under Section 144

The Best judgement assessment means evaluation of income of the assessee by the assessing officer as per Income Tax Law. In the best judgment assessment, the assessing officer will make the assessment based on his best judgement i.e. he must not act dishonestly or capriciously. The assessee should not be dishonest in assessment nor have a bitter attitude towards the assessing officer. There are two types of judgement assessments:
1. Best judgement Assessment (Compulsory) is done by the Assessing officer (AO) in case assessee does not cooperate or found to be a defaulter in supplying information to the income tax department.
2. Best judgement assessment (Discretionary/optional) is done where the Assessing Officer has a reasons to believe that accounts given by the assessee does not show the correctness or completeness or where regular method of accounting has not been followed regularly or consistently by the assessee.

As per Section 144, Best Judgement Assessment,

If any person-
a) Fails to furnish a return of income u/s 139(1) and has not furnished the return under section 139(4) or 139(5) upto the date of issue of show cause notice or
b) Fails to comply with all terms of a notice issued u/s 142(1)(i) or 142(1)(ii), or
c) Fails to comply with the direction for special audit issued u/s 142(2A) or
d) Fails to comply with all terms of a notice issued u/s 143(2),
Then the Assessing officer after taking into account all the information which he has gathered make an assessment according to best of his judgement and ascertain the tax liability of the assessee.

The Assessing officer must gives an opportunity of being heard to the assessee before making assessment.

4. Re-assessment or Income escaping assessment under Section 147

Where the assessing officer has reasons to believe that any income chargeable to tax for any assessment year (AY) has escaped assessment, then he may assess or reassess the income which has escaped assessment and has come to the notice of assessing officer subsequently during the course of proceedings u/s 147.

Time Limit for assessment completion under section 147
The period for completion of Section 147 Assessment must be within a period of 9 months from the end of year in which notice under section 148 was served. (Earlier the time limit was 12 months).

Service of Notice under Section 148 where Income has escaped assessment
Before making assessment or reassessment u/s 147, the Assessing officer shall serve a notice to assessee asking him to furnish the return of income within the time specified.
The Assessing officer shall before issuing a notice u/s 148, record his reasons for doing so.

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