The different types of income tax assessment

Section 140A – Self Assessment

The assessee himself determines the income tax payable. The tax department has made available various forms for filing income tax return. The assessee consolidates his income from various sources and adjusts the same against losses or deductions or various exemptions if any, available to him during the year. The total income of the assessee is then arrived at. The assessee reduces the TDS and Advance Tax from that amount to determine the tax payable on such income. Tax, if still payable by him, is called self assessment tax and must be paid by him before he files his return of income. This process is known as Self Assessment.

Section 143(3) – Scrutiny Assessment

This is a detailed assessment and is referred to as a scrutiny assessment. At this stage, detailed scrutiny of the return of income will be carried out to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income. The objective of scrutiny assessment is to confirm that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner. To confirm the above, the Assessing Officer carries out detailed scrutiny of the return of income and will satisfy himself regarding various claims, deductions, etc., made by the taxpayer in the return of income. To carry out an assessment under section 143(3), the Assessing Officer shall serve such notice in accordance with provisions of section 143(2).

Section 144 – Best Judgement Assessment

This assessment gets invoked in the following scenarios:
a. If the assessee fails to respond to a notice issued by the department instructs him to produce certain information or books of accounts
b. If he/she fails to comply with a Special Audit ordered by the Income tax authorities
c. 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 After providing an opportunity to hear the assessee’s argument, the assessing officer passes an order based on all the relevant materials and evidence available to him. This is known as Best Judgement Assessment.

Section 147 – Income Escaping Assessment

When the assessing officer has sufficient reasons to believe that any taxable income has escaped assessment, he has the authority 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 triggered 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 could close quickly for some taxpayers, while it could prove to be quite gruelling for others. If you are not comfortable dealing with income tax officers, 

The department cannot be seized the following type of assets:1. Stock-in-trade of a business 2. Assets declared in the books of accounts and the return of income 3. Cash which is duly explained 4. Jewellery provided in wealth tax return 5. Jewellery (Gold and Silver and articles thereof) up to 500 gm for each married female and 250 gm for each unmarried female and 100 gm per male member as per Instruction No. 1916 dated 11.05.1994 by the CBDT. (Here, jewellery means, jewellery which is not disclosed in the return of income)

Provided that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of a such authorised officer. The authorised officer may requisition the services of any police officer or of any officer of the Central Government. The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during the such examination may thereafter be used in evidence. Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed that 1. Such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person 2. The contents of such books of account and other documents are true The books of account or other documents seized, shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment or reassessment or recomputation under sub-section (3) of section 143 or section 144 or section 147 or section 153A or clause (c) of section 158BC unless he records the reasons for retaining the same in writing and the approval authorised officer. The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf.  Powers to requisition books of account, etc. under section 132A 

The authorised officer has the power to requisition books of account, etc. If authorised officer, in consequence of information in his possession, has reason to believe that

1. The taxpayer has failed to produce such books of account or other documents as required by the summons or notices

2. The taxpayer is in possession of any money, bullion, jewellery or other valuable article or thing and all are not disclosed in the return of income Then books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force. 

Faceless Assessment under section 144B Faceless assessment means the assessment proceedings are conducted electronically in the “e-proceeding” facility through the assessee’s registered account in the designated portal. Designated portal means the web portal designated as such by the Principal Chief Commissioner or Principal Director General, in charge of the National Faceless Assessment Centre. The CBDT had issued the instructions, guidelines, and notice formats for conducting scrutiny assessments electronically.

The provision provides that the assessment, re-assessment or re-computation under Section 143(3), Section 144, or Section 147 shall be made in a faceless manner in respect of the specified territorial areas, persons, income or class of cases.