ASSESSMENT

PROCEDURE –
Ch.XIV
P.K. PRADEEPKUMAR, ITO.
SOME QUESTIONS
 Who is an assessee?
 Who has to file ROI? When to file? Which
Form?
 What if not filed in time?
 What if mistakes found after filing?
 What if not filed at all?
 What is assessment? What are the types?
 When the assessment procedure commences?
 When it ends?
 What after completion of assessment?
ASSESSEE - SEC. 2(7)

“Assessee” means a person by whom any tax or

any other sum of money is payable under the
Income tax Act and includes -
every person in respect of whom any
proceeding under the I.T. Act has been taken or
any proceeding is pending or any amount is
payable or any amount of refund due to him;
every person who is deemed to be an
assessee;
every person who is deemed to be an assessee
in default.
 PERSON – SEC.2(31)
“Person” includes
(i) an individual
(ii) a HUF
(iii) a Company
(iv) a firm
(v) An association of persons(AOP) or a body
of individuals(BOI)
(vi) a local authority and
(vii) every artificial juridical person, not
falling within any of the above.
WHAT IS ASSESSMENT?

Sec 2(8) defines ‘Assessment’

includes reassessment.
It is understood as a process of
determination of total income and
for ascertaining the tax payable
thereon.
WHAT IS ASSESSMENT?

Assessment generally includes all

proceedings including penalty
proceedings.
Includes all proceedings starting
with the filing of return or issue
of notice and ending with
determination of tax payable by the
assessee.
ELEMENTS IN ASSESSMENT

(i) Filing of Return of Income

(ii) Inquiry by Assessing Officer

(iii) Order of Assessment

(iv) Issue of Demand Notice

 ASSESSMENT PROCEDURE
o Filing of return of income - Sec.139
o Self Assessment – Sec.140A
o Inquiry before assessment – Sec.142
o Summary Asst.– Sec.143(1) [Processing of ROI]
o Asst. in response to notice u/s 143(2) – 143(3)
o Best judgment assessment – Sec.144
o Reference to Dispute Resolution Panel-Sec.144C
o Reassessment – Sec.147 to 151
o Time Limits – Sec. 153
o Rectification of mistakes – Sec.154/155
• Accelerated assessments – Ch.XV
 Mandatory Filing of Return of Income
139(1): Every person –
a) being a company or a firm –
b) others if the total income exceeded the threshold limit of
tax –
shall file Return of Income.
6th proviso to sec.139(1) – Inserted Vide Fin Act (No.2), 2019 -
effect from 1st April 2020 -
A person who is claiming rollover benefits on investment in
a house or a bond or other assets, under sections 54, 54B, 54D,
54EC, 54F, 54G, 54GA and 54GB – Mandatory to file a Return of
Income - if before claim of such rollover benefits, his total
income is more than the maximum amount not chargeable to
tax.
 Mandatory Filing of Return of Income - 139(1)
7th proviso to Sec.139(1) - Inserted with effect from 1st April
2020 –
A person has to file RoI, if during the previous year—

(a) has deposited an amount or aggregate of the amounts

exceeding Rs.1 crore in one or more current account
maintained with a banking company or a co-operative bank;
or
(b) has incurred expenditure of an amount or aggregate of
the amounts exceeding Rs. 2 lakhs for himself or any other
person for travel to a foreign country; or
(c) has incurred expenditure of an amount or aggregate of
the amounts exceeding Rs.1 lakh towards consumption of
electricity; or
(d) fulfils such other conditions as may be prescribed.
[Refer explanations (3) to (6)]
 DUE DATE TO FILE ROI - SEC.139(1)
Where the assessee is -
Company
Non-Corporate assessees whose a/cs are
required to be audited* under the Act or
under any other law for the time being in force
Working* Partner of a firm whose a/cs are
required to be audited under this Act or under
any other law for the time being in force
Due date is 30th September* of the AY.
* Changes from A.Y. 2021-22 – 31ST OCTOBER
(TAR to be filed one month before)
DUE DATE TO FILE ROI - SEC.139(1)

In the case of an assessee who is required to

furnish a report referred to in section 92E, the
30th November of the AY;

In any other case, due date is 31st July

WHAT IF NOT FILED IN TIME?
Sec. 139(4)
Return of Income can be filed
- before the end of the Assessment Year*; or
- before completion of Assessment,
whichever is earlier.
* Changes as per ordinance
notifications due to Covid-19.
CONSEQUENCES OF DELAY
Interest for default in furnishing ROI u/s
139(1) / 139(4) or in response to a notice
u/s 142(1) – sec. 234A(1) _ _ _ _ _ _ _ _
Fees u/s 234F _ _ _ _ _ _ _ _ _
If loss return is filed belatedly, business
loss, loss from specified business, capital loss and
loss from maintaining race horses cannot
be carried forward.
Deductions under Part C of Chapter VIA
(10AA, 80IA, 80IAB, 80IB, 80IC, 80ID and
80IE, etc.) are not available.
WHAT IF THERE IS OMISSION /
CORRECTION?
Sec. 139(5)
Revised return can be filed - if
original is filed
u/s 139(1) or u/s 139(4) or u/s 142(1)
Before the end of the AY, or
Before completion of Assessment*

whichever is earlier.

*Assessment means….
Interchangeability of Aadhar with PAN
 The Finance (No. 2) Act, 2019 inserted sub-section
(5E) to Section 139A to allow the interchangeability
of Aadhaar with PAN.
 The same has been implemented in the ITR’s
notified.
 Now, the Individual person not having the PAN
Number but having Aadhar Number will be able to
file the Return of Income based on his Aadhar
Number.
 The Department shall allot the PAN Number to
such person in the manner prescribed
 FORM FOR RoI - SEC. 139(6) & RULE 12
S.No ITR DESCRIPTION
For Individuals having Income from Salaries, one house
ITR 1 property (even jointly owned), other sources (Interest etc.)
1
(SAHAJ) and having total income upto Rs.50 lakh; Persons covered
by 7th proviso to sec.139(1).
For Individuals and HUFs not carrying out business or
2 ITR 2
profession under any proprietorship
For individuals and HUFs having income from a proprietary
3 ITR 3
business or profession
ITR 4
4 For presumptive income from Business & Profession
(SUGAM)
For persons other than,- (i) individual, (ii) HUF, (iii)
5 ITR 5
company and (iv) person filing Form ITR-7
For Companies other than companies claiming exemption
6 ITR 6
under section 11
For persons including companies required to furnish return
under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or
7 ITR 7 139(4E) or 139(4F) [Including Charitable Company incorporated
under section 25 of Companies Act, 1956 or under  section 8 of Companies
Act, 2013 )
 ITR -2 – Who has to file?
 ITR-2 form is to be filled by an individual or by a HUF (not
earning income from business), in the following conditions:
• If the individual is a salaried employee
• If the individual receives a pension
• If the individual is a Director in a company or holds equity
shares of an unlisted company.
• If the individual earns from more than 1 house property or has
b/f or c/f losses from house property.
• If the individual earns a tax-free income, like agriculture, of
more than INR 5,000
• If the individual has property/assets in any other country
• If the individual earns Other Source income through activities
like a lottery, gambling or income chargeable at special rates.
• If the individual is earning an income from other countries
(Sch FSI of ITR 2)
• If the individual earns through taxable capital gains
S.No 139 WHO HAS TO FILE
For Charitable & Religious Trusts claiming exemption
1 4A
u/s 11 & 12

2 4B For Political parties claiming exemption u/s 13

For assessee’s claiming deduction on scientific research

3 4C
u/s 10(21) or 10(23) or 10(46) and 10(47)
Universities, colleges & other institutions referred in
4 4D
sec.35(1)(ii) & (iii).
Business Trust – Refer Sec.2(13A) – An infrastructure
5 4E investment Trust of Real Estate Investment Trust made
under SEBI
Investment Fund referred in 115UB – Alternative
6 4F Investment Fund being trust / co / LLP regulated by
SEBI – Income exempt u/s 10(23FBA).
DEFECTIVE RETURN? SEC. 139(9)

Return of income is to be regarded as defective

only if it contains any of the defects as stated in
sec.139(9).
Defects?
Return form has not been duly filled;
When annexures, statements, accounts
etc. do not accompany the return.
Remedy?
If defect is not rectified within 15
days of intimation of the defect, it
becomes an invalid return.
 PERMANENT ACCOUNT NUMBER (PAN) – 139A
Who has to obtain? - Every person –
(i) If his total income or total income of whom he represents
exceeds threshold limit of tax
(ii) Carries business or profesion – turnover exceeds Rs.5 lakhs
(iii) Who is required to furnish RoI u/s 139(4A) / 139(4B) [wef
A.Y.2018-19]
(iv) An employer who is required to furnish Return of Fringe
Benefits u/s 115WD.
Amendments w.e.f. 1.4.2018
(v) A resident (other than individual) – entering into a financial
transaction of an amount aggregating to two lakh fifty
thousand rupees or more in a financial year
(vi) The managing director, director, partner, trustee, author,
founder, karta, chief executive officer, principal officer or
office bearer of the person referred to in clause (v), or any
person competent to act on behalf of the person referred
to in clause (v).
WHO HAS TO VERIFY RETURN? - SEC.140

Individual Individual,
HUF Karta
Company Managing Director
Firm Managing Partner
Local authority Principal Officer
Political Party CEO
Any other assn. Member / Principal Officer
Any other person That person
 SELF ASSESSMENT – SEC.140A

An assessee is required to file his

R/I u/s 139/142/148 or 153A/158BC.
Before filing the return, he has to
calculate the tax and interest
payable by him.
The amount so determined should
be paid before filing R/I & proof
enclosed/ mentioned in the return.
 SELF ASSESSMENT – SEC.140A
Where the amount paid u/s 140A
falls short of the total of tax and
interest, amount so paid – to be
adjusted first against interest and
balance towards taxes.
If an assessee fails to pay the
whole/part of tax/interest u/s 140A,
he shall be deemed to be an
assessee in default to that extent.
 SELF ASSESSMENT – SEC.140A

If an assessee is deemed to be an
assessee in default, following liability is
attracted
Liability to pay the unpaid self
assessment tax including interest
Liability to pay simple interest u/s
220(2) @ 1% p.m. / part thereof for the
period of default
Liability for penalty u/s 221 for a
maximum of the 100% of amount of
unpaid taxes.
INQUIRY BEFORE ASSESSMENT –
SEC.142 / 142A

Sec 142(1) empowers the AO

to collect information from the
assessee himself;

Sec 142(2) empowers him to

collect information from
sources other than the assessee.
SCOPE OF SECTION 142

By calling for Return.

By asking assessee to produce/ cause
to produce, accounts, documents which
Assessing Officer may require.
By asking assessee to furnish
information in writing (including
statement of assets and liabilities)
which Assessing Officer may require.
 SCOPE OF SECTION 142
Previous approval of JCIT is to be
obtained before requiring the assessee
to furnish a statement of assets &
liabilities not included in the a/cs.
The AO cannot require the production
of books of account relating to a period
3 years prior to the p.y relevant to
the A.Y. for which enquiry for
assessment is made.
SPECIAL AUDIT 142(2A)

The AO at any stage of proceedings

before him, may direct the assessee to
get accounts audited by a CA nominated
by the CIT/PCIT .
AO will order special audit, if
Having regard to the complexities in the
A/cs&
Interests of Revenue,
It is necessary to do so.
SPECIAL AUDIT 142(2A)
The AO can order special audit only after prior
approval of the CIT /PCIT.
The AO shall not direct the assessee for special
audit without giving the assessee an opportunity of
being heard.
Direction for special audit can be given even if a/c
s already audited under IT Act or any other law.

Time Limit? Sec. 142(2C)

Who has to bear the expenditure? Sec. 142(2D)
Time Limit : Sec. 142(2C) :
Discretion of AO - Maximum 180 days from
the date on which the direction u/s 142(2A)
received by the assessee.

Expenditure for Spl Audit : Sec. 142(2D) :

(Wef 1.6.2007)
All incidental expenses and remuneration to
the Accountant – determined by Pr CCIT or
CCIT or PCIT or CIT – As per guidelines
prescribed under Rule 14B – paid by the
Central Government.
Rs.3,750 to Rs.7,500 per hour
OPPORTUNITY OF BEING HEARD

Where the AO has gathered information

u/s 142(2) or 142(2A) and proposes to
use such information for the purpose of
assessment, the assessee has to be
given an opportunity of being heard.
ESTIMATION BY VALUATION OFFICER – 142A
 During the course of assessment / reassessment –
for the purpose of estimating value / FMV of any
asset / property / investment – AO can make a
reference to a Valuation Officer – Immaterial
whether the AO is satisfied or not about the
correctness or completeness of the assessee’s
accounts.
 For this purpose, V.O has all the powers that he has
u/ 38A of the W.T Act.
 V.O to make valuation on the basis of evidences
produced by the assessee or evidences he gathered –
Hearing Opportunity to be given to the assessee – If
no cooperation from the assessee – V.O can make
valuation on best-judgement basis.
 Valuation Report to be sent to AO / assessee within
six months from the end of the month in which a
reference is made.
 After receipt of Valuation Report – Assessee to be
given an opportunity by A.O before taking into
account such report in making the assessment.
SUMMARY ASSESSMENT – SEC.143(1)
Total Income of an assessee to be computed u/s
143(1)(a) after making following adjustments -
 Any arithmetical error in the return;
 An incorrect claim, if such incorrect claim is
apparent from any information in the return;
 Disallowance of loss claimed, if the ROI in
which loss is claimed was filed beyond the due
date u/s 139(1);
 Disallowance of expenditure mentioned in
audit report but not considered in the ROI;
 Disallowance of deductions u/s 10AA, 11, 12 &
13A and Part C of Ch.VI-A (80H to 80RRB) if ROI is
not filed in time u/s 139(1) / 4A / 4B
 What if Trusts filed RoI after the due date? Deduction u/s 11 to
be withdrawn? (Refer CBDT Circular dated 23.04.2019 issued to Pr DGIT (Systems).
SUMMARY ASSESSMENT – SEC.143(1)

An intimation specifying the tax due or refund due

to an assessee will be sent to the assessee
Refund due to assessee in pursuance of an
intimation shall be granted .
Where no sum is payable by an assessee or no
refund is due to him and where no adjustment has
been made, acknowledgment of ROI shall be deemed
to be intimation u/s143(1).
SUMMARY ASSESSMENT– SEC.143(1)

Intimation is treated as notice of demand;

Tax and interest as per intimation should be paid
within 30 days from the receipt.
If not so paid within 30 days, the assessee shall be
deemed to be an assessee in default and liable for
interest u/s 220 on unpaid tax and interest and for
penalty u/s 221 in r/o unpaid tax.
TIME LIMIT – SEC.143(1)

No intimation shall be sent after the expiry of

one year from the end of the FY in which the
RoI is made.
Limitation period of one year is only for sending
intimation and not for issue of refund order which
can be granted anytime.

Sec. 143(1)(1D): Processing of Return not necessary if

notice u/s 143(2) issued – This provision not applicable wef
A.Y.2017-18.
NOTICE U /S 143(2)

For making Scrutiny Assessment u/s 143(3)(ii)

A return of income should be made u/s 139 or in
response to notice u/s 142(1);
A notice u/s 143(2) requiring the asessee to produce
evidence in support of ROI should be served on the
assessee
The notice to be served within 6 months from
the end of FY in which return is filed.
NOTICE U /S 143(2)

Service of notice.
143(2) notice sent by RPAD on the limitation date
and served on the assessee later – no valid service;
In the event of belated service of 143(2) notice, even
if the assessee had not challenged the jurisdiction
during asst proceedings, but raises it for the first
time before CIT(A), still the assessment is bad in law
and liable to be quashed.
As per e-Assessment Scheme, 2019, notice u/s 143(2) shall
be issued centrally from NeAC.
ASSESSMENT U/S 143(3)
General points
The AOs have quasi-judicial powers and so must
act in a fair manner;
The assessing officer is acting in dual capacity – he
is the tax gatherer representing the Government
and he has also to perform the judicial function
of determining the correct tax liability of the
assessee;
Sec. 143 contemplates that the AO should make a
complete assessment; piecemeal assessment not
permissible;
AO has no power to review his order; nor can he
do so u/s 147.
No power to detain books; only to call for.
ASSESSMENT U /S 143(3)
General points
➢ Assessment includes imposition of penalty
➢ Law to be applied is that in force in the assessment
year unless otherwise provided
➢ Service of assessment order not provided in the
Act, but service of demand notice on the assessee is
provided. A D/N and acknowledgement slip
showing service of D/N presupposes a valid asst
order
➢ IT assessments have to be made for every year;
cannot be held up until the final result of a legal
proceeding is announced
ASSESSMENT U/S 143(3)
Fresh claim
A fresh claim before an AO can be made only by
filing a revised return, not otherwise – Goetze
(India) V CIT (248 ITR 323) (SC)

Evidence
The AO can collect evidence from any source but
has to put it to assessee prior to assessment
‘Evidence’ used in sec 143 is comprehensive enough
to cover circumstantial evidence
Material constituting evidence for IT Act is far
wider than evidence admissible under Evidence Act.
ASSESSMENT U/S 143(3)
Principle of ‘Res Judicata’
Has no application to IT proceedings
Findings reached for a particular assessment
year are not binding in the assessment
proceedings of subsequent years.
ASSESSMENT U/S 143(3)
Protective Assessment
IT Act does not provide for protective or alternative
assessment
Where owing to litigation, it is not possible to
establish as to who is the assessee,
alternative / protective assessment can be made
However, ultimately only one final asst order will
stand & the other will be cancelled
Recovery of tax is permissible only in one hand,
normally in the substantive / main assessment.
BEST JUDGMENT ASSESSMENT – SEC. 144
 Best judgment assessment is resorted to where a
person fails to make ROI u/s 139.
 Where he fails to comply with all the terms of
notice u/s 142(1)/ directions u/s 142(2A) for getting
accounts audited.
 Where a person, having made the return fails to
comply with all the terms of 143(2) notice.
 Where the Assessing Officer is not satisfied about the
correctness or completeness of the accounts of the assessee, or
where the method of accounting provided in 145(1) has not been
regularly followed by the assessee, or income has not been
computed in accordance with the ICDS notified u/s 145(2).
 METHOD OF ACCOUNTING
Sec.145. (1) Income chargeable under the head "Profits and
gains of business or profession" or "Income from other sources"
shall, subject to the provisions of sub-section (2), be computed in
accordance with either cash or mercantile system of accounting
regularly employed by the assessee.
(2) The Central Government may notify in the Official Gazette
from time to time [income computation and disclosure standards]
to be followed by any class of assessees or in respect of any class
of income. [Effective from A.Y.2017-18]
(3) Where the Assessing Officer is not satisfied about the
correctness or completeness of the accounts of the assessee, or
where the method of accounting provided in sub-section (1) has
not been regularly followed by the assessee, or income has not
been computed in accordance with the standards notified under
sub-section (2)], the Assessing Officer may make an assessment
in the manner provided in section 144.
BEST JUDGMENT ASSESSMENT
Opportunity
The assessee to be given an opportunity by issue of a
show cause notice u/s 144.

Such show cause notice not necessary if notice u/s

142(1) issued prior to making assessment u/s 144.
 E-ASSESSMENT SCHEME –SEC.143(3A)

For the purpose of making assessment u/s 143(3) or

u/s 144, the Goventment may make a scheme so as
to impart greater efficiency, transparency and
accountability by—
(a) eliminating the interface between the Assessing
Officer and the assessee in the course of proceedings to
the extent technologically feasible;
(b) optimising utilisation of the resources through
economies of scale and functional specialisation;
(c) introducing a team-based assessment with dynamic
jurisdiction.
 E-ASSESSMENT SCHEME – 143(3A)
143(3B): The Central Government may, for the purpose of
giving effect to the scheme made under sub-section (3A),
by notification in the Official Gazette, direct that any of
the provisions of this Act relating to assessment of total
income or loss shall not apply or shall apply with such
exceptions, modifications and adaptations as may be
specified in the notification:
Proviso: No direction shall be issued after the 31st day of
March, 2022.
143(3C): Every notification issued under sub-section (3A)
and sub-section (3B) shall, as soon as may be after the
notification is issued, be laid before each House of
Parliament.
 JCIT’S DIRECTIONS U/S 144A
A Joint Commissioner may
On his own motion, or
On a reference being made to him by AO, or
On the application of the assessee
Call for and examine the record of any
proceeding in which assessment is pending.

If the JCIT considers that

Having regard to the nature of the case, or
The amount involved, or
For any other reasons
It is necessary, may issue directions for guidance
of the AO to complete assessment.
 JCIT’S DIRECTIONS U/ S 144A
JCIT’s powers are wide & direction to the AO can
be for any reason;
Such directions are binding on the AO;
If the AO does not follow the directions, the
assessee can agitate in appeal;
Directions prejudicial to the assessee shall be
issued only after opportunity to assessee.
Explanation.— A direction by JCIT as to the lines on
which an investigation connected with the assessment
should be made - shall not be deemed to be a direction
prejudicial to the assessee.
 JCIT’S DIRECTIONS U /S 144A
Conditions to be satisfied
Notice u/s 143(2) has been issued; and
The assessment proceedings as a consequence
of the notice are pending.
Assessment includes reassessment. Hence
144A directions can be given even when any
reassessment is pending.
 REFERENCE TO CIT/PCIT - SEC.144BA
(General Anti-Avoidance Rules – GARR)
E f f e c t i v e f r o m A . Y . 2 0 1 8 - 1 9

Sec.144BA(1): During asst proceedings - having regard to the

material and evidence available before him, if the AO
considers that it is necessary to declare an arrangement
as an impermissible avoidance arrangement within the
meaning of Chapter X-A - then, he may make a reference
to the PCIT/CIT in Form No. 3CEG.
As per Rule 10UB (1), the AO before making a
reference, grant the assessee an opportunity of being
heard.
Sec.144BA(2): On receipt of reference – PCIT to afford opportunity
to the assessee – If no objections received, to issue directions to AO
u/s 144BA(3) for declaration of the arrangement to be an
impermissible avoidance arrangement.
REFERENCE TO CIT/PCIT - SEC.144BA
As per Rule 10UB (2), the notice shall contain –

i. details of the arrangement which is proposed to

be declared as an impermissible avoidance arrangement
ii. the tax benefit arising under the arrangement
iii. the basis and reason for considering that the
main purpose of the identified arrangement is to
obtain tax benefit
iv. the basis and the reasons why the arrangement is
an impermissible avoidance arrangement u/s 96
v. the list of documents and evidence relied upon by the AO
REFERENCE TO CIT/PCIT - SEC.144BA
144BA(4): Where the CIT is not satisfied by
assessee’s objection and is of the opinion that
provisions of Chapter X-A are required to be
invoked - make a reference to the Approving
Panel under sub-section (4) of section 144BA - after
recording his satisfaction regarding the
applicability of the provisions of Chapter X-A in
Form No. 3CEI and enclose the same with the
reference.
144BA(5): If PCIT is not satisfied with the reference by AO or
accepts the reply of assessee – directions to AO in Form 3CEH.
 REFERENCE TO CIT/PCIT - SEC.144BA
On receipt of a reference from CIT, the Approving
Panel may, before issuing any direction, require the
following –
i. direct the CIT to carry out further inquiry
ii. call for and examine such records as it deems fit; or
iii. require the assessee to furnish such documents and
evidence as it may direct.
144BA(16): Approving Panel – consists of three members – Serving
or former High Court judge will be Chairman – One IRS Officer in
the rank of Pr CCIT / CCIT – one member shall be an academic or
scholar having special knowledge of matters, such as direct taxes,
business accounts and international trade practices
144BA(17): The term of the Approving Panel shall ordinarily be for one
year and may be extended from time to time up to a period of three
years.
144BA(19): In addition to the powers conferred u/s 144BA, the
Approving Panel shall have all the powers which are vested in the
Authority for Advance Rulings under section 245U of the Act.
REFERENCE TO CIT/PCIT - SEC.144BA
Section 144BA (6) of the Act empowers the Approving
Panel to issue such directions, as it deems fit, in
respect of the declaration of the arrangement as an
impermissible avoidance arrangement.
As per section 144BA (13) of the Act, directions by the
Approving Panel must be issued within six months
from the end of the month in which the reference was
received from CIT.
Section 144BA (14) of the Act provides that the
directions issued by the Approving Panel shall be
binding both on the assessee and the revenue.
Section 144BA (12) : Where any tax consequences have been
determined in the order under the provisions of Ch.X-A - Prior
approval of PCIT / CIT to obtained by AO for passing asst /
reasst order
 Period to be excluded
 In computing the period referred to in sub-section (13), the
following shall be excluded—
 (i) the period commencing from the date on which the
first direction is issued by the Approving Panel to the PCIT /
CIT for getting the inquiries conducted through the
authority competent under an agreement referred to in
section 90 or section 90A and ending with the date on which
the information so requested is last received by the
Approving Panel or one year, whichever is less;
 (ii) the period during which the proceeding of the Approving
Panel is stayed by an order or injunction of any court:
 Where immediately after the exclusion of the aforesaid
time or period – if the period available to the Approving
Panel for issue of directions is less than sixty days - such
remaining period shall be extended to sixty days and the
period of six months u/s 144BA(13) shall be deemed to have
been extended accordingly.
 REFERENCE TO Dispute Resolution Panel
SEC.144C
• To facilitate expeditious resolution of disputes, sec
144C was introduced
• In all cases, where TPO has reported variation in
International transactions and in cases of any
foreign company. Wef 1.4.2020, a non-resident other than a
company also eligible.
• TIME LIMIT
• Sec.144C(1) - The AO to forward a draft of the proposed asst
order.
• Sec.144C(2) – Within 30 days from receiving draft order – Assessee may file
objections before DRP and intimate AO or file acceptance of draft order to the
A.O
• Sec.144C(3) – If acceptance received from assessee or no objections received
within the time specified u/ss (2) – A.O to pass final assessment order.
• Sec.144C(4) – Time limit for 144C(3) – One month from the end of the month in
which acceptance received (or) period to file objection u/ss (2) expires.
 REFERENCE TO DRP - SEC.144C
Dispute Resolution Panel is a collegium of 3
Commissioners nominated by the Board
Sec.144C(5) - Where objections are received u/ss
(2) - the DRP shall issue such directions for the
guidance of the AO to enable him to complete the
asst.
Sec.144C(8) – DRP has powers to enhance or reduce the
variations proposed in the draft asst order – irrespective
of whether assessee included such variation in his
objections.
Sec.144C(10): Every direction of the DRP is binding
on the AO.
Sec.144C(11): Before issuing any prejudicial directions
– DRP to afford opportunity to assessee / A.O.
.
 REFERENCE TO DRP - SEC.144C
Sec.144C(12): DRP to issue directions within 9
months from the end of the month in which
draft order is forwarded by the AO.

144C(13) : Upon receipt of DRP directions - the AO

shall complete the asst within one month from the
end of the month in which the directions are received.
No further opportunity to be afforded to the assessee by
AO.
The AO’s order in conformity with the DRP
directions, are appealable to the ITAT and not to
the CIT(A).
144C(14A): Reference to DRP is not applicable where
reference made to CIT and order passed u/s 144BA(12).
REOPENING OF ASSESSMENTS
The relevant provisions in the IT Act are:
Sec. 147 to Sec. 153 of the Act
Sec. 147- deals with cases of income escaping
assessment
Sec.148- deals with issue of notice where income
has escaped assessment
Sec.149- discusses time limit for notice
Sec.150-provision for cases where asst is in
pursuance of appeal etc.
Sec.151- sanctions for issue of notice
Sec.152 Other provisions
Sec.153 Timelimit for completion of assessments
and reassessments.
REOPENING OF ASSESSMENTS

• Provisions of sec.147:
• If the Assessing Officer has reason to believe
that any income chargeable to tax has escaped
assessment for any A Y
• He may assess or reassess such income
• Once an assessment is reopened, any other
income which has escaped assessment which
comes notice of the AO subsequently in the
course of 147 proceedings can also be included in
the assessment. (Explanation 3).
• Income involving matters which are the subject matters
of any appeal, reference or revision, which is chargeable
to tax and has escaped assessment, is outside the scope
of section 147.
REOPENING OF ASSESSMENTS

• As per Expln 2 to sec.147, following shall also be

deemed to be escapement of income:
• Where no R/I furnished, although TI is above
taxable limit
• Where R/I furnished, but no assessment is made,
& the assessee is found to have understated
income / claimed excessive loss/relief/depreciation
etc
• Where asst is made, but income has been under-
assessed or excessive loss/relief/depreciation etc has
been allowed
EXCEPTIONS TO TIME LIMITS FOR
ISSUE OF NOTICE U/S 148
In cases of orginal assessment u/s 143(3)/147, to
issue 148 notice after 4 years, conditions to be met
are that income chargeable to tax should have
escaped assessment
1. By reason of failure of the assessee to make
a return U/s. 139(1) or U/s. 142(1) or 148
2.By failure to disclose fully and truly all material
facts necessary for his assessment.
3. Notice u/s 148 can be issued upto 16 years from the end
of relevant asst year, if the income in relation to any asset
(including financial interest in any entity) located outside
India, chargeable to tax, has escaped assessment. [149(1)
(c)]
 ISSUE OF NOTICE U/S 148
SANCTIONING AUTHORITY & MONETARY LIMIT

Sec.151(1):

Upto 4 yrs from the end of A.Y. - to take approval of

JCIT/Addl CIT.

After 4 years - Notice can be issued only

if Pr.CCIT/Pr.CIT/CCIT/CIT approves issue of notice
and only if the income escaped is more than Rs. 1 lakh
and there should be failure on the part of the
assessee in disclosing full and true facts / materials.
FAILURE TO MAKE FULL AND TRUE DISCLOSURE

Production of books of accounts /

Explanation 1:
other evidence before the AO from which
material evidence could have been discovered
by the AO, will not amount ot disclosure
Disclosure in an indirect and incidental
manner in some other proceeding is not
disclosure
Once the assessee discloses all primary facts ,
the AO cannot reopen just because the
conclusions drawn by him are erroneous.
ISSUES IN REASSESSMENTS

The AO may assess or reassess income in respect of

any issue which comes to his notice, subsequently
in the course of 147 proceedings, even if the same is
not covered in reasons recorded. (Rajesh Jhaveri
Stock Brokers Ltd.291 ITR 500(SC))

Valuation report is only an opinion of the valuer

and is not information. It cannot constitute ground
for belief about failure to disclose income truly &
fully.
Reopening of assessment - Audit objection
 Indian Eastern Newspaper society v CIT [ 1979] 119 ITR 996
 The opinion of IAP cannot be regarded as information u/s
147(b)
 Audit may draw the attention of AO to law.
 AO must determine himself the consequence of law
brought to his notice by audit
 The basis for reopening must be the law which has come
to his notice, and not the audit note/ objection.
 When audit party pointed out a fact which has been
overlooked by the AO – reopening of asst is correct – PVS
Beedies – SC decision.
 When the AO disagree with audit objection – subsequent
reopening on the basis of audit objection – Not sustainable
– CIT v. Rajan N. Aswani (Bom)
ISSUES IN REASSESSMENTS

• An asst cannot be reopened only because of change

of opinion on the part of the AO – CIT v. Kelvinator
of India Ltd – 320 ITR 561 (SC)

• Reassessments based solely on the audit party’s

remarks would be invalid under the law. (CIT V
Mettur Chemical & Indl Corpn. 242 ITR 119 (Mad))

• The AO cannot initiate reasst proceedings without

completing asst proceedings already initiated.
ISSUES IN REASSESSMENTS

• Revenue authorities are empowered to reopen

a completed asst on the basis of a decision of the
HC or SC, but it should be within the time
prescribed under the law.
• Reason to believe should be an objective and prima
facie opinion formed by the AO and not based on
mere suspicion, gossip or rumour.
• The existence of such belief can be challenged
by the assessee but the adequacy of the grounds is
not a matter for the courts to investigate.
ISSUES IN REASSESSMENTS

CIT v. (P.) Ltd. [1992]

198 ITR 297 (SC) it was held that claims which
have been disallowed in orgl asst proceedings
cannot be permitted to be reagitated during reasst
proceedings.
No limit prescribed in sec.147 on the number
of times an asst can be reopened, as long as
the reopening is validly done.
GKN DRIVESHAFTS (INDIA) LTD.
(SC)
• “When a notice under section 148 of the
Income- tax Act, 1961, is issued, the proper
course of action for the noticee is to file
the return and, if he so desires, to seek
reasons for issuing the notices. The
Assessing Officer is bound to furnish
reasons within a reasonable time. On
receipt of reasons, the noticee is entitled
to file objections to issuance of notice and
the Assessing Officer is bound to dispose
of the same by passing a speaking order”.
 ACCELERATED ASSESSMENTS
Cases
where income is assessed before completion of the previous
year
 Section 172 : Shipping business income of non-resident
ship-owners
 Section 174: In cases of persons leaving India with no
intention of returning to India
 Section 174A: Assessment of any association of persons,
body of individuals or Artificial Juridical person formed or
established only for a limited period
 Section 175: In case of persons who are likely to transfer
their assets to avoid tax
 Section 176: In case of discontinued business
 TIME LIMIT FOR ASSESSMENTS - SEC. 153

153(1): Order u/s 143(3) or 144 has to be made

before the expiry of
21 months (Upto A.Y.17-18) /18 months (A.Y.18-19) /12
months (from A.Y.2019-20) from the end of the
assessment year in which the income was first
assessable.
153(2): Reassessment u/s 147: Nine months* from the end of the
financial year in which the notice under section 148 was served:
153(3): Set aside and fresh assessment – U/s 254 / 263 / 264 – 9*
months from the end of the year in which 254 order received or
263 / 264 order passed by CIT.
*Where notice u/s 148 served on or after 1.4.2019 / Order u/s 254
received on or after 1.4.2019 / order u/s 263 / 264 passed on
or after 1.4.2019 – twelve months.
153(4): Where during the course of assessment / reassessment /
254 / 263 / 264 proceedings, case referred to TRO – time limit
u/s 153(1) to (3) - extended by another twelve months.
 TIME LIMIT FOR ASSESSMENTS - SEC. 153

153(5): Effect to order u/s 250 / 254 / 260 / 262 /

263 / 264 – Otherwise than by making a fresh assessment
– time limit is 3 months from the end of month in which
order received by CIT or passed by CIT.

A.O may request CIT for additional time of six

months.

But where passing the order requires verification of

issue / document / affording opportunity to the assessee
- Time limit as specified in 153(3).
 PERIOD TO BE EXCLUDED U/S 153
(i) Opportunity granted under section 129; or
(ii) the period during which the assessment proceeding is stayed by an order or
injunction of any court; or
(iii) the period commencing from the date on which the Assessing Officer intimates the
Central Government or the prescribed authority, the contravention of the provisions of
clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause
(v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, under clause (i) of
the proviso to sub-section (3) of section 143 and ending with the date on which the copy
of the order withdrawing the approval or rescinding the notification, as the case may be,
under those clauses is received by the Assessing Officer; or
(iv) the period commencing from the date on which the Assessing Officer directs the
assessee to get his accounts audited under sub-section (2A) of section 142 and—

(a) ending with the last date on which the assessee is required to furnish a report of
such audit under that sub-section; or
(b) where such direction is challenged before a court, ending with the date on which
the order setting aside such direction is received by the Principal Commissioner or
Commissioner; or

(v) the period commencing from the date on which the Assessing Officer makes a
reference to the Valuation Officer under sub- section (1) of section 142A and ending with
the date on which the report of the Valuation Officer is received by the Assessing Officer;
or
 PERIOD TO BE EXCLUDED U/S 153
(vi) the period (not exceeding sixty days) commencing from the date
on which the Assessing Officer received the declaration under sub-
section (1) of section 158A and ending with the date on which the order
under sub-section (3) of that section is made by him; or

(vii) in a case where an application made before the Income-tax

Settlement Commission is rejected by it or is not allowed to be
proceeded with by it, the period commencing from the date on which
an application is made before the Settlement Commission under
section 245C and ending with the date on which the order under sub-
section (1) of section 245D is received by the Principal Commissioner or
Commissioner under sub-section (2) of that section; or

(viii) the period commencing from the date on which an application is

made before the Authority for Advance Rulings under sub-section (1) of
section 245Q and ending with the date on which the order rejecting the
application is received by the Principal Commissioner or Commissioner
under sub-section (3) of section 245R; or
 PERIOD TO BE EXCLUDED U/S 153
(ix) the period commencing from the date on which an application is
made before the Authority for Advance Rulings under sub- section (1) of
section 245Q and ending with the date on which the advance ruling
pronounced by it is received by the Principal Commissioner or
Commissioner under sub-section (7) of section 245R; or

(x) the period commencing from the date on which a reference or first of
the references for exchange of information is made by an authority
competent under an agreement referred to in section 90 or section 90A
and ending with the date on which the information requested is last
received by the Principal Commissioner or Commissioner or a period of one
year, whichever is less; or

(xi) the period commencing from the date on which a reference for
declaration of an arrangement to be an impermissible avoidance
arrangement is received by the Principal Commissioner or Commissioner
under sub-section (1) of section 144BA and ending on the date on which a
direction under sub-section (3) or sub-section (6) or an order under sub-
section (5) of the said section is received by the Assessing Officer.
 TIME LIMIT

 Where after exclusion of the above time limits – If time

available to A.O is less than 60 days – Period of
limitation shall be deemed to be extended to 60 days.
 Where a proceeding before the Settlement Commission
abates under section 245HA – the period of limitation
after the exclusion of the period under sub-section (4)
of section 245HA - be not less than one year
 If not, period of limitation shall be deemed to be
extended to one year.
 SEARCH ASSESSMENTS
 153A: Where search initiated u/s 132 – Issue notice u/s
153A in respect of 1 + 6 asst years calling for RoI –
Separate assessment orders to be passed for each asst
year. Prior approval of JCIT must u/s 153D.
 Any assessment proceedings pending on the date of
issue of notice u/s 132 shall stand abate.
 Where search initiated on or after 1.4.2017 – no notice
u/s 153A if income escaping assessment (represented in
the form of asset*) is less than Rs.50 lakhs in a A.Y or in
aggregate for 1 + 6 years.
 [* "asset" shall include immovable property being land or building or both,
shares and securities, loans and advances, deposits in bank account.]
 153A(2): If any proceeding under this section stands
annulled in appeal or any legal proceeding – then
assessment proceedings already abated stands revived.
Time limit –one year from the end of the month in which
search assessment proceedings were annulled.
 ASSESSMENT OF OTHER PERSON U/S 153C
 where the Assessing Officer is satisfied that,—
 (a) any money, bullion, jewellery or other valuable article or thing,
seized or requisitioned, belongs to; or
 (b) any books of account or documents, seized or requisitioned,
pertains or pertain to, or any information contained therein, relates
to,
 a person other than the person referred to in section 153A,
 then, the books of account or documents or assets, seized or
requisitioned shall be handed over to the Assessing Officer having
jurisdiction over such other person and that Assessing Officer shall
proceed against each such other person and issue notice and assess or
reassess the income of the other person in accordance with the
provisions of section 153A, if, that Assessing Officer is satisfied that
the books of account or documents or assets seized or requisitioned
have a bearing on the determination of the total income of such other
person for six assessment years immediately preceding the assessment
year relevant to the previous year in which search is conducted or
requisition is made and for the relevant assessment year or years
referred to in sub-section (1) of section 153A
 Time limit for Search Assessment – 153B

153B: Order u/s 153A(1) – within a period of 21* months from

the end of the financial year in which the last of the
authorisations for search under section 132 or for requisition
under section 132A was executed.

Person referred to in section 153C - period of limitation - shall

be the period as referred above (21 months) or nine months
from the end of the financial year in which books of account or
documents or assets seized or requisitioned are handed over
under section 153C to the Assessing Officer having jurisdiction
over such other person, whichever is later.

* Where 132 / 132A executed on or after 1.4.2018 – Time limit

– 18 months. Where 132 / 132A executed on or after 1.4.2019
– Time limit – 12 months

Similarly for 153C :: 18 / 12 & 12 / 12

Ifduring 153A / 153C – Reference to TPO – another 12

months.
 153B(2):
 The authorisation referred to in clause (a) and clause (b) of
Section 153A(1) shall be deemed to have been executed —
 (a) in the case of search, on the conclusion of search as
recorded in the last panchnama drawn in relation to any
person in whose case the warrant of authorisation has been
issued; or
 (b) in the case of requisition under section 132A, on the
actual receipt of the books of account or other documents
or assets by the Authorised Officer.
 Similar to section 153, periods of reference to special
audit, application before settlement commission, 144BA
etc., shall be excluded.
 After exclusion, if time limit is less than 60 days – then
deemed to be extended to 60 days.
 Where proceedings before Settlement commission abates,
time limit is not less than one year.
 PERIOD TO BE EXCLUDED
 Similar to section 153, periods of reference to special
audit, application before settlement commission, 144BA
etc., shall be excluded.
 After exclusion, if time limit is less than 60 days – then
deemed to be extended to 60 days.
 Where proceedings before Settlement commission
abates, time limit is not less than one year.
 RECTIFICATION OF MISTAKES – SEC 154

AUTHORITY : Income tax authority referred in sec.116. An

IT authority can rectify suo moto OR if the mistake is
brought to his notice by the assessee.

Which order can be rectified ?

 Any order passed under any provision of the Act

 An intimation or deemed intimation u/s 143(1)

 An intimation under sub-section (1) of section 200A

 An intimation under sub-section (1) of section 206CB

RECTIFICATION OF MISTAKES – SEC 154

Meaning of ‘mistake’ – only mistakes which are

apparent from record can be rectified.
Some examples of such mistakes
• Clerical / Arithmetical mistake
• Error in determining WDV
• Mistake arising as a result of subsequent retrospective
amendment of law
(Refer SC decision in the case of M.K. Venkatachalam, ITO & Other v.
Bombay Dyeing & Mfg Co Ltd – 34 ITR 143).
• Allowing relief upon furnishing of evidence for P ayment
of sums referred to in Sec 43B
RECTIFICATION OF MISTAKES – SEC 154
Mistakes which cannot be rectified u/s 154
• Where on an issue, two views are possible,
that is debatable issues
• Where a controversy can be resolved only
by a complicated process of investigation
• Where there is a doubt about the applicability
of a HC/SC decision to the assessee’s case
• An issue on which there is difference of opinion
between two judges of a HC
• Where any matter had been considered and decided in
any proceeding by way of appeal or revision,
Rectification of such matter can not be done by AO u/s
154.
RECTIFICATION OF MISTAKES – SEC 154

Time limits

Before expiry of 4 years from the end of the FY in

which the order sought to be amended was passed
– pl note ‘order sought to be amended’ and not
original order

Where an appln u/s 154 is made by the assessee,

154 order to be passed within 6 months from the
end of the month in which the appln is received

154 application can be disposed even after the

expiry of time limit, if the assessee filed a valid
application but the same was not disposed of.
 Other Amendments u/s 155
 155(1): Where consequent to assessment / 154 / 250 / 260 /
262 / 263 / 264 / 245D(4), income of firm modified –
corresponding share of profit in the hands of partners to be
modified – Time limit: 4 years from the end of the year in which
income of firm modified.
 155(1A): Corresponding provision for modification of
remuneration of partner.
 155(2): Corresponding provision for modification of income of
member of AOP / BOI.
 155(4): Where due to reassessment order u/s 147 carried forward
losses are modified – modification for subsequent asst years – 4
years from the end of the year in which reasst order passed.
 155(15): Where capital gain computed u/s 50C (Stamp duty
value) – Subsequently the value revised in any appeal / revision /
reference (142A) – To modify asst order – Time Limit – Four years
from the end of the year in which the order of appeal / revision /
reference received.
 DEMAND NOTICE U/S 156
Sec.156(1): When any tax, interest, penalty, fine or any other sum is
payable in consequence of any order passed under this Act, the A.O
shall serve upon the assessee a notice of demand U/S 156 in the
prescribed form (Form No.7 – rule 15) specifying the sum so payable :

The intimations u/s 143(1) / 200A(1) / 206CB(1) shall be deemed to

be a notice of demand for the purposes of this section.
 Consequence of default u/s 156
 Sec.220(1): Amount specified in the demand notice u/s
156 (Other than Adv Tax) – payable within 30 days of the
service of the notice at the place and to the person mentioned in
the notice.
 If A.O has reason to believe that allowing 30 days would be
detriment to the interest of Revenue – can reduce the time limit
with the prior approval of JCIT.
 Sec.220(2): Default in complying with sec.220(1) – simple
interest @ 1% for the period of default.
 Sec.220(2A): Pr CCIT / CCIT / PCIT / CIT can reduce or waive
interest u/s 220(2). Order to be passed within 12 months from
the end of the month in which application for waiver received.
 Conditions for waiver

(i) payment of such amount has caused or would cause

genuine hardship to the assessee ;

(ii) default in the payment of the amount on which

interest has been paid or was payable under the said sub-
section was due to circumstances beyond the control of
the assessee ; and

(iii) the assessee has co-operated in any inquiry relating

to the assessment or any proceeding for the recovery of
any amount due from him:
 Grant of Instalments / Stay
 Sec.220(3): If assessee makes application before due date
specified u/s 220(1) – A.O can grant further time or
instalments for payment of demand.
 Sec.220(5): Non-compliance to any one instalment will make
the assessee as defaulter for the entire outstanding demand.
 Sec.220(6): - Where appeal filed before CIT(A) – A.O can
grant stay of disputed demand till disposal of appeal. (Subject
to Instruction No.1914).
 Sec.220(7): Where assessment made in respect of any foreign
income – which could not be remitted into India due to Law of
other country – assessee not defaulter in respect of
corresponding tax on foreign income, until the money is
remitted into India.
 INTIMATION OF LOSS
SECTION 157
 During assessment proceedings – if loss determined and the
assessee is entitled to have carried forward and set off under
the provisions of section 72(1), 73(2), 74(1), or 74A(3) – the
A.O shall notify to the assessee by an order in writing the
amount of the loss as computed by him under the above
sections.
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