Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing his return of income. Once the return of income is filed by the taxpayer; the next step is the processing of the return of income by the Income Tax Department. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income- Tax department is called as ‘Assessment’. Assessment also includes re-assessment and best judgment assessment under section 144.
Under the Income-Tax Law, there are four major assessments given below:
• Assessment under section 143(1), ie, Summary assessment without calling the assessee.
• Assessment under section 143(3), ie, Scrutiny assessment.
• Assessment under section 144, ie, Best judgment assessment.
• Assessment under section 147, ie, Income escaping assessment.
Assessment under section 143(1)
This is a preliminary assessment and is referred to as summary assessment without calling the assessee (ie, taxpayer). The total income or loss is computed after making adjustments for any arithmetical error in the return; or an apparent incorrect claim, or disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; or addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return.
Assessment under section 143(3)
This is a detailed assessment and is referred to as scrutiny assessment. At this stage a detailed scrutiny of the return of income will be carried out to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income.
The objective of scrutiny assessment is to confirm that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner.
To confirm the above, the Assessing Officer carries out a detailed scrutiny of the return of income and will satisfy himself regarding various claims, deductions, etc, made by the taxpayer in the return of income by requiring the tax payer to produce required books of accounts, records and evidences.
E-assessments
The Finance Act, 2018 has inserted a new sub-section (3A) in Section 143 that the Central Govt. may make a scheme for the purpose of making assessment so as to impart greater efficiency, transparency and accountability by:
• Eliminating the interface between the Assessing Officer and the assessee in the course of proceeding to the extent technologically feasible;
• Optimising utilisation of the resources through economies of scale and functional specialisation;
• Introducing a team-based assessment with dynamic jurisdiction.
As part of e-governance initiative to facilitate conduct of assessment proceedings electronically, Income-Tax Dept. has launched ‘e-Proceeding’ facility. Under this initiative, CBDT has made it mandatory for the tax officers to take recourse of electronic communications for all limited and complete scrutiny. The CBDT had issued the instructions and notice formats for conducting scrutiny assessments electronically. As per the instruction, except search related assessments, all scrutiny assessments shall be conducted only through the ‘e-Proceeding’ functionality available at e-filing website of Income-Tax Dept.
The e-Assessment system was introduced in the year 2016 on a pilot basis in New Delhi and Mumbai. In 2017, it was extended to 102 cities with the objectives of reducing the interface between the department and the assessee. The Finance Act 2018 is set to launch a new system of assessment proceedings on pan-India basis ie’ jurisdiction free assessment’ for scrutiny related assessments where system envisages allocation of a particular taxpayer’s profile to any assessing officer across the country using a special software. For example, a Goa based assessee can be assessed by any officer at Hyderabad or Kolkata or vice versa. However, facilities of e-Assessement are not available for Best Judgment Assessments and Income Escaping Assessments under section 144 and 147 of Income tax Act, 1961.
The new system would do away with the assessing officer’s discretionary powers to call for additional documents, records and most importantly ask the tax payer to appear in person. Thus, the new system will:
• Minimize interaction between the tax payer and the assessing officer.
• Curb corrupt practices in the department.
• Ensure a transparent and no- harassment culture.
• Deal with all kinds of tax related matters such as electronic filing of submissions for scrutiny along with supporting documents.
• Identities of tax payers and their Assessing Officers will be kept as confidential.
• It will save precious time of tax payers.
• It will provide a 24/7 anytime / anywhere convenience to submit details to Department.
• Compliance burden on tax payers in the form of time and resources will be reduced.
• The scheme is environment friendly as information can be exchanged online.
• The taxpayer would retain complete information for future reference.
e-Assessment is expected to usher in Good Days for honest tax-payers who have nothing to hide, by use of Information Technology Tools for the purpose of assessments. The new system would do away with the Assessing Officer’s discretionary powers to call for additional documents, records and ask the tax payer to appear in person which will do away with harassment and corruption.
