Jb Nagar Cpe Study Circle

ASSESSMENT & REASSESSMENT

On

Saturday 14th July, 2012

JB NAGAR CPE STUDY CIRCLE

Assessement includes Re assessement 2(8)

Initiation

Whom can be served 142(1)

on any person

1.  who has made a return under section 139 or

2.  in whose case the time allowed under sub-section (1) of section 139 for furnishing the return has expired, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act,

When the notice can be issued:- 143(3)

if he considers it necessary or expedient to ensure that

the assessee has not under-stated the income or

has not computed excessive loss or

has not under-paid the tax in any manner,

Contents of Notice

142(1)

·  the purpose – i.e. making an assessment under this Act,

·  the details of Assessing Officer

·  service of a notice with requirement

·  date to be specified,

Requirements

142(1)

·  to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require,

·  to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the Assessing Officer may require:

Pre conditions for requirements

·  the previous approval of the Joint Commissioner shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts;

·  the Assessing Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.

143(3)

·  on a date to be specified therein, either

·  to attend his office or

·  to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return:

Time Limitation 143

·  no notice shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.

PROCEDURE 142

·  For the purpose of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such inquiry as he considers necessary.

·  If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to get the accounts audited

·  The assessee shall, except where the assessment is made under section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub-section (2) or any audit under sub-section (2A) and proposed to be utilised for the purpose of the assessment.

Power regarding discovery, production of evidence, etc. 131

General Powers.

The Assessing Officer, shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:—

(a)  discovery and inspection;

(b)  enforcing the attendance of any person, including any officer of a banking company and examining him on oath;

(c)  compelling the production of books of account and other documents; and

(d)  issuing commissions.

Impounding of books. 131

impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act:

an AssessingOfficer shall not—

(a)  impound any books of account or other documents without recording his reasons for so doing, or

(b)  retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General or Commissioner or Director therefor, as the case may be

Power to call for information 133

The Assessing Officer, may, for the purposes of this Act,—

(1)  require any firm to furnish him with a return of the names and addresses of the partners of the firm and their respective shares;

(2)  require any Hindu undivided family to furnish him with a return of the names and addresses of the manager and the members of the family;

(3)  require any person whom he has reason to believe to be a trustee, guardian or agent, to furnish him with a return of the names of the persons for or of whom he is trustee, guardian or agent, and of their addresses;

(4)  require any assessee to furnish a statement of the names and addresses of all persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage, or any annuity, not being any annuity taxable under the head "Salaries" amounting to more than [one thousand rupees, or such higher amount as may be prescribed], together with particulars of all such payments made;

(5)  require any dealer, broker or agent or any person concerned in the management of a stock or commodity exchange to furnish a statement of the names and addresses of all persons to whom he or the exchange has paid any sum in connection with the transfer, whether by way of sale, exchange or otherwise, of assets, or on whose behalf or from whom he or the exchange has received any such sum, together with particulars of all such payments and receipts;

(6)  require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the manner specified by the Assessing Officer, giving information in relation to such points or matters as, in the opinion of the Assessing Officer, will be useful for, or relevant to, any inquiry or proceeding under this Act:

Provided further that the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of Director or Commissioner without the prior approval of the Director or, as the case may be, the Commissioner.

Power of Joint Commissioner to issue directions in certain cases 144A.

A Joint Commissioner may, on his own motion or on a reference being made to him by the Assessing Officer or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and such directions shall be binding on the Assessing Officer:

Provided that no directions which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard.

Explanation.—For the purposes of this section no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be a direction prejudicial to the assessee.

Best judgment assessment 144

Conditions to invoke

·  When assessee fails to make the return required

·  has not made a return or a revised return

·  When assessee fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or

·  fails to comply with a direction issued under sub-section (2A) of that section, or

·  When assessee having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143,

Conditions to pass

·  after taking into account all relevant material which the Assessing Officer has gathered, shall,

·  after giving the assessee an opportunity of being heard,

make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment:

Other conditions

opportunity shall be given by the Assessing Officer by

·  serving a notice calling upon the assessee to show cause,

·  on a date and time to be specified in the notice,

·  why the assessment should not be completed to the best of his judgment:

that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.

When the order can be passed. 143

·  On the day specified in the notice, or

·  as soon afterwards as may be,

·  after hearing such evidence as the assessee may produce and

·  such other evidence as the Assessing Officer may require on specified points, and

·  after taking into account all relevant material which he has gathered,

The Assessing Officer shall, by an order in writing,

·  make an assessment of the total income or loss of the assessee,

·  and determine the sum payable by him or refund of any amount due to him on the basis of such assessment:

Some relavant points

1.  The Income-tax Officers should give each assessee a different timing for hearing. [Circular No. 230, dated 27th October, 1977]

2.  The Assessing Officers should make all efforts to see that the assessment orders are passed immediately after the hearing is over. In complicated cases or those involving the handling of voluminous materials, it may not be possible to pass an order immediately after the hearing. Even in such cases the order should be passed within fourteen working days after the date of last hearing. [Letter No. 241/23/70, dated 23rd October, 1970]

3.  In cases chosen for sample scrutiny, if the assessment has already been completed under section 143(1) by the computer, the proceedings should be reopened under section 143(2)(b) in scrutiny. [Instruction No. 1753, dated 1st April, 1987]

4.  It is not open to the Revenue to issue intimation under section 143(1)(a) after notice for regular assessment is issued under section 143(2). [CIT v Gujarat Electricity Board (2003) 260 ITR 84 (SC)]

Time limit for completion of assessments and reassessments 153.

(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of—

(a)  two years (21 months for A. Y. 2004-05 till A. Y. 2009-10) from the end of the assessment year in which the income was first assessable;

(b)  one year from the end of Financial year in which return or a revised return is filed

Whichever is later

In computing the period of limitation the following shall be excluded:

(i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129, or

(ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, or

(iia) 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;

(iii) 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 ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section, or

(iva) 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

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

Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (2) and (2A) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.

PENALTIES

Failure to furnish returns, comply with notices, concealment of income, etc 271.

has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or / a sum of ten thousand rupees for each such failure;
has concealed the particulars of his income or furnished inaccurate particulars of such income, / in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded

Failure to keep, maintain or retain books of account, documents, etc. 271A.