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    Income Tax - Midhun

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    1. Regular assessment under section 143(3) is done on the basis of evidence submitted by the taxpayer in response to a notice from the assessing officer. The AO verifies items like income reported and tax paid. 2. During the assessment, the AO may call for documents and audit accounts. A valuation officer can estimate asset values. 3. If sufficient evidence is not provided, the AO can make a best judgment assessment under section 144, estimating income based on past returns and local knowledge. The taxpayer can appeal a best judgment assessment.

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    Income Tax - Midhun

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    1. Regular assessment under section 143(3) is done on the basis of evidence submitted by the taxpayer in response to a notice from the assessing officer. The AO verifies items like income reported and tax paid. 2. During the assessment, the AO may call for documents and audit accounts. A valuation officer can estimate asset values. 3. If sufficient evidence is not provided, the AO can make a best judgment assessment under section 144, estimating income based on past returns and local knowledge. The taxpayer can appeal a best judgment assessment.

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    1. Regular assessment under section 143(3) is done on the basis of evidence submitted by the taxpayer in response to a notice from the assessing officer. The AO verifies items like income reported and tax paid. 2. During the assessment, the AO may call for documents and audit accounts. A valuation officer can estimate asset values. 3. If sufficient evidence is not provided, the AO can make a best judgment assessment under section 144, estimating income based on past returns and local knowledge. The taxpayer can appeal a best judgment assessment.

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    Download as pptx, pdf, or txt
    235 views19 pages

    Income Tax - Midhun

    Uploaded by

    midhun
    1. Regular assessment under section 143(3) is done on the basis of evidence submitted by the taxpayer in response to a notice from the assessing officer. The AO verifies items like income reported and tax paid. 2. During the assessment, the AO may call for documents and audit accounts. A valuation officer can estimate asset values. 3. If sufficient evidence is not provided, the AO can make a best judgment assessment under section 144, estimating income based on past returns and local knowledge. The taxpayer can appeal a best judgment assessment.

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    MIDHUN JOHNY GEORGE

    ΙΙ PG M.COM
    PG DEPARTMENT OF COMMERCE
    ST.THOMAS COLLEGE, PALAI
    REGULAR ASSESSMENT
    Tax on regular assessment is the tax that a
    taxpayer is required to pay against a notice of demand
    from the income tax department.
    1. Assessment on the basis of evidence or scrutiny
    assessment sec. 143(3)
    2. Best judgment assessment sec. 144
    REGULAR ASSESSMENT U/S 143(3)
    • Notice u/s 143(2) will be served with in six months of
    filing the return to assessee to present before Assessing
    Officer with evidence.
    A.O needs to verify:
    1. the correctness or completeness of the return
    2. income has not been understated
    3. loss declared is not excessive
    4. tax has not been underpaid
    Notice u/s 143(2) to:
     attend his office
     to produce on a date specified any evidence in
    support of his return.

    • A.O may also call for the production of any accounts


    and documents by issuing notice u/s 142(1)
    INQUIRY BEFORE ASSESSMENT sec. 142

    A notice requiring on a date to be specified therein:


    1. To furnish a return of his income assessable under
    this Act, in the prescribed form if not paid in A.Y or
    2. To produce such accounts or documents as the A.O
    may require or
    3. To furnish in writing and verified in prescribed
    manner information in such form and on such
    points or matters as the A.O may require.
    • A.O can also call for a statement of all assets and
    liabilities of the assessee with the approval of joint
    commissioner.
    • The A.O shall not require the production of any
    accounts relating to a period of more than three
    years prior to the previous year.
    Compulsory Audit of Accounts or Tax Audit
    • if A.O doubts about the correctness of accounts,
    multiplicity of transactions in the accounts or due to
    the specialised nature of business activity.
    • Needs approval of chief commissioner or
    commissioner
    • By a nominated C.A
    • Assessee has been given a reasonable opportunity of
    being heard.
    • if the assessee does not get the accounts audited as
    required by the A.O ,he can make a best judgment
    assessment u/s 144 and impose penaltyof 10,000/
    •Expenses of audit is determined by the chief
    commissioner and is paid by the Central Govt.
    • The assessee has to submit audit report .
    ESTIMATE BY VALUATION OFFICER
    1. A.O may make a reference to V.O to estimate the
    value, including fair market value of any asset ,
    property or investment and submit a copy of report
    2. The A.O may make a reference for valuation
    whether or not he is satisfied about the correctness
    or completeness of the accounts.
    3. The V.O has all the powers under sec.38A of the
    wealth tax Act.
    4. The V.O take into account the evidence produced by
    the assessee or in his possession gathered , after
    giving an opportunity of being heard.
    5. V.O ‘s best judgment , if the assessee does not co-
    operate or comply with his direction.
    6. The V.O shall send a copy of the report of the
    estimate to A.O and assessee within six months
    from the end of the month in which a reference is
    made to him.
    POWER OF JOINT COMMISSIONER
    • may call for and examine records of any proceeding
    either on his own motive, reference by A.O or
    application by assessee.
    • to issue directions and guidelines to A.O
    • opportunity must be given to assessee to be heard
    first, if the guidelines are prejudicial to the assessee.
    ASSESSMENT AFTER EVIDENCE
    • Where the notice is issued to the assessee u/s 143(2),
    he will pass an order after hearing such evidence.
    • An order determining the total income or loss of the
    assessee and the sum payable by him or refund of
    any amount due to him , on the basis of such
    assessment.
    Comparision of notice
    Notice u/s 142(1) Notice u/s 143(2)
     Notice to call for ROI/  Notice for making
    books of accunts/other assessment u/s 143(3)
    information
     By issuing notice u/s 142(1)  Assessment u/s 143(3) is
    alone, assessment is not possible only if the notice
    possible u/s 143(2) has been issued.

     Can be issued even if the  Can be issued only if the


    assessee has not filed the assessee has filed ROI
    ROI
     No time limit prescribed in
     Time limit of 12 months
    law for issue of this notice. prescribed for service of
    notice.
     Books of accounts can be  No such restrictions
    asked for a limited period
    ie, 3 years.
    BEST JUDGMENT ASSESSMENT sec. 144
    • When there is an absence of evidence or
    • The available evidence is insufficient to portray the
    exact picture of profit or loss of the assessee.
    • A.O must not act dishonestly
    • Must make fair estimate of proper figureof
    assessment
    • Consideration of local knowledge, previous returns
    and assessment.
    Two type: compulsory and discretionary.
    Compulsory best judgment assessment
    1. Fails to submit return
    2. Fail to complied with the terms of the notice u/s
    142(1)- to produce accounts and documents, fails to
    get the accounts audited u/s 142(2A).
    3. Where the return has made and A.O considers
    incorrect or incomplete and the assessee does not
    produce evidence in support of his return.
    Consequences
    1. The assessee becomes liable to penalties u/s 272A
    2. The assessee becomes liable to prosecution u/s
    276CC and 276D
    3. The assessee is prevented from bringing on record
    any new facts before the appellate authorities if an
    appeal is given
    4. A refund may not be granted under this section
    REMEDY AGAINST BEST JUDGMENT ASSESSMENT
    Filing an appeal
    • If excessive tax has been imposed
    • Appeal to commissioner – Appellate Tribunal- High
    Court.
    • The A.O shall have to disclose the basis of judgment
    before the appellate authority.
    Discretionary Best Judgment Assessment
    • used when the A.O is not satisfied about the
    correctness of the accounts of the assessee,
    • where no method of accounting has been regularly
    employed,
    • where income has not been computed in accordance
    with the standard notified by the govt.
    • Assessee can file an appeal

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