Assessment Procedure

Income earned by the assessee in the FY 2017-18

Shall be chargeable to tax in AY 2018-19

In the AY 2018-19 Tax must be paid and return must be filed;

1st step: Self-Assessment of tax u/s 140A

2nd step: Return of Income must be filed within due date u/s 139

Note: Income must be assessed and tax must be paid in step 1, after paying tax in step 1,The
amount of income, deductions claimed and tax computation must be declared and disclosed by way
of filing return of income in step 2.

Return of Income u/s 139(1)

Every company or firm; or

Every person other than company or firm, if his total income exceeds basic limits;

Shall be file return of income within due date of furnishing return of income

4th proviso: Assessee being R & OR, will have to furnish return of income even if his income is
below basic exemption limit:

If has assets located outside India and account outside India

Due date means

For Company;

Non-company whose accounts are required to be audited under the act;

Working partner of the firm whose account are required to be audited as per the act

30th September of AY

In other cases

31st July of AY

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Loss return u/s 139(3)

Return of loss should also be filed for disclosure purpose and to facilitate carry forward of current
year unabsorbed loss of to future years.
Income for the year:
Loss under the head: H.P loss: (2,00,000)
Business and profession; Business: 60,000
Speculative business; Other sources: 1,00,00

Capital gains; Net loss from H.P of 40,000 shall be

carry forward & set-off against income
Horse race; of future AY.
As per section 80: loss shall be allowed to carryforward to next year only if return of loss is filed
within due date.

Belated return u/s 139(4):

If any person has not furnished within due date of filing the return of income, then he may file a
belated return within end of relevant AY or completion of assessment whichever is earlier.

PY 2017-18 ROI not filed within due date

Belated return filed within AY 19-20

For the PY 2017-18

Return of income must be file in AY 2018-19 within due date

If ROI not filed within due date: belated return must be filed within AY 2018-19.

Revised return u/s 139(5):

 Any person having furnished return of income u/s 139(1) or 139(4);

 After filing the return of income will discover any omission or wrong statement therein;
 Then he may furnish revised return;
 At any time within one year from the end of the relevant assessment year of completion of
assessment.

Both ordinary and belated ROI can revised within 1 year from the end of relevant AY

FY 2017-18 AY 2018-19 Return can be revised up to 31/3/2020

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Defective return u/s 139(9):

A return is considered to be defective if it is not accompanied by the following documents:

Annexure, statement supporting the amounts or income

A statement showing computation of income and tax

Proof of tax deducted at source, Advance tax and self –assessment tax.

Note: Failure pay tax by the assessee will be considered as assessee in default and not defective
return.

In case of defective return the A.O shall serve a defective notice on assessee to rectify the defects;

The assessee upon receiving the notice shall rectify the defects within 15 days.

If, defects are not rectified then it shall be treated as invalid return.

Self-assessment u/s 140A:

Assessee shall pay the tax and interest, if any, before filing the return of income

The proof of payment of tax shall be attached to return of income

Payment of self-assessment tax shall be made:

Income tax: XXX

Add: Interest u/s 234A,B,C: XXX

Less: rebate u/s 87A: XXX

Less: Advance Tax : XXX

Less: TDS: XXX

Net balance amount u/s 140A: XXX

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Intimation of summary assessment u/s 143(1):
After the return is filed by the assessee the department shall assess the income and tax declared by
the assessee

The return of income shall be processed and adjusted, if there are any:

Arithmetical errors in the return;

Incorrect claim;

Disallowance of loss claimed;

Disallowance of expenditure incurred but taken into account in computing total income

Disallowed deduction u/s 80-IA to 80-IE, return not furnished within due date;

Addition of income appearing in form 26AS or Form 16/16A, which has not been included in
computing the total income.

If intimation u/s 143(1) is not received for the above adjustments in the ROI, then
Acknowledgement of filing the return will itself serve as a deemed intimation;

Any adjustment by way of intimation received from the department, assessee will have 2 options:

Option 1: Revise the return of income (within due date)

Option 2: Rectification of mistake apparent from record u/s 154

Demand u/s 143(1) intimation must be paid within 30 days, else will suffer interest u/s 220 &221.

Notice u/s 142(1)

Assessee has not furnished return of income within due date, notice can be issued to file ROI;

For the purpose of making assessment, require the assessee to furnish accounts, documents and
other information.

Scrutiny assessment

Notice for scrutiny assessment u/s 143(2)

When a return of income has been furnished u/s 139 or response to notice u/s 142(1);

A.O shall serve notice to assessee to produce evidences and supporting documents for return of
income;

Notice of scrutiny to ensure that he has not understated the income or paid less tax;

Notice must be served within 6 months from the end of FY in which return of income is filed.

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Response to notice u/s 143(2) must be filed by assessee along with requisite evidences and
documents must be filed by assessee with time prescribed;

The A.O upon hearing from the parties shall determine the amount of tax payable after collecting
evidences and documents from parties and will pass order of assessment;

The assessment u/s 143(2) : order must be passed by A.O within 21 months from the end of
relevant A.Y.
1st step: Issue show cause
Best judgement assessment u/s 144:
notice;
If any person:
2nd step: assessee failed to
Fails to furnish ROI u/s 130(1) or upon issue of show cause notice u/s 144; respond or committed default

Fails to comply with notice u/s 142(1); 3nd step: Make best judgment
assessment.
Fails to comply with notice u/s 143(2);

The A.O shall make a best judgment assessment by determining tax liability.

Assessment u/s 147

 A.O may assess or Re-assess the income escaping assessment:

 Where the A.O has reasons to believe the any income chargeable to tax has escaped assessment,
 He may assess or re-assess such income
 Also any other income which has escaped assessment which has come his notice subsequently
during the course of proceeding
 Income assessed under this section should not be subject matter of any appeal or revision.

Assessment u/s 147 can be made in following situation:

 ROI not filed by assessee;

 ROI filed but under assessed or assessment is not complete;
 Assessment is made but income is under valued and loss is over valued;
 Asset is located outside India but ROI not filed.
 Notice u/s 148 for assessment of income escaped assessment must be served after:
 Recording the reasons to believe; and
 Within time limit specified u/s 149(1): 4 years / 6 years from end of A.Y

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Appeals

Appealable order before CIT(appeal) u/s 246A

 An assessee can appeal before CIT(A) if they are aggrieved by following order:
 Order against assessee to pay tax u/s 143(3)/144;
 Order of assessment / reassessment u/s 153A or 147;
 Order u/s 154 for enhancing the assessment;
 Order imposing penalty u/s 271AA;
 Order u/s 201 for failure in deducting TDS;
 Intimation against assessee u/s 143(1) or 200A.

Following documents must be filed in order file an appeal before CIT(A):

 Form 35;
 Memo of appeal;
 Statement of facts;
 Grounds of appeal;
 Copy of order appealed against;
 Notice of demand;
 Copy of challan- fees paid.

Note : Appeal shall be filed within 30 days of order by A.O

Procedure of filing an appeal u/s 250:

 CIT(A) shall fix a date and place of hearing;

 Serve notice for both appellant and A.O;
 Both the parties shall be heard;
 CIT(A) shall make further enquiry of appeal by himself / by direct ions of A.O;
 Appeal shall be decided within 1 year from the end of F.Y in which appeal was filed.

Power of CIT(A) u/s 251:

 To confirm, reduce, enhance or annual the assessment;

 Confirm, cancel or verify order passed;
 Pass such other order as deemed fit.

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Appeal to Income Tax Appellate Tribunal (ITAT) u/s 253:

 Order against which an appeal can be filed to ITAT

 Order of CIT(A) u/s 250, 154, 270A and 263
 Order of A.O u/s 143(3), 147 and 153A.

Note: appeal to ITAT can be filed within 60 days of order.

Document required to be filed:

 Form 36;
 Grounds of appeal;
 Order against which appeal is filed;
 Order of A.O;
 Statement of facts;
 Copy of challan- fees paid maximum of 10,000.

Procedure of appeal:

 ITAT shall issue notice to both the parties for hearing;

 ITAT shall issue notice of appeal to A.O
 A.O shall file memo of cross objection within 30 days;
 Appeal shall be heard and decided within 6 months;
 Rectification of mistakes by ITAT u/s 254;
 Order shall be passed 6 months.

Note : on question of fact ITAT is the final order.

Hierarchy of appeal to be preferred to Appellant authority:

Supreme Court

High Court

ITAT

CIT(A)

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