Dtp Proj Ppt

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S

ASSESSMENT

ELF

UMMARY

CRUTINY


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INTRODUCTION

ASSESSMENT

Assessment in literal term means valuation. So is the meaning of Assessment in

taxation terms. Assessment for Income Tax Laws means valuation of the income and

determining the tax liability of the assessee in a particular assessment year.

Now the question arises that for the purpose of assessment what constitutes

income, tax liability, assessment yearand who all are included in the purview of

assessee. Lets understand the same..

INCOME

As per the act, tax is assessed (i.e. determined) under the following heads of

income:

Salary

House Property

Capital Gains

Profit & Gains from Business and Profession

Other Sources


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Continue.

TAX LIABILITYTax Liability for assessment willconstitute of the regular taxcalculated on the income of theassessee including the interestpayable under various sections

like 234A, 234B, 234C, 234D,220(2) etc. It will also includepenalties payable under varioussections of the act.

ASSESSMENT YEARAs per the section2(9), "Assessment year" meansthe period of twelve monthscommencing on the 1st day ofApril every year.

ASSESSEE - PERSON ONE WHO

EARNS INCOMEUnder section 2(7), "Assessee" means a

person by whom any tax or any other

sum of money is payable under this Act,and includes -

Every person in respect of whom any proceeding under this Act has been taken for the

assessment of his income or of the income of any other person in respect of which he

is assessable, or of the loss sustained by him or by such other person, or the amount

of refund due to him or to such other person.


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TOPIC OF PRESENTATION

In India under the Income Tax Act 1961, there are thefollowing types of assessment:

Sec 140 ASelf Assessment

Sec 143(1)- Summary Assessment

Sec 143 (3)Regular / Scrutiny Assessment Sec 144 Best Judgment Assessment

Sec 147 Assessment / Reassessment of Income EscapingAssessment

Sec 153- Assessment in the case of search

In my project, I have covered the first three types ofassessments and all the provisions related to the same.


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SELF ASSESSMENT

This simply means that theperson is calculating his own tax

liabilityand thereafter filing ITR after payment ofself-

calculated tax. Since assessee himself calculates the tax and

income returnedit is called self-assessment.

There is no assessment orderby the Department under Self

Assessment simply because the assessment is not being done

by the department.

The first step in the process of assessment(s) that areundertaken by the department.


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Collect details of INCOME

Compute total TAXABLE INCOME

Compute TAX PAYABLE

Less: TDS and Adv. Tax

Compute Self Assessment Tax payable u/s 140A

Pay Self Assessment Tax as computed

Enter the details of payment in the return to be filed

File return u/s 139

SELF ASSESSMENT


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As per section 140A, an assessee is required to file his return of income u/s

139/142/148/153A/153BC. Before submitting the return, the assessee is supposed to find

if any tax and/or interest is payable. The tax so payable is called self assessment tax.

Following is the formula to calculate self assessment tax :-

Find out income tax, surcharge and education cess per return of income XXXX

Add: Interest

Under section 234A for late submissions of return of income/ fringe

benefitsXXXX

Under section 234C for non-payment or short payment of advance tax XXXX

Under section 234C for non-payment or short payment of different

installments of advance taxXXXX XXXX

Total tax and Interest

Less: Advance tax, tax deducted at the source, tax collected at source, MAT

credit and relief under section 90/90A/91 XXXX

Self assessment tax payable under section 140A XXXX

Self Assessment tax so calculated is the tax liability payable under the self assessment

procedure u/s 140A

Continue.


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The assessee is then required to submit the details of the payment of taxlike BSR

Code, Bank name, Challan number, amount of payment and date of payment along

with the return of income. The same shall act as proof of payment of the self

assessment tax.

It should be noted that where the amount paid by the assessee under section 140A is

less than the amount required to be paid under the section, then the amount so paid

shall be first adjusted towards the interest aforesaid and the balance towards the tax.

If an assessee fails to pay whole or part of the tax or interest or both then the

assessee shall be deemed to be the assessee-in-default in respect of the tax or

interest or both remaining unpaid and he is liable to pay

Self assessment tax including interest which he has not paid so far

Simple interest u/s 220(2) @ 1% per month or part thereof for the period ofdefault.

Interest u/s 234A, 234B and 234C

Penalty u/s 221(1). However, the penalty shall not exceed the amount of tax in

arrears.

Continue.


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SUMMARY ASSESSMENT 143(1)

As per section 143(1), Where a return has been made under section 139, or inresponse to a notice under sub-section (1) of section 142, -

if any tax or interest is found due on the basis of such return, after adjustment of

any tax deducted at source, any advance tax paid, any tax paid on self assessment

and any amount paid otherwise by way of tax or interest, then, without prejudice

to the provisions of sub- section (2), an intimation shall be sent to the assesseespecifying the sum so payable, and such intimation shall be deemed to be a notice

of demand issued under section 156 and all the provisions of this Act shall apply

accordingly

if any refund is due on the basis of such return, it shall be granted to the assessee

and an intimation to this effect shall be sent to the assessee


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File return u/s 139/142(1) with Self Assessment Tax paid (if Payable)

Return is processed at CPC

Return is processed &accepted with the details

Filed

Refund isrecievable

Refund isrecieved alongwith intimation

of refund.

No refund/ TaxPayable

Ack. isdeemed to

beintimationu/s 143(1)

Difference indetails of

return & Datawith CPC

Intimation u/s

143(1)

DemandRaised

RefundClaimed isReduced

Adjustment ismade

Adjustment iscorrect &

accepted by theassessee

Demand raised is tobe paid by the

assesseeSUMMARY ASSESSMENT ends

Adjustment notaccepted by the

assessee & there is amistake in intimation

u/s 143(1)

Rectification tobe filed u/s156

SUMMARY ASSESSMENT


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Summary assessment is the assessment of the income of the assessee done by the income tax

department through computer systems with a purpose to identify and make following

adjustments:-

Arithmetical errors

Incorrect claims

lncorrect claim"- The term anincorrect claim apparent from any information in the return has

been defined. It means such claim on the basis of an entry in the return-

of an item, which is inconsistent with another entry of the same or some other item in such

return;

in respect of which, information required to be furnished to substantiate such entry, has not

been furnished under the Act; or

in respect of deduction, where such deduction exceeds specified statutory limit which may have

been as monetary amount or percentage or ratio or fraction.

CPC (Computerized Processing Center)

The adjustments will be made only in the course computerized processing without any human

interface. To put it differently, software is designed to detect arithmetical inaccuracies and internal

inconsistencies and make appropriate adjustments in the computation of the total income. For this

purpose the department has established a system of centralized processing of returns, called

Central Processing Center (CPC).


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Filed

Refund isrecievable


of refund.


Ack. isdeemed to




Intimation u/s

143(1)

DemandRaised


Adjustment ismade







u/s 143(1)


SUMMARY ASSESSMENT


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Filed

Refund isrecievable


of refund.


Ack. isdeemed to




Intimation u/s

143(1)

DemandRaised


Adjustment ismade







u/s 143(1)


SUMMARY ASSESSMENT


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Other Points.

The acknowledgement of the return i.e. the ITR-V generated on filing the return, shall be deemed

to be intimation under section 143(1) in a case where no sum is payable by, or refundable to the

assessee, and where adjustment has to be made.

Three different types of intimations u/s 143(1) can be issued, in which:

Sum is payable by the assessee;

Sum is refundable to the assessee;

No sum is payable by, or refundable to the assessee.

In many cases it is observed that mistakes may also occur in the intimation u/s 143(1) while

computing the taxable income and the tax payable. As a result, there may be demand payablealthough refund had been claimed in the original return. Reasons for Demand that have come to

my notice are as mentioned below:

Reason 1: TDS Mismatch TDS Credit claimed in the Income-tax Return has not been considered

by the Income-tax Department. There are various possibilities for the query.

Reason 2: Wrong data in Income-tax Return Wrong data in Income-tax Return. had entered

correct details but due to some mistake the amounts in ITR-V and your Income-tax return differs

and therefore the demand.

The remedial actions are according to the nature of query.

No intimation shall be sent after expiry of one year from the end of financial year in which the

return is filed.


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Filed

Refund isrecievable


of refund.


Ack. isdeemed to




Intimation u/s

143(1)

DemandRaised


Adjustment ismade







u/s 143(1)

Rectification tobe filed u/s

156

SUMMARY ASSESSMENT


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Sample of rectification letter to be filed:

Date

To,

Jurisdictional Officer

Baroda

Dear Sir/Madam,

Sub: Rectification u/s 154-In case of ABCD

for the Asst. Year 2011-12; PAN AAAAA1234A

Our above named client has placed in our hands an intimation dated 13th February, 2012 issued under section 143(1) of the Income Tax

Act, 1961 whereby a refund of Rs. 2,700/- has been given as against Rs.5,129/- claimed by us.

In this context we have been asked to state that our client has filed return of income for the Asst. Year 2011-12 on 30th July, 2011 vide

acknowledgement no. 261602030311711 declaring Total Income of Rs.1,47,501/- & TDS of Rs. 5,129/- and refund amounting to 5,129/-.As per the intimation, a credit of TDS of Rs.2,559/- has only been given as against Rs. 5,129/- as claimed by us while processing the return

under section 143(1) of the Act and accordingly credit of Rs.2,750/- deducted u/s 194A by Bank of India is not given & therefore refund is

reduced. Copies of TDS certificates of Rs. 5,129/-, Acknowledgement of Return filed for the Asst.Year 2011-12 & copy of Intimation are

enclosed herewith for your reference. Hence there is a mistake apparent from the record which needs to be rectified under section 154

of the Income Tax Act, 1961 by giving effect of all TDS.

We have therefore been asked to request you to kindly take the above information on record, rectify the mistake u/s 154 of the Act,

delete the demand, issue the refund along with interest, if any and oblige. If you need any further information the same shall be

furnished on hearing from you.

Thanking You,

Yours Faithfully,

XYZ

FOR XYZ & Co.

CHARTERED ACCOUNTANTS


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SCRUTINY ASSESSMENT 143(3)The scrutiny assessment is undertaken in two steps. Firstly, the assessee is given notice

under section 143(2) and then on the basis of the reply to the notice, assessment u/s

143(3) is conducted to compute the income of the assessee.

The scheme of scrutiny assessment is as follows-

1. A return of income (or loss) has been made u/s 139 or in response to the notice under

section 142(1)

2. The Assessing Officer considers it necessary or expedient to ensure that the assesseehas not-

Understated the income (or)

Computed excessive loss (or)

Not under-paid tax in any manner

3. A notice shall be served on the assessee under section 143(2).

4. After hearing such evidence produced by the assessee in response to the notice givenu/s 143(2) the Assessing officer shall pass an assessment order u/s 143(3) in writing

determining-

The total income or loss of the assessee and

The sum payable by the assessee (or refund of any amount due to him) on the

basis of such assessment order.


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Return is filed u/s 139/142(1) with Self Assessment Tax paid (if Payable)

Case selected for SCRUTINY ASSESSMENT

Notice Sent to Assessee u/s 143(2)

Assessee replies to the notice with required evidences

Assessing Officer satisfied with such evidences Assessing Office not satisfied with such evidences

AO asks for more details & show causes to collect necessary & satisfactory evidences.

Order passed u/s 143(3)

ADDITION made to the INCOME

Demand Notice is issued us 156

Assessee accepts the DEMAND RAISED

Demand is to be paid.

Assessee does not accepts the DEMAND RAISED

Appeal is filed u/s 246A

No Addition to the INCOME

SCRUTINY ASSESSMENT ends

SCRUTINY ASSESSMENT


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Continue.

NOTICE U/S 143(2)

A notice shall be served on the assessee under section 143(2). The notice shouldspecify a date and should call upon the assessee either to attend before the officer on

that date or produce or cause to be produced before the officer, on that date, any

evidence which the assessee may rely upon in support of his return and it is then up to

the assessee to satisfy the officer by producing necessary material that the return is

correct and complete.

Issue of notice under the section is the prerequisite condition for conducting assessment

under section 143(3). Where an assessment order under section 143(3) is passed

without issuing any notice to the assessee under section 143(2) the said order is invalid.

Such notice shall be served on the assessee within a period of 6 months from the end

of the Financial year in which return is furnished. This time-limit is applicable with

effect from April 1, 2008.


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SCRUTINY ASSESSMENT


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Objectives of the Assessment officer behind the scrutiny assessment

The main objective of the IT officer during scrutiny is to make sure that the income shown

in the return is real and there is no tax evasion. The expenses incurred are also scrutinized

to find out whether they are actually incurred and are not fictitious. For this, the assessingofficer calls for all required documents/information and the assessee should furnish the

same on being asked for.

Assessees role in assessment proceedings u/s 143(3)

Be Prepared for the hearing Never ignore the notice

Furnish the information

Evidence in support of return

Treatment of self-incriminating evidence

Unproved return may occasion prosecution

Give written replies Adjournment letter should be a speaking one

Do not withhold evidence


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SCRUTINY ASSESSMENT


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ASSESSMENT ORDER U/S 143(3)

After all the hearings and scrutiny and analysis of all the evidences, information and

explanations provided by the assessee the Assessment Officer shall, by an order in writing,

make an assessment of the total income or loss of the assessee, and determine the sum

payable by him or refund of any amount due to him on the basis of such assessment.

If any tax or interest is found due on the basis of such return, after adjustment of any tax

deducted at source, any advance tax paid, any tax paid on self assessment and any amount

paid otherwise by way of tax or interest, then, an intimation shall be sent to the assessee

specifying the sum so payable, and such intimation shall be deemed to be a notice ofdemand issued under section 156 .

To put it differently, every assessment order whereby the assessee is liable to pay tax is

attached with a notice of demand under section 156.

The demand u/s 156 is required to be paid within 30 days of the issue of notice. On failureto pay the demand the assessee will be liable to pay:

Simple interest under section 220(2) @ 1% every month or part thereof.

Penalty under section 221.

The scrutiny assessment u/s 143(3) should be completed before the end of 2 years from

end of the relevant assessment year.


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SCRUTINY ASSESSMENT


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ASSESSMENT ORDER U/S 143(3)

After all the hearings and scrutiny and analysis of all the evidences, information and

explanations provided by the assessee the Assessment Officer shall, by an order in writing,

make an assessment of the total income or loss of the assessee, and determine the sum

payable by him or refund of any amount due to him on the basis of such assessment.

If any tax or interest is found due on the basis of such return, after adjustment of any tax

deducted at source, any advance tax paid, any tax paid on self assessment and any amount

paid otherwise by way of tax or interest, then, an intimation shall be sent to the assessee

specifying the sum so payable, and such intimation shall be deemed to be a notice ofdemand issued under section 156 .

To put it differently, every assessment order whereby the assessee is liable to pay tax is

attached with a notice of demand under section 156.

The demand u/s 156 is required to be paid within 30 days of the issue of notice. On failureto pay the demand the assessee will be liable to pay:

Simple interest under section 220(2) @ 1% every month or part thereof.

Penalty under section 221.

The scrutiny assessment u/s 143(3) should be completed before the end of 2 years from

end of the relevant assessment year.


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SCRUTINY ASSESSMENT


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IMPORTANT JUDGEMENTS RELATING TO SECTION 143(2) & 143(3)

Piecemeal Assessment -Debi Prasad Malviya v.CIT

Review Not Possible-CIT v. Feather Foam Enterprises( P.)Ltd

Assesmsent Year In Force - Reliance Jute & IndustriesL td.v. CITAssessment- 'Assessment' includes imposition of penalty -CIT v. Kirkend Coal Co.

Notice - ClT v. Badri Prasad Binnwalla

Service Of Notice Of Demand- CIT v. Kailasho Devi Burma

Similar Error- Shyam Sunder Gupta v. CIT

Liquidation Of Company- S.V. Kondaskar, Official Liquidator& Liquidator of the Colaba

Land & Mills Co. Ltd v. V.M. Deshpand. Void status - Manji Dana v. CIT.

Notice - CITv. Briiraj Singh.

Amalgamation - Pampasar Disttilery Ltd. v. ClT

Opportunity To Assessee - Chiranjilal Steels Rolling v. CIT.

No Biased ApproachIndore Malwa United Mills Ltd. v. Madhya Pradesh

Auditors Reports - CIT v. Jay Eng. Works Ltd. Circumstantial EvidenceParas Dass Munna Lal v. CIT

Books Cannot Be DetainedPragdas Mathuradas v . ITO

Suspicion - Dhakeswar Cotton Mills Ltd v. CIT.

Cross-Examination Not NecessaryT. Devasahay Nadar v. CIT.

Opportunity To AssesseeGargi Din Jwala Prasad v. CIT

Past History- Banshidha Ornkarnull v. CIT.


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