Understanding Different Types of Income Tax Assessment
Introduction
The process of income tax assessment involves the examination of tax returns and determining the tax liability. There are various methods of assessment under the Income Tax Act of 1961. Let's explore these methods in simpler terms:
Self-assessment – u/s 140A
In self-assessment, taxpayers calculate their own taxes, considering factors like TDS and advance tax. This is usually done under sections 139, 142, 148, or 153A. Taxpayers assess and pay their expected tax amount.
Summary Assessment u/s 143(1)
This is like a preliminary review where taxpayers receive an intimation from the Income Tax Department (IRS). It compares the taxpayer's income calculations with those of the ITA. It's a quick check of income or loss.
Scrutiny Assessment u/s 143(3)
Scrutiny assessment involves detailed examination. Taxpayers provide evidence for their reported income, expenses, deductions, and losses. The tax department checks for accuracy and compliance. If discrepancies are found, an assessment is done based on relevant information.
Best Judgment Assessment u/s 144
This is when the assessing officer determines the taxpayer's income based on their best judgment. The taxpayer isn't being dishonest or confrontational, but the officer makes the decision in the best way possible.
Protective Assessment
This assessment safeguards the revenue's interests. If it's unclear who should pay tax, authorities can conduct a protective assessment. It's more of a precaution, and they keep it on record until resolved.
Re-Assessment (or) Income Escaping Assessment u/s 147
If the assessing officer believes income has escaped taxation, re-assessment is done under Section 147. This allows the officer to reassess previously unnoticed income, turnover, and other figures.
Assessment in Case of Search u/s 153A
Here, the assessing officer takes these steps:
- Notifying the person within a specified time frame.
- Having returns for six preceding assessment years.
- Re-assessing total income for the six years before the relevant assessment year.
- Issuing a notice for the years before the search, not for the search year itself.
Conclusion
Different types of assessments are crucial and should be taken seriously. Accurate income tax return preparation can help avoid issues during assessment. If you're unsure about dealing with tax authorities, professionals can assist you. They can help you submit your ITR accurately and efficiently.