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Income Tax Notices and Assessment Proceedings India 2024

Most people dread about receiving Income Tax Notices and are in state of Panic when they receive one. Today we shall focus on Income Tax Notices and Assessment Proceedings India 2024.

Table of Contents

What is an Assessment Order?

The 'assessment order' means computation of total income plus determination of tax. According to the assessee, 'assessment' meant determination of income/loss and 'assessment order' meant determination of income/loss, coupled with determination of amount payable by the assessee or refundable to him. 

The assessment order is the bedrock or the pillar of all proceedings under the Income
Tax Act, be they appellate proceedings, recovery proceedings, or penalty and
prosecution proceedings. Hence, it is of paramount importance that the Assessing
Officer (“AO”) is given all the material necessary for the framing of a judicious
assessment order.

What are different types of Assessment Order?

Assessment Orders fall in two categories that are commonly referred to as

Summary Orders

Summary Orders, which is not an order but an intimation under section 143(1), are those where the AO accepts the ITR (“Income Tax Return”) filed by the assessee by making the basic and obvious corrections, such as arithmetical errors and incorrect claims.

Scrutiny Orders

Scrutiny Orders are, as the expression suggests, assessment orders passed under section 143(3) after making the necessary scrutiny of the IT Return filed.


Inquiry before assessment

A scrutiny assessment order is always preceded by the issue of notice under section 143(2). This notice can be further supported by a notice under section 142(1) calling for certain information/details.

Section 142(1)

Notice under section 142(1) is issued only when an Income Tax Return is already filed, or the time limit for filing the return is over. This notice is issued for either asking the assessee to file the Income Tax Return or to call for details where the Income Tax Return has been filed. However, no such information can be called for relating to a period more than three years prior to the previous year. If the AO desires details of assets and liabilities not included in the accounts he shall do so only after obtaining the previous approval of the Joint Commissioner.


Section 142(2A)

Under the provisions of section 142(2A) the AO can direct the assessee to get his accounts audited (special audit, in common parlance) having regard to the nature and complexity of accounts, and the interest of revenue. The accounts of the assessee can be got audited by an accountant nominated by the CIT or the CCIT, but only after the previous approval of the CIT or the CCIT. It is incumbent upon the AO to give the assessee a reasonable opportunity of being heard before such a reference is made.
This audit has to be done within 180 days from the date on which this direction is
received by the assessee.


Section 143(2)

This is the key that opens the door of a scrutiny assessment.

It is issued only when the Income Tax Return has been filed, and permits the AO to make an assessment order after scrutinising the details filed, the evidence produced by the assessee and after taking into account all relevant material that the AO has gathered. Notice under section 143(2) has to be ‘served’ upon the assessee within a period of six months from the end of the financial year in which the return is furnished. The AO derives his jurisdiction to pass an assessment order only after the compliance of the conditions laid down in section 143(2), viz service upon the assessee, and adherence to the time limit. Failure to adhere to this time limit results in the assessment order being non-est and bad in law.

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