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Income Tax Assessment Procedure – Complete Details


Income Tax Assessment Procedure, We all know that every assessee whose income exceeds the Basic Exemption Limit is required to file a return of income. If the return is not filed or late filed, penalty and/ or interest can be imposed on the assessee. Also, you must have heard of the term such as ‘Regular Assessment’, ‘Scrutiny Assessment’, etc. Now check more details regarding “Income Tax Assessment Procedure” from below…

Income Tax Assessment Procedure

Income Tax Assessment Procedure

Here, we will do a detailed study about Regular Assessment and what is the meaning of Self – Assessment?

Self Assessment:

Every person who files the return of income is assumed to have self assessed his income, expenses, his tax liability, tax already deducted by others, etc. This is known as self – Assessment. A certain random number of cases are selected every year for assessment. For, the ones which are not selected, it is assumed that the particulars mentioned therein are properly self – assessed by the assessee and are deemed to be proper and correct. Thus, every return of income is considered by the Income Tax Department to be self – Assessed by the Assessee.

Regular Assessment:

The department picks up a certain random number of cases which are assessed by the Income Tax Authorities. In these cases, The Assessing Officer does an in depth analysis of the various claims made by the assessee. If he finds any ambiguity in any of the claims, he calls for further supportive information to confirm that claim. If the Assessing Officer disagrees to the claim made, he can disallow a particular expense and add it back to the Total Income of the assessee. Also, the Income Tax Officer will send u a notice under Section 143 (3) demanding the tax to be paid. The Income Tax Officers also have the right to demand confirmations from parties with which the assessee had transactions. If required he can also ask them to represent in front of their respective Assessing Officers. The parties are obliged to serve the required documents within the time limit prescribed in the notice. Failure on behalf of the parties can lead to penal proceedings against them.

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However, every Assessing Officer needs to give a Show Cause Notice to the assessee that why should the penalty/ interest/ tax, etc. should not be imposed on the assessee. To this, the assessee or his representative has to attend and present his case explaining the Officer as to why addition should not be made to the Income of the assessee.

Once the Assessment is done, a specified (reasonable) period is given to the assessee to pay the balance demand. If the Assessee is not satisfied with the contentions of the Income Tax Officer, he has options to file an appeal or opt for re – assessment. The demand has to submitted in the prescribed format by the Department which should clearly indicate the sum payable by the assessee. If the Assessing Officer fails to submit such a demand, the recovery proceedings will be deemed to be invalid. This was held in the famous case of Shri Mohan Wahi Versus Commissioner of Income Tax.

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About CA Ridhi Dhoot

The writer is a Chartered Accountant & a Licentiate Company Secretary. You can reach out to her at [email protected]

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