Intimation u/s 143(1) of the IT Act

The tax returns filed with the income tax department are processed to determine the sum (including interest) recoverable from the taxpayer or amount to be refunded (after adjustment of advance tax, TDS and self assessment tax paid). An intimation of the sum recoverable/refundable is sent to the taxpayer. In case if no sum is recoverable or refundable, the acknowledgement of tax return is considered as intimation.

Assessments

Various types of assessments under the IT Act are:

 Scrutiny Assessment

To ensure that the taxpayer has not understated his income or has not computed excessive loss or has not underpaid his taxes, the Assessing Officer (‘AO’) may serve a notice on the taxpayer requiring him to produce evidence in support of his return of income.

The notice is required to be served upon the taxpayer before the expiry of 12 months from the end of the month in which return was filed (e.g. if the return is filed on July 21, 2007, the notice is required to be served by July 31, 2008). After perusing evidence produced by the taxpayer and based on the relevant material gathered, the AO passes an assessment order determining the total income/loss and the consequential tax payable/refundable.

The time limit for completing the scrutiny assessment is 21 months from the end of the assessment year (stands extended to 33 months in some cases). 

The CBDT specifies the criteria based on which the returns for scrutiny assessment are selected every year.

 Best Judgment Assessment

In the following situations, the AO may make an assessment of the total income of the taxpayer to the best of his judgment and based on the information available with him 

     a direction to get his accounts audited; or

-    the notice issued by the tax authorities requiring his presence or production of evidence and documents.

•          Where the AO is not satisfied about the correctness and completeness of the accounts of the taxpayer or where the prescribed method of accounting or accounting standards have not been regularly followed by the taxpayer.

  However, the taxpayer should be issued a notice to show cause as to why the assessment should not be completed to the best of the AO’s judgment. 

  The time limit for completing the best judgment assessment is 21 months from the end of the assessment year (stands extended to 33 months in some cases).

     Income Escaping assessment/reassessment:

   Where the AO has reasons to believe that

        ·         Any income chargeable to income-tax has escaped assessment; or

  ·         Income chargeable to tax has escaped assessment due to failure on the part of the taxpayer to either file a return of income or to disclose fully or truly all material facts necessary for the assessment,  

  in such cases, the AO may choose to assess / reassess such income by issuing a notice.

  The following shall also be deemed to be cases of income escaping assessment 

  ·     Whereno return has been filed by the taxpayer although total income is above the taxable limit;

  ·         Where a return of income has been furnished, but no assessment has been made and the taxpayer is found to have understated his income or claimed excessive loss/ deduction in his return;

  ·         Where an assessment has been made, but income chargeable to tax has been under assessed or has been assessed at a lower rate or any excessive loss or relief or depreciation allowance or any other allowance under the Act has been allowed.

  A notice for assessment/ reassessment of escaped income can be served on the taxpayer within 4 years from the end of the assessment year (6 years in cases where the income escaping assessment or likely to escape assessment exceeds Rs. 100,000).

  The assessment is to be completed within 9 months (21 months in some cases) from the end of the year in which the notice of assessment/reassessment of escaped income is served upon the taxpayer.

  Assessment in case of search

  Where a search has been initiated on any person, the AO may assess or reassess his income for 6 preceding assessment years. He is required to issue a notice to the taxpayer, requiring him to file his return for all the 6 assessment years.

  The assessment is required to be completed within 2 years from the end of the year in which last of the authorizations for search is executed.

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