Various Types of Assessment of Income under Income Tax Act, 1961

Income Tax Department
Ministry of Finance, Government of India

ASSESSMENT OF INCOMES

Introduction

Income-tax assessment involves verifying and reviewing the information furnished by the assessee in the Income-tax return. The Income-tax Act prescribes various types of assessments, including Self-Assessment, Summary Assessment, Scrutiny Assessment, Best Judgment Assessment, and Income Escaping Assessment.

Types of Assessment

The term ‘assessment’ refers to the examination of a return of income to determine the exact income and tax liability of an assessee. The process, which was earlier manual, is now largely electronic. Section 144B of the Act governs faceless assessments.

• Self-Assessment– The taxpayer calculates total income and tax liability before furnishing the return.
• Summary Assessment– Conducted without calling the assessee, it involves automated processing of returns to correct errors and verify tax payments.
• Scrutiny Assessment– A detailed examination of selected returns to verify the correctness of income, deductions, and tax liability.
• Best Judgment Assessment– Conducted when an assessee fails to file a return, does not cooperate, or maintains inadequate books of accounts. It may be compulsory or discretionary.
• Income Escaping Assessment– If income chargeable to tax has escaped assessment, subject to certain conditions, the Assessing Officer can reassess such income.

Other Assessments and Directions

• Direction by Joint Commissioner– The Joint Commissioner may examine records and issue directions to the Assessing Officer.
• Reference to Dispute Resolution Panel (DRP)– Available for non-resident/foreign company or person with variation from TPO’s order u/s 92CA(3) if any variation in income is prejudicial to the assessee.
• Faceless Proceedings– Covers assessment, inquiries, valuation, appeals, and penalty proceedings under a digital framework.]

Self-Assessment

Introduction

Self-assessment requires an assessee to compute taxable income and tax liability before filing the Income-tax return. Failure to discharge this obligation may result in being treated as an assessee-in-default.

Computation of Income and Tax

Self-assessment involves calculating total income under the five heads of income:

• Salary
• House Property
• Profits and Gains of Business or Profession
• Capital Gains
• Income from Other Sources

Total income is determined after setting off losses, clubbing income, and claiming deductions under Sections 80C to 80U. The computed tax liability includes:

• Tax at normal or special rates
• Rebate under section 87A(if applicable)
• Surcharge and Health & Education Cess
• Deductions for relief under Section 89, MAT/AMT credit, and foreign tax credit

Prepaid taxes such as TDS, TCS, and Advance Tax are deducted from the total tax liability. Interest under Sections 234A, 234B, and 234C and late filing fees under Section 234F are added, if applicable.

Payment of Self-Assessment Tax

• Self-assessment tax can be paid even after filing the return.
• Companies and assessees liable for tax audit (Section 44AB) must pay tax electronically.

Credit for Tax Paid

If the amount paid falls short of the liability, it is adjusted in the following order:

• Fees and interest
• Balance tax payable

Consequences of Non-Payment

• Non-payment of self-assessment tax results in being treated as an assessee-in-default.
• The tax authorities may initiate recovery proceedings.
• Penalties may be imposed for non-compliance.

Enquiry before Assessment

Introduction

The Assessing Officer (AO) is empowered to conduct an enquiry to obtain complete information regarding a taxpayer’s income or loss. The AO can issue notices, direct special audits, or refer matters to a Valuation Officer. These powers are exercised in a faceless manner.

Powers of the Assessing Officer

• Notice to File Return [Section 142(1)(i)]
  • If a taxpayer fails to file a return within the due date, the AO may issue a notice requiring submission of the return within a specified time.
• Notice to Produce Documents or Accounts [Section 142(1)(ii)]
  • The AO can ask a taxpayer to produce books of accounts or documents. However, books older than three years from the relevant previous year cannot be demanded, though documents can be required without any time restriction.
• Notice to Furnish Information [Section 142(1)(iii)]
  • The AO may require the taxpayer to furnish a statement of all assets and liabilities, whether included in the accounts or not, with prior approval from the Joint Commissioner.
• Making Inquiries [Section 142(2)]
  • The AO may gather information necessary for assessment. Before using such material against the assessee, an opportunity to be heard is provided, except in best judgment assessments under Section 144.
• Direction for Special Audit [Section 142(2A)]
  • If books of accounts are complex or require further verification, the AO may direct:
    • A Chartered Accountant to audit the accounts.
    • A Cost Accountant to value inventory.
• Estimation of Asset Value by valuation officer [Section 142A]
  • The AO may refer an asset, property, or investment for valuation by a Valuation Officer, irrespective of doubts about the correctness of the accounts.
• Faceless Proceedings
  • Section 142B allows the government to implement a Faceless Inquiry or Valuation Scheme, ensuring automated allocation of cases using artificial intelligence and machine learning.
  • The Faceless Inquiry or Valuation Scheme, 2022, was notified vide Notification No 19/2022 dated 30-03-2022 to conduct these proceedings digitally.

Special Audit and Inventory Valuation under Income-tax

Introduction

The Assessing Officer (AO) may direct an assessee to get accounts audited or inventory valued if the complexity of accounts, volume of transactions, or nature of business necessitates such action. This power is exercised in a faceless manner.

Conditions for Special Audit or Inventory Valuation

The AO can issue such a direction if:

• There are doubts about the correctness of accounts.
• The accounts involve complexity or a high volume of transactions.
• The business activity is specialised and requires further verification.
• The audit or valuation is necessary in the interest of revenue.

The Principal Chief Commissioner/Chief Commissioner or Principal Commissioner/Commissioner must approve the direction, and the assessee is given an opportunity to be heard.

Appointment of Auditor or Valuer

• A Chartered Accountant is appointed for auditing accounts.
• A Cost Accountant is appointed for inventory valuation.
• The appointment is made from a panel of Accountants and Cost Accountants maintained by the tax authorities.

Submission of Reports

• The audit report must be submitted in Form 6B, and the inventory valuation report in Form 6D.
• Reports must be filed electronically within the time prescribed by the AO, extendable up to 180 days.

Payment of Audit Expenses

• The Central Government bears the cost of the audit or valuation.
• As per Rule 14B, remuneration is fixed between ₹3,750 to ₹7,500 per hour, based on the time spent.

Consequences of Non-Compliance

Failure to comply may result in:

• Best Judgment Assessment by the AO.
• Penalty under Section 271and prosecution under Section 276D.

Faceless Proceedings

• As per Section 142B, the Faceless Inquiry or Valuation Scheme, 2022, ensures that notices for special audits and valuations are issued electronically through an automated system.[Notification No 19/2022, dated 30-03-2022]
• Artificial intelligence and machine learning assist in random allocation of cases.

Estimation of Value of Assets by Valuation Officer

Introduction

The Assessing Officer (AO) may refer a case to a Valuation Officer to estimate the value or fair market value of any asset, property, or investment for assessment or reassessment. The Valuation Officer must submit the report within six months from the end of the month in which the reference was made.

When Can a Reference Be Made?

The AO may refer an asset, property, or investment for valuation irrespective of doubts about the correctness of accounts. The reference can be made under any provision, including but not limited to:

• Unexplained investments (Section 69)
• Unexplained money (Section 69A)
• Undisclosed investment in books (Section 69B)
• Unexplained expenditure (Section 69C)
• Fair market value determination under Section 56(2)

Process of Valuation

• The Valuation Officer considers evidence provided by the assessee and any other relevant material.
• The assessee is given an opportunity of being heard before any evidence is used.
• If the assessee does not cooperate, the Valuation Officer may estimate the value to the best of his judgment.

Time Limit for Valuation

• The valuation report must be submitted to the AO and the assessee within six months from the end of the month in which the reference was made.
• The AO may use the report for assessment or reassessment after granting the assessee an opportunity of being heard.

Powers of the Valuation Officer

The Valuation Officer can:

• Enter land, buildings, or premises related to the valuation.
• Inspect assets, books of accounts, and documents relevant to valuation.
• Require individuals in charge of the property to provide necessary facilities for valuation.

Prior notice of at least two days is required before entering any premises, and consent of the occupant must be obtained.

Faceless Proceedings

• Section 142Ballows valuation to be conducted under the Faceless Inquiry or Valuation Scheme, 2022.
• References to Valuation Officers are made electronically through an automated allocation system using artificial intelligence and machine learning.[Notification No 19/2022, Dated 30-03-2022]

Faceless Inquiry or Valuation

Introduction

The Faceless Inquiry or Valuation Scheme, 2022, was introduced to eliminate direct interaction between taxpayers and Income-tax authorities. It applies to notices under Section 142, special audits, inventory valuation, and valuation by a Valuation Officer under Section 142A.

Scope of the Scheme

Under Section 142B, the scheme covers:

• Issuance of notices under Section 142(1)& 142(2)for return filing and inquiries.
• Directing special audits or inventory valuation under Section 142(2A).
• Valuation of assets, properties, or investments by a Valuation Officer under Section 142A.

Objectives
The scheme aims to enhance:

• Transparency and accountability by eliminating personal interactions.
• Efficient resource utilization using economies of scale.
• Team-based processing and dynamic jurisdiction through automation.

Faceless Inquiry or Valuation Scheme, 2022

• The Central Government notified the scheme via Notification No. 19/2022, dated 30-03-2022.
• As per scheme, the following shall be issued or made in a faceless manner through an automated allocation system as per the procedure prescribed in section 144B:

a. Notice under Section 142(1)to file return of Income,

b. Notice under Section 142(2)for making inquiry before assessment,

c. Notice under Section 142(2A)for directing the assessee to get his account audited or inventory valued, or

d. Reference for estimating the value of any asset, property or investment by a Valuation Officer under Section 142A,

• All proceedings are conducted digitally using automated case allocation.
• Artificial intelligence and machine learning assist in case selection and processing.

Government Directions

The Central Government may modify the applicability of provisions through notifications, which must be tabled before Parliament.

Summary Assessment

Introduction

A Summary Assessment is the automated processing of an Income-tax return by the Centralised Processing Centre (CPC). It verifies arithmetical accuracy, deductions, and tax payments without requiring the taxpayer’s presence or passing a detailed assessment order.

Scope and Process

• All Income-tax returns filed under Section 139or in response to a notice under Section 142(1)are processed by CPC, Bengaluru.
• CPC checks for:
  • Arithmetical errors and incorrect claims.
  • Losses claimed beyond the due date.
  • any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed.
  • Disallowance/Income indicated in audit reports but not reflected in returns.
  • Disallowance of deductions under Section 10AA and Chapter VI-A (Part C) if the return is filed late.

Meaning of ‘Incorrect Claim’

A claim is considered incorrect if:

• It contradicts another entry in the return.
• Not furnished the required information to substantiate the claim.
• Deduction claimed exceeds the specified statutory limit.

Re-computation of Tax after Adjustments

• The total income is recalculated after necessary adjustments.
• Prepaid taxes, such as advance tax, TDS, TCS, and self-assessment tax, are deducted from the computed liability.
• Interest under Sections 234A, 234B, and 234Cand late filing fees under Section 234Fare added if applicable.

Opportunity to Respond

Before making any adjustments, the CPC notifies the assessee and allows 30 days to respond electronically. If no response is received, the adjustment is finalized.

Intimation to the Assessee

• If tax is payable, an intimation (deemed as a Notice of Demand) is issued, requiring payment within 30 days to avoid recovery proceedings.
• If a refund is due, it is processed and credited to the assessee.
• If no tax is payable or refundable, no intimation is issued, and the acknowledgement of the return is deemed as intimation.

Time Limit for Intimation

• CPC must issue an intimation within 9 months from the end of the financial year in which the return is filed.

Appeal Against Intimation

• If dissatisfied with adjustments, the assessee can file an appeal before CIT(A) or make an application for revision.

Scrutiny Assessment

Introduction

Scrutiny Assessment is a detailed examination of an Income-tax return to ensure that the assessee has correctly reported income and paid taxes. It may be Limited Scrutiny, focusing on specific issues, or Complete Scrutiny, covering the entire return. A notice must be served within 3 months from the end of the financial year in which the return is furnished.

Types of Scrutiny Assessments

• Limited Scrutiny– Examines only specified issues communicated to the assessee.
• Complete Scrutiny– Conducted in special cases where a thorough review of the return is necessary.
• Selection of Cases– Cases are selected through Computer-Aided Scrutiny Selection (CASS), using data analytics and 360-degree taxpayer profiling.

Faceless Scrutiny Assessment

• Section 144Bmandates that Scrutiny Assessments (Section 143), Best Judgment Assessments (Section 144), and Reassessments (Section 147) be conducted electronically.
• The National Faceless Assessment Centre (NFAC) issues notices and coordinates assessments digitally.

Initiation of Scrutiny Assessment

• A notice under Section 143(2)is issued by NFAC or the jurisdictional AO within 3 months from the end of the financial year in which the return is furnished.
• Non-compliance may lead to Best Judgment Assessment under Section 144.

Deemed Validity of Notices

Under Section 292BB, an assessee cannot challenge the validity of a notice if:

• He has participated in the assessment, and
• He has not objected to the validity of the notice before the completion of the assessment.

No later objection allowed on:

• Non-service,
• Late service, or
• Improper service of notice.

Conclusion of Scrutiny Assessment

• If conducted facelessly, the process follows Section 144Bguidelines.
• In the other case, the AO issues a written Assessment Order determining income, deductions, tax, and refunds.
• If additional income is assessed, the AO must issue a show-cause notice, giving the assessee an opportunity to respond before passing the final order.

Time Limit for Completion

Assessment Year	Time Limit
2022-23 onwards	12 months from the end of the assessment year
2021-22	9 months from the end of the assessment year
2020-21	18 months from the end of the assessment year
2019-20	12 months from the end of the assessment year
2018-19	18 months from the end of the assessment year
Up to 2017-18	21 months from the end of the assessment year

• Updated returns can be assessed within 12 months from the end of the financial year in which they are filed.
• If a Transfer Pricing reference is made, the time limit is extended by 12 months.

Faceless Assessment

Introduction
Faceless Assessment ensures electronic processing of Scrutiny Assessments (Section 143(3)), Best Judgment Assessments (Section 144), and Reassessments (Section 147). This eliminates physical interaction between taxpayers and tax authorities, except for cases excluded from faceless assessment.

Scope of Faceless Assessment

All assessments, reassessments, or recomputations under Sections 143(3), 144, and 147 are conducted facelessly, except in cases:

• Assigned to Central Charges or International Taxation Units.
• Where pendency could not be created on ITBA because of technical reasons or cases not having a PAN, as the case may be;

Authorities Involved

• National Faceless Assessment Centre (NFAC)– It facilitates the conduct of faceless assessment proceedings in a centralised manner.
• Assessment Units (AU)– It shall conduct a faceless assessment by identifying issues, determining liability/refund, seeking clarifications, and analysing information.
• Verification Units (VU)– It shall verify through enquiry, cross-checks, examination of books, witnesses, and statements, or other required functions
• Technical Units (TU)– It shall provide technical assistance on legal, accounting, forensic, IT, valuation, transfer pricing, data analytics, management, or treaty matters as required.
• Review Units (RU)– It shall review the Income Determination Proposal by verifying evidence, facts, legal points, proposed additions/disallowances, arithmetic accuracy, and other required aspects.

Procedure for Faceless Assessment

• Case Assignment– NFAC assigns cases to an Assessment Unit.
• Notice Issuance– Notices under Section 143(2) or 142(1) are issued electronically.
• Taxpayer Response– Taxpayers file replies online.
• Verification and Technical Assistance– Requests for documents, inquiries, or expert opinions are handled digitally.
• Draft Assessment Order– If variations are proposed, a show-cause notice is issued.
• Review Process– Orders undergo review before finalization.
• Final Assessment– NFAC issues the order, along with demand/refund notices.

Communication and Personal Hearings

• All notices, responses, and orders are exchanged electronically.
• Taxpayers may request a virtual hearing if variations are proposed.
• The system uses video conferencing or telephony for hearings.

Special Audit or Inventory Valuation

• If required, NFAC refers cases to jurisdictional authorities for Special Audit (Section 142(2A)) or Inventory Valuation.

Transfer of Cases

NFAC may transfer cases to jurisdictional Assessing Officers if faceless processing is impractical.

Best Judgment Assessment

Introduction

Best Judgment Assessment is conducted when an assessee fails to file a return, does not cooperate in assessment proceedings, or maintains incomplete or inaccurate accounts. The Assessing Officer (AO) estimates taxable income based on available information and must pass a reasoned order.

Types of Best Judgment Assessments

• Compulsory Best Judgment Assessment– Mandatory in cases where:
  • The assessee fails to file a return within the due date.
  • An updated return (Section 139(8A)) is not filed.
  • The assessee does not respond to a notice under Section 142.
  • The assessee fails to comply with a special audit or inventory valuation order (Section 142(2A)).
  • A defective return is not rectified within the allowed time.
• Discretionary Best Judgment Assessment– Conducted when:
  • The AO is not satisfied with the correctness or completeness of accounts.
  • If no regular accounting method or Accounting Standards are followed,

Manner of Conducting Assessment

• Faceless Assessment (Section 144B): Conducted through automated allocation and digital communication.
• Other assessment:
  • The AO issues a show-cause notice, allowing the assessee to justify their position.
  • The assessee is given an opportunity to be heard, except when a prior notice under Section 142(1) has already been issued.

Time Limit for Completion

Assessment Year	Time Limit
2022-23 onwards	Smith
2021-22	Jackson
2020-21	Jackson
2019-20	Jackson
2018-19	Jackson
Up to 2017-18	Jackson

• If Transfer Pricing reference is made, the time limit extends by 12 months.
• Updated returns (Section 139(8A)) can be assessed within 12 months from the financial year in which the return was filed.

Reference to Dispute Resolution Panel (DRP)

Introduction

The Dispute Resolution Panel (DRP) provides a fast-track mechanism for resolving disputes arising from draft assessment orders issued to non-residents, foreign companies, or assessee with Transfer Pricing Officer (TPO) adjustments. DRP proceedings are conducted in a faceless manner. It is a panel of three Principal Commissioners or Commissioners of Income-tax, constituted by the Board.

Who Can Approach the DRP?

• Non-residents (excluding companies) and foreign companies.
• Assessees facing transfer pricing adjustments (Section 92CA(3)).
• Not available for assessees subject to search/requisition under Sections 132or 132A

Process for Filing Objections

• The Assessing Officer (AO) issues a draft assessment order to the assessee.
• Within 30 days, the assessee must:
  • Accept the order, or
  • File objections with DRP (Form 35A) and the AO.
• If the assessee accepts the order or does not object, the AO finalizes the assessment within one month.

DRP’s Role and Powers

• Reviews the draft order, objections, supporting evidence, and reports from AO, TPO, or other authorities.
• Can confirm, reduce, or enhance variations, but cannot set aside the assessment or order further inquiries.
• Issue directions within 9 months from the end of the month in which the draft order was forwarded to the assessee.
• The AO must complete the assessment within one month from the end of the month in which such directions are received.

Binding Nature of DRP Directions

• The AO must comply with DRP’s directions.
• If the directions prejudice the assessee, an opportunity for a hearing is provided.

Appeal Against DRP Orders

• The assessee can appeal before ITAT against the final order.
• No appeal to CIT(A) is allowed.

Faceless DRP Proceedings

• DRP directions are issued digitally, using automated case allocation and a dynamic jurisdiction system.

Alternative to DRP: Dispute Resolution Committee (DRC)

• Assessees with income up to ₹50 lakh and disputed additions up to ₹10 lakh may opt for DRC instead of DRP.
• An assessee may approach either the DRP or the DRC, but not both
• If admitted by the DRC, proof of DRP withdrawal or no pending proceedings must be given.
• No DRP reference is allowed against the AO’s modified order passed as per DRC resolution.

Income Escaping Assessment

Introduction

If any income chargeable to tax has escaped assessment, the Assessing Officer (AO) can reassess such income, recompute loss, or modify allowances as per Sections 148 to 153. Effective 01-09-2024, search and requisition cases are excluded from reassessment provisions and governed under Chapter XIV-B (Block Assessment).

Conditions for Reassessment (Section 147)

• The AO must have information suggesting that income has escaped assessment.
• The AO must follow the procedures in Sections 148to 153.

When Is Income Deemed to Have Escaped Assessment?

• Information received through Risk Management Strategy (RMS).
• Audit objections indicating incorrect tax assessments.
• Information under Tax Information Exchange Agreements (TIEA) or DTAA.
• Tribunal or Court orders requiring tax adjustments.
• Survey findings under Section 133A(effective 01-09-2024), provided specific income-related information is obtained.

Issuance of Notice (Section 148A & 148)

• The AO must issue a show-cause notice (SCN) under Section 148A, along with information that suggests income escapement.
• The assessee is given time to respond before a final decision is made.
• If the AO decides to proceed, a notice under Section 148is issued along with the SCN order.

Time Limits for Issuing Notices (Section 149)

Escaped Income	Show-Cause Notice (148A) Deadline	Reassessment Notice (148) Deadline
Less than ₹50 lakh	3 years from the end of the relevant assessment year	3 years & 3 months from the end of the relevant assessment year
₹50 lakh or more	5 years from the end of the relevant assessment year	5 years & 3 months from the end of the relevant assessment year

• If reassessment arises from appeal/revision orders, no time limit applies (Section 150).
• No reassessment based on TDS/TCS-related surveys.

Faceless Reassessment (Section 151A)

• The e-Assessment of Income Escaping Assessment Scheme, 2022 ensures automated case allocation using artificial intelligence.
• AO actions, including SCNs, inquiries, and notices, are conducted electronically.

Completion of Reassessment (Section 153)

• The AO must finalize reassessment within 12 months from the end of the financial year in which the notice was served.

Penalties & Prosecution

• Penalty under Section 270A: 50% of tax for under-reporting, 200% for misreporting.
• Prosecution under Section 276C: For willful tax evasion.

Appeal Against Reassessment Order

• The assessee may file an appeal before CIT(A) or JCIT(A) or seek revision.
• Cases involving Dispute Resolution Panel (DRP) or GAAR can be directly appealed before ITAT.

Time Limits for Assessments

Introduction

The Income-tax Act prescribes specific time limits for completing Summary Assessments, Scrutiny Assessments, Best Judgment Assessments, and Reassessments. If an assessment is not completed within the prescribed time, it becomes time-barred.

Summary Assessment (Section 143(1))

• Returns are processed electronically by the Centralized Processing Centre (CPC), Bengaluru.
• The intimation must be issued within 9 months from the end of the financial year in which the return is filed.
• If no tax is payable or refundable and no intimation is issued, the return acknowledgement is deemed as intimation.

Scrutiny Assessment (Section 143(3))

• Notice issuance: The AO must issue a notice within 3 months from the end of the financial year in which the return is furnished.
• Completion deadlines:

Assessment Year	Time Limit
2022-23 onwards	12 months from the end of the assessment year
2021-22	9 months from the end of the assessment year
2020-21	18 months from the end of the assessment year
2019-20	12 months from the end of the assessment year
2018-19	18 months from the end of the assessment year
Up to 2017-18	21 months from the end of the assessment year

• If the AO seeks cancellation of registration/exemption of an entity, the time from intimation to the final order is excluded from the limitation period.
• Updated returns or returns filed under condonation (Section 119(2)(b)) can be assessed within 12 months from the end of the financial year in which they are furnished.

Best Judgment Assessment (Section 144)

• Conducted when an assessee fails to file a return, does not comply with notices, or maintains incomplete books of accounts.
• Completion deadlines are the same as those for Scrutiny Assessments.

Reassessment (Income Escaping Assessment – Section 147)

• The AO can reassess income if he has information suggesting income has escaped assessment.
• Notice issuance deadlines (Section 148& 148A):

Escaped Income	Show-Cause Notice (148A) Deadline	Reassessment Notice (148) Deadline
Less than ₹50 lakh	3 years from the end of the relevant assessment year	3 years & 3 months from the end of the relevant assessment year
₹50 lakh or more	5 years from the end of the relevant assessment year	5 years & 3 months from the end of the relevant assessment year

• Completion deadline: 12 months from the end of the financial year in which the reassessment notice was served.

Time Extensions for Special Cases

• Search Cases:
  • If a search is conducted under Section 132 or 132A, the time limit extends by 12 months if assessments were pending at the time of the search.
• Transfer Pricing Cases:
  • If a reference is made to the Transfer Pricing Officer (TPO), the time limit extends by 12 months.

Time Limits for Special Assessments & Orders

Scenario	Time Limit
Fresh assessment after appeal or revision	Within 12 months from the end of the financial year in which the order was received/passed
Appeal effect orders (ITAT, HC, SC)	Within 3 months from the end of the month from receipt of order
Modify assessment as per TPO order	Within 2 months from the end of the month in which order of the TPO is received.
To give effect to finding/direction	Within 12 months from the end of the month in which the order is received/passed
Assessment of partners after firm’s assessment	Within 12 months from the end of the month in which assessment order is passed in case of the firm.
Cases revived after abatement in search cases	One year from the end month of revival or period under Section 158BE, whichever is later

Exclusions from Time Limits

Certain periods are excluded when computing assessment deadlines which includes:

• Time taken in reopening proceedings or rehearing, due to change in AO’s jurisdiction.
• Period of stay granted by court, till receipt of order vacating such stay by PCIT/CIT.
• Time taken in special audit or inventory valuation.
• Where the assessee approaches the Authority or Board for Advance Rulings, the limitation period shall exclude the time from the date of application to the date on which the rejection order or advance ruling is received by the Principal CIT or CIT.
• “Where a reference is made by the competent authority for exchange of information, the period excluded from limitation shall be from the date of such reference (or first reference) till the earlier of
  • The date of last receipt of information by the Principal CIT/CIT, or
  • One year.

Rectification of Mistake

Introduction

Income-tax authorities have the power to rectify mistakes in their orders if the error is apparent from the record. Rectification may be initiated by the authority itself or upon a request from the assessee, deductor, or collector.

Orders Eligible for Rectification

The Income-tax authority can rectify apparent mistakes in:

• Any order it passes
• Intimations after processing IT returns
• Intimations after processing TDS/TCS statements

Exceptions:

• Appeal/Revision cases: Cannot rectify parts already considered in appeal or revision proceedings (but can rectify other mistakes in the same order)
• Post-notice intimations: Cannot rectify intimation mistakes after issuing Section 143(2)scrutiny notice

Authorities Empowered to Rectify Mistakes

• Assessing Officer (AO)– For assessment orders.
• CIT(A) / JCIT(A)– For appeal orders.
• ITAT– For appellate orders.
• TPO– For arm’s length price determinations.

Time Limits for Rectification

Order Type	Time Limit for Rectification
AO / CIT(A) / JCIT(A) orders	4 years from the end of the financial year in which the order was passed
ITAT orders	6 months from the end of the month in which the order was passed
TPO orders	4 years from the end of the financial year in which the order was passed

If an assessee applies for rectification, the authority must pass an order within 6 months from the end of the month in which the application is received.

Procedure for Rectification

• If rectification increases tax liability or reduces a refund, the assessee must be given an opportunity of being heard.
• A written rectification order must be issued.
• If additional tax is payable, a demand notice is served.
• If tax liability reduces, a refund is issued.

Faceless Rectification, Amendments, and Notice of Demand

Introduction

Section 157A empowers the Central Government to implement a Faceless Scheme for conducting rectifications, amendments, demand notices, and intimation of loss in an automated and electronic manner.

Scope of the Scheme

The Faceless Scheme covers:

• Rectification of Mistakes (Section 154)
• Amendments (Section 155)
• Issuance of Demand Notices (Section 156)
• Intimation of Loss (Section 157)

Objectives

The scheme aims to enhance:

• Efficiency and transparency by eliminating direct interactions between taxpayers and tax authorities.
• Automation and resource optimization through economies of scale.
• Team-based rectifications and amendments under a dynamic jurisdiction system.

Government Directions

• The Central Government is authorized to issue modifications or exemptions to existing provisions for effective implementation.
• Any changes must be notified before 31-03-2022 and presented before both Houses of Parliament.

Amendments in Assessment Order

Introduction

Assessment orders may require modifications due to subsequent events, such as appellate orders, rectifications, or reassessment proceedings. These amendments ensure the correct computation of taxable income for the assessee or other connected taxpayers.

Key provisions of Section 155 are as follows:

• Rectification in assessment of partner (Section 155(1A))
  • If the partner’s remuneration is later disallowed in the firm’s assessment, the partner’s income is adjusted.
  • Time limit: Within 4 years from the end of the financial year in which the firm’s final order was passed.
• Rectification in assessment of members of AOP/BOI (Section 155(2))
  • If a member’s share of AOP/BOI income is incorrectly assessed, the AO must correct it.
  • Time limit: Within 4 years from the AOP/BOI’s final order.
• Rectification on re-computation of loss or depreciation (Section 155(4))
  • If loss or depreciation is recomputed in reassessment, its impact on future years is corrected.
  • Time limit: Within 4 years from the reassessment order.
• Rectification on conversion of capital asset into stock (Section 155(7B))
  • If a parent-subsidiary transfer is eligible for a capital gains exemption but later fails to meet the conditions, the exemption is revoked.
  • Time limit: Within 4 years from the financial year in which the conditions were breached.
• Rectification if investment made in extended period (Section 155(11))
  • If a taxpayer invests capital gains in new assets within the extended period, the earlier tax liability is reversed.
  • Time limit: Within 4 years from the financial year of receiving compensation.
• Rectification if exports proceeds received in foreign exchange (Section 155(11A))
  • If export proceeds are later received in convertible foreign exchange, exemptions (10A, 10AA, 10B, 10BA) are granted retrospectively.
  • Time limit: Within 4 years from the year of receipt.
• Rectification based on settlement of overseas tax dispute (Section 155(14A))
  • If disputed foreign tax is later settled, the AO allows the credit upon submission of proof.
  • Time limit: Within 6 months from document submission.
• Rectification where full value of consideration is changed (Section 155(15))
  • If stamp valuation is reduced in appeal, the capital gains are recomputed accordingly.
  • Time limit: Within 4 years from the revision order.
• Rectification where amount of compensation is changed (Section 155(16))
  • In case of compulsory acquisition, enhanced compensation is taxed as capital gains on receipt basis. If compensation is later reduced by judicial authorities, the Assessing Officer shall amend the assessment by taking the reduced amount as full value of consideration.
  • Time limit: Within 4 years from the reduction order.
• Rectification where amount of deduction is withdrawn (Section 155(17))
  • If patent rights are revoked, deductions for royalty under Section 80RRB are reversed.
  • Time limit: Within 4 years from the revocation order.
• Rectification due to disallowance of surcharge/cess (Section 155(18))
  • Deduction for surcharge/cess is disallowed retrospectively from 01-04-2005.
  • Time limit: Within 4 years from the financial year starting 01-04-2021.
• Rectification to allow a deduction for differential sugarcane price paid in subsequent years by the co-operative sugar factories (Section 155(19))
  • Co-operative sugar factories can claim deductions for excess sugarcane purchase price disallowed in earlier years.
  • Time limit: Within 4 years from 01-04-2022 (i.e., till 31-03-2027).
• Rectification of TDS credit in respect of the income disclosed in the return of income filed in earlier years (Section 155(20))
  • If TDS is deposited late, credit is allowed in the correct year upon application in Form 71.
  • Time limit: Within 4 years from the financial year of deduction.
• Recomputation of total income of 2 subsequent years in conformity with the ALP determined by TPO [Section 155(21)]
  • The Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive previous years, by amending the order of assessment or any intimation or deemed intimation under sub-section (1) of section 143.

Time limit:

• If assessment, intimation or deemed intimation of Year 2 and Year 3 is done: The Assessing Officer is required to make an amendment within 3 months from the end of the month in which Year 1’s assessment is completed.
• If assessment, intimation or deemed intimation of Year 2 and Year 3 is not done within the 3-month period: The Assessing Officer is required to make an amendment within 3 months from the end of the month in which assessment, intimation or deemed intimation for Year 2/3 is done.

Faceless Proceedings for Amendments (Section 157A)

• All rectifications are conducted electronically under a faceless system.
• Ensures automation, efficiency, and minimal taxpayer interaction.

Directions by Joint Commissioner

Introduction

If the assessment is pending, the Joint Commissioner of Income Tax (JCIT) may examine the records and issue directions to the Assessing Officer for the proper completion of the assessment.

Issuance of Directions

• The JCIT may examine assessment records:
  • On his own motion.
  • On a reference made by the AO.
  • On an application filed by the assessee.
• If necessary or expedient, the Joint Commissioner may issue binding directions to the Assessing Officer for completing the assessment.

Binding Nature of Directions

• The AO must comply with the directions issued by the JCIT.
• If an assessment order based on such directions is later found to be erroneous and prejudicial to revenue, the Commissioner or Principal Commissioner may revise it under Section 263.

Opportunity of Being Heard

• If the directions are prejudicial to the assessee, an opportunity of being heard must be provided.
• No hearing is required if the directions relate to matters already investigated.

Reference to Authorities to Invoke GAAR

Introduction

The General Anti-Avoidance Rule (GAAR) allows tax authorities to declare an arrangement as an Impermissible Avoidance Arrangement (IAA). If the Assessing Officer (AO) identifies such an arrangement during assessment or reassessment, he may refer it to the Principal Commissioner (PCIT) or Commissioner (CIT). If the CIT is not satisfied with the assessee’s objections, he refers the case to the Approving Panel for final determination.

Reference to PCIT/CIT

• If the AO suspects tax avoidance through an IAA, he may refer the case to the PCIT/CIT
• Upon receiving the reference, the PCIT/CIT must issue a notice to the assessee within 60 days, stating reasons for invoking GAAR and allowing the assessee to submit objections.
• If the PCIT/CIT is satisfied with the objections, GAAR is not applied, and an order is issued to the AO.
• If the PCIT/CIT is not satisfied, he refers the matter to the Approving Panel for final determination.

Role of Approving Panel

• The Approving Panel is constituted by the Central Government and consists of:
  • A High Court Judge (Chairperson).
  • An IRS officer (Principal CCIT or CCIT).
  • An academic/scholar specialising in taxation, accounts, or trade practices.
• The Panel’s tenure is one year, extendable up to three years.

Decision by Approving Panel

• The Approving Panel reviews the case and issues directions on whether the arrangement is an Impermissible Avoidance Arrangement.
• It specifies the applicable assessment years for its decision.
• Binding Nature of Directions:
  • The assessee, CIT, and AO must comply with the Panel’s directions.
  • No appeal can be filed against these directions.
  • If applicable to other assessment years, the AO must apply GAAR without requiring a fresh reference.

Time Limit for Panel’s Directions

• The Approving Panel must issue its decision within 6 months from the end of the month in which the reference was received.
• Exclusions from the time limit:
  • From the date the Approving Panel first directs the Principal CIT/CIT to conduct inquiries under Section 90/90A, until the information is last received or one year, whichever is earlier.
  • From the date a court grants a stay on Approving Panel proceedings until the Panel receives the certified copy vacating the stay.

If the period remaining with the Approving Panel immediately after excluding the above period is less than 60 days then the same shall be extended to 60 days and the period of 6 months shall be deemed to be extended accordingly.

Powers of the Approving Panel

• The Panel has powers similar to the Authority for Advance Rulings (AAR).
• It can:
  • Order further inquiries through the CIT.
  • Examine records and summon documents.
  • Seek evidence from the assessee.
• If members disagree, the decision is based on the majority opinion.

Notice of Demand

Introduction

A Notice of Demand is issued by the Assessing Officer (AO) when an assessee is liable to pay tax, interest, penalty, fine, or any other sum under the Income-tax Act.

When is a Notice of Demand Issued?

• A tax, interest, penalty, or other sum becomes due only when the Assessing Officer serves a notice of demand.
• Intimation of tax payable in return or TDS/TCS processing is deemed a notice of demand.
• If NCLT/NCLAT/Supreme Court reduces a tax demand raised under Section 156in insolvency cases, Section 156Arequires the AO to revise the demand accordingly.

Time Limits

• Issuance: No specific time limit, but the notice must be served within a reasonable time.
• Payment:
  • General cases – Within 30 days unless a shorter period is specified.
  • ESOP taxation (for eligible start-ups) – Within 14 days from the earliest of:
    • Expiry of 48 months from the end of the assessment year in which ESOPs were allotted.
    • At the date of sale of shares.
    • At the date the assessee ceases employment.

Format of Demand Notice

The notice of demand for the tax liability payable on assessment shall be issued in Form No. 7 and demand notice for payment of advance tax liability shall be issued in Form No. 28.

Is a Demand Notice Mandatory for Recovery?

• Yes, recovery proceedings can only begin after serving a demand notice.
• If no notice is issued, the assessee cannot be treated as a defaulter.

Consequences of Non-Payment

• The assessee is deemed an assessee-in-default.
• Interest under Section 220and penalty under Section 221may be imposed.

Faceless Issuance of Demand Notice

• Section 157Aprovides for a Faceless Scheme for issuing Notices of Demand electronically.

Payment of Taxes

Introduction

Under the Income-tax Act, 1961, taxpayers are required to pay taxes in various forms, including advance tax, self-assessment tax, TDS, TCS, and other levies. These payments can be made online or offline using prescribed challans.

Types of Tax Payments

Income Tax Payments

• Advance Tax: Paid using Challan No. ITNS 280(Code 100) before the end of the financial year.
• Self-Assessment Tax: Paid under Section 140Ausing Challan No. ITNS 280(Code 300).
• Tax on Updated Returns: Paid under Section 140Bwhen filing an updated return.
• Tax on Regular Assessment: Paid upon receipt of a Notice of Demand using Challan No. ITNS 280(Code 400).

Tax Deducted/Collected at Source (TDS/TCS)

• TDS Deposits: Paid using Challan No. ITNS 281(Code 200 for voluntary payments, Code 400 for demand notices).
• TDS on Special Transactions:

Nature of Payment	Challan/Form
Sale of property (Section 194-IA)	Form 26QB
Rent payments (Section 194-IB)	Form 26QC
Payments to contractors/professionals (Section 194M)	Form 26QD
Virtual Digital Assets (Section 194S – Specified Person)	Form 26QE

• TCS Deposits: Paid using Challan No. ITNS 281, selecting Code 200 or 400.

Modes of Payment

• Taxes can be paid online (electronic payment) or offline (through authorized banks).
• Mandatory e-payment applies to:
  • Companies.
  • Tax audit cases (Section 44AB) [Circular No. 5/2008, Dated 14-7-2008].
• Payment Channels:
  • Net banking, debit cards, credit cards or UPI
  • Payment from another person’s account is allowed, provided the assessee’s PAN is mentioned on the challan. [Circular No. 5/2008, Dated 14-7-2008.]

Document Identification Number (DIN)

Introduction

The Central Board of Direct Taxes (CBDT) has made it mandatory to quote a Document Identification Number (DIN) in all communications issued by Income-tax authorities from 01-10-2019. Taxpayers can verify the authenticity of such documents on the Income-tax e-filing portal. This initiative aims to enhance transparency and maintain an audit trail of communications.

Scope of DIN

• DIN must be quoted in all assessment orders, appeals, notices, exemptions, enquiries, penalties, prosecution orders, rectifications, and approvals. [Circular No. 19/ 2019, Dated 14-8-2019]
• As per CBDT Circular No. 19/2019, dated 14-08-2019, any communication without a DIN is deemed invalid.

Exceptions for Manual Communications

Manual communications may be issued only in exceptional cases with prior approval from the Chief Commissioner/Director General of Income-tax, such as:

• Technical difficulties in generating or allotting DIN.
• Field officers conducting on-site verification or enquiries.
• Delay in PAN migration, leading to incorrect jurisdiction.
• Absence of PAN, where proceedings are initiated (except under Sections 131& 133).
• Unavailability of system functionality for issuing communication.

Each manual communication must:

• Clearly state that it is issued without a DIN.
• Mention the date of approval for manual issuance.

Regularisation of Manual Communications

Manually issued communications must be regularised within 15 working days by:

• Uploading the document on the Income Tax Business Application (ITBA) system.
• Generating a DIN electronically.
• Sending the DIN to the assessee using the system-generated format.

Consequences of Non-Compliance

• Any communication without a DIN and not meeting the prescribed exceptions is treated as never issued.
• Taxpayers can verify the authenticity of their notices/orders using the Income-tax e-filing portal at:
  https://www1.incometaxindiaefiling.gov.in/e-FilingGS/Services/AUTHNoticeLink.html?lang=eng.

Guidelines for Compulsory Selection of Returns for Complete Scrutiny – FY 2024-25

Introduction

The Central Board of Direct Taxes (CBDT) issues annual guidelines for compulsory scrutiny selection. For FY 2024-25, the guidelines were issued via Circular F. No. 225/72/2024/ITA-II, dated 03-05-2024.

Parameters for Compulsory Scrutiny Selection

• Cases Pertaining to Survey (Section 133A)
  • If the survey detects specific information or material indicating tax evasion, the case is selected for compulsory scrutiny.
  • Surveys under Section 133A(2A) are not selected for scrutiny.

Procedure:

• • AO issues a notice under Section 143(2) with prior approval from Principal CIT/DIT.
  • Case transferred to Central Charges under Section 127 within 15 days.
• Cases Pertaining to Search & Seizure

Search conducted before 01-04-2021

• Such cases are automatically selected for compulsory scrutiny.
• AO issues notice under Section 143(2)/142(1) with prior approval and transfers the case to Central Charges within 15 days.

Search conducted on or after 01-04-2021

• AO issues notice under Section 143(2)/142(1) with prior approval and transfers the case to Central Charges within 15 days.
• CBDT clarified that if third-party information is found during a search, such cases are not transferred to Central Charges unless they meet the criteria outlined in CBDT Guidelines F. No. 299/107/2013-IT (Inv. III)/1568, dated 25-04-2014.

Cases Where Notice is Issued for Filing Return

• If no return is furnished → Case handled by NaFAC for compulsory scrutiny.
• AO uploads supporting documents, and further action is conducted through NaFAC.

Cases Where Notice is Issued Under Section 148

• All cases where a notice under Section 148 has been issued are selected for compulsory scrutiny, irrespective of whether a return is filed.
• AO uploads documents and NaFAC handles further proceedings.
• If search/survey was conducted on or after 01-04-2021, the case is transferred to Central Charges within 15 days.
• CBDT clarified that third-party cases found in a search are not transferred unless they meet specific guidelines.

Cases Related to Registration/Approval (Sections 12A, 12AB, 35, 10(23C))

• If exemption/deduction is claimed despite denial or withdrawal of registration/approval, the case is selected for compulsory scrutiny.
• If the withdrawal order is reversed in appeal, the case will not be selected.

Cases with Additions in Earlier Assessments

• If a recurring issue of law or fact (including transfer pricing) resulted in an addition of:
• ₹25 lakh or more in metro cities (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune).
• ₹10 lakh or more in other locations.
• The addition must have been upheld by appellate authorities in favor of the revenue.

Cases Involving Tax-Evasion Reports

• Cases flagged by Law Enforcement Agencies, Investigation Wing, Intelligence Authorities, or Audit Reports.

Other Cases

• Return filed in response to Section 142(1) notice due to information from NMS/AIS/SFT/CPC-TDS/IC&I → Not compulsory scrutiny; selected through CASS.
• Cases already selected by International Taxation & Central Circle continue under their jurisdiction.

Time Limits for Selection & Notices

Action	Time Limit
Selection & transfer of cases to NaFAC	31-05-2024
Service of Notice under Section 143(2)	30-06-2024

Power to Call for Information by Income-tax Authorities

Introduction

Section 133 of the Income-tax Act empowers income-tax authorities to call for information for any inquiry or proceeding under the Act. This provision enables authorities to collect relevant data from various persons, including firms, HUFs, trustees, and financial institutions.

Types of Information That Can Be Called Under Section 133

Section	Person From Whom Information Can Be Asked	Person in Respect of Whom Information Can Be Asked	Nature of Information
133(1)	Firm	Partners	Names, addresses, and shareholding of partners
133(2)	HUF	Manager & Members	Names and addresses of family members
133(3)	Trustee, Guardian, Agent	Settlor, Beneficiary, Ward, Principal	Names and addresses of these persons
133(4)	Assessee making payments above ₹1,000	Payment recipients	Names, addresses, and payment details
133(5)	Dealers, brokers, stock/commodity exchange agents	Buyers and sellers of stock/commodities	Names, addresses, and payment details
133(6)	Any person (including banks)	Any relevant inquiry	Any useful or relevant information

Authorities Empowered to Call for Information

• All Clauses of Section 133:
  • Assessing Officer (AO)
  • Joint Commissioner (JCIT)
  • Deputy Commissioner (Appeals)
  • Joint Commissioner (Appeals)
  • Commissioner (Appeals)
• Under Section 133(6)Only (Higher Authorities):
  • Principal Director General (PDGIT) / Director General (DGIT)
  • Principal Chief Commissioner (PCCIT) / Chief Commissioner (CCIT)
  • Principal Commissioner (PCIT) / Commissioner (CIT)
  • Joint Director, Deputy Director, Assistant Director, Director

Block Assessment

Introduction

Block assessment is a special procedure applicable in cases where a search under Section 132 or a requisition under Section 132A is initiated on or after 01-09-2024. It provides for a single consolidated assessment of the total undisclosed income for the block period. Any pending assessments or reassessments abate and merge with the block assessment. The undisclosed income assessed under this scheme is taxable at 60%. A notice requiring the assessee to furnish a return must be issued within 60 days after obtaining approval from the competent authority.

Statutory framework of block assessment

Chapter XIV-B comprises the following provisions:

• Section 158B– Definitions of “block period”, “undisclosed income”, and “last authorisation”.
• Section 158BA– Assessment of total undisclosed income as a result of search.
• Section 158BB– Computation of total undisclosed income of the block period.
• Section 158BC– Procedure for block assessment.
• Section 158BD– Assessment of undisclosed income of any other person.
• Section 158BE– Time limits for completion of block assessment.
• Section 158BF– Immunity from interest under Sections 234A, 234B, 234C and penalty under Section 270A.
• Section 158BFA– Levy of interest and penalties in specified cases.
• Section 158BG– Competent authority to make the assessment.
• Section 158BH– Applicability of other provisions of the Act to block assessment.

Meaning of block period

The block period comprises:

• The 6 previous years preceding the year in which the search or requisition is initiated; and
• The period from 1st April of the previous year in which the search or requisition is initiated up to the date of execution of the last authorisation.

The date of initiation of the search determines the block period.

Meaning of undisclosed income

Section 158B(b) provides an inclusive definition. Undisclosed income covers:

• Undisclosed assets

Assets representing income or property not disclosed or that would not have been disclosed, including money, bullion, jewellery, virtual digital assets, other valuable articles or things, and income reflected in books, documents, or transactions.

• Incorrect claims

Incorrect claims of expenses, exemptions, deductions, or allowances are treated as undisclosed income.

Execution of “last authorisation”

The last authorisation is deemed executed:

• Upon conclusion of search as recorded in the last panchnama for the person searched; or
• In case of requisition under Section 132A, on actual receipt of books, documents, or assets by the authorised officer.

A panchnama documents the events of the search, items found, seized, and inventoried.

Authority competent to make block assessment

As per Section 158BG:

• Only an Assessing Officer not below the rank of Deputy/Assistant CIT or Deputy/Assistant Director may conduct the assessment.
• The assessment order requires prior approval of the Additional Commissioner/Additional Director/Joint Commissioner/Joint Director.

Applicability of other provisions

Under Section 158BH, all other provisions of the Income-tax Act apply to block assessments except where specifically overridden by Chapter XIV-B. This includes provisions relating to the issue of notice of demand, recovery, etc.

Framework of Block Assessment

Introduction

Section 158BA provides the statutory framework governing the assessment of total undisclosed income in cases of search under Section 132 or requisition under Section 132A. The provision aims to ensure a comprehensive, consolidated, and legally robust mechanism for addressing undisclosed income, reducing litigation and streamlining tax administration.

Date of application

The block assessment procedure applies only when the search is initiated on or after 01-09-2024. If a search began before but concluded on or after this date, assessments shall be made under the reassessment provisions (Sections 147 to 151A).

Supremacy of block assessment provisions

Section 158BA begins with a non-obstante clause and, read with Section 158BH, establishes that:

• The provisions of Chapter XIV-B override all other provisions of the Act.
• Other provisions of the Income-tax Act apply only to the extent they are not inconsistent with this Chapter.

Thus, normal assessment procedures are restricted, while provisions relating to essential matters such as accounting methods and tax recovery continue to apply.

Abatement of pending proceedings

Section 158BA(2) mandates automatic abatement of any pending assessment, reassessment, or recomputation relating to any assessment year within the block period once a search or requisition is initiated.

Key features:

• All regular assessment proceedings for the block period stand discontinued.
• Notices issued between the initiation of search and the date of the block assessment order under Section 158BC(1)(c) also lead to abatement upon issue of such notice.
• Exception: the assessment year in which the last authorisationis executed is not subject to abatement.
• Under Section 158BA(3), proceedings involving transfer pricing references under Section 92CA also abate, ensuring unified assessment of issues arising from the search.

Sequential handling of multiple searches

Under Section 158BA(4):

• Where a fresh search or requisition occurs before completion of an ongoing block assessment, the first assessment must be completed before commencing the next.
• If the available time after completing the initial assessment is short, a minimum of three monthsis provided for completion of the subsequent assessment.

Revival of abated proceedings

Section 158BA(5) provides that if an assessment order under Section 158BC(1)(c) is annulled in appeal or any other legal proceeding:

• All previously abated proceedings(assessment, reassessment, recomputation, transfer pricing reference or order) stand revived.
• Revival takes effect from the date the annulment order is received by the Principal Commissioner or Commissioner.
• If the annulment is later reversed, the revival ceases.

Assessment of current year

Section 158BA(6) specifies that the total income of the year in which the last search authorisation or requisition was executed, excluding undisclosed income, is to be assessed separately under normal provisions of the Act. Only the undisclosed income is assessed under the block assessment procedure.

Tax on total undisclosed income of the block period

Under Section 158BA(7), the total undisclosed income determined for the block period is chargeable to tax at the rate prescribed under Section 113, ensuring uniform taxation of such income.

Computation of Total Undisclosed Income of the Block Period

Introduction

Section 158BB specifies the method for computing total undisclosed income during a block assessment. The Finance Act 2025 introduces a simplified computation mechanism, under which undisclosed income is the aggregate of (a) undisclosed income declared by the assessee and (b) undisclosed income determined by the Assessing Officer. Tax is chargeable at 60% under Section 113.

Computation of total undisclosed income

The total undisclosed income for the block period shall be:

• [A]Undisclosed income declared in the return furnished under Section 158BC;
  Plus
• [B]Undisclosed income determined by the Assessing Officer based on evidence or information found during search, requisition or proceedings.

The aggregate [C = A + B] is the total undisclosed income of the block period.

As per Section 158BB(7), brought-forward losses or unabsorbed depreciation from periods before the block period cannot be set off against undisclosed income but may be carried forward for future years.

Computation of disclosed income

Section 158BB(1A) prescribes the incomes to be excluded from undisclosed income. Disclosed income for all previous years falling within the block period is computed on the basis of:

• Income determined under Section 143(1).
• Income assessed before the date of search or requisition, including assessments under Sections 143, 144, 147 , 153A, 153C, 158BC, and orders under Section 245D(4).
• Income declared in returns filed before search under Section 139 or in response to Section 142(1).
• Income computed on the basis of entries recorded in books or other documents maintained in the normal course, covering:

• Previous year ended, but return not yet due;
• Period from 1st April of the year of search to the day before initiation;
• Period from initiation of search to execution of the last authorisation.
  • Income taxable by TDS without mandatory return filing, i.e., under Sections 115A(5), 115G and 194P(1).

Basis for computing total income for each previous year

Section 158BB(1A) provides different bases depending on the status of return filing or assessment:

• Assessed income where an assessment under Sections 143, 144, 147 , 153A, 153C, 158BC or 245D existed before search.
• Returned income where returns were filed but not assessed.
• Income based on books/documents where the previous year ended, but the return due date had not expired before the search.
• Income determined for part periods in the year of search, based on regular books/documents.
• Nil disclosed income where the due date had expired, but the return was not filed; income declared in the Section 158BC return becomes undisclosed.

The Assessing Officer may recompute income determined under Section 158BB(1A)(c) if he forms the opinion that any part of such income is undisclosed.

Cases involving completed or pending assessments

For completed assessments, the assessed total income is treated as disclosed income. If rectification occurs, the rectified income is considered. Where appeals are pending, the returned income forms the basis. If an assessment was set aside but not completed before the search, the returned income is adopted.

Where the return filing is not mandatory

Under Section 158BB(1A)(d), income is treated as disclosed where tax has been deducted, and return filing is not required for:

• Non-residents or foreign companies earning income under Section 115A.
• NRIs with income taxable under Chapter XII-A.
• Resident senior citizens covered by Section 194P.

Special provisions for determining undisclosed income

Section 158BB(4) provides:

• In the case of a firm, income is computed before deducting salary, interest, commission, bonus, or remuneration to partners (other than working partners).
• Sections 68, 69, 69A, 69B and 69C apply to unexplained credits, investments, money and expenditure.
• References to “previous year” in transfer pricing provisions apply to the relevant period within the block period.

International and specified domestic transactions

Under Section 158BB(3):

• Income relating to international or specified domestic transactions for the period up to the date of search is excludedfrom the computation of undisclosed income.
• Such income is assessable separately under other provisions of the Act.

Tax on undisclosed income

Section 158BA(7) mandates that undisclosed income for the block period is taxable at the rate prescribed in Section 113, i.e., 60%, with surcharge, if any, specified under a Central Act.

Procedure for Block Assessment

Introduction

Section 158BC lays down the procedure for conducting the block assessment of undisclosed income detected as a result of a search under Section 132 or a requisition under Section 132A. It authorises the Assessing Officer (AO) to issue a notice for filing the return for the block period, determine the total undisclosed income and pass an assessment or reassessment order.

Issue of notice to file a return

Under Section 158BC(1)(a), the AO shall:

• Issue a notice requiring the assessee to furnish the return of undisclosed income for the block period.
• Specify a time limit not exceeding 60 days, extendable as permitted.
• Require filing of the return in Form ITR-B, in the manner prescribed by CBDT.
• Treat a return filed within the permitted period as a return under Section 139, enabling issuance of notice under Section 143(2).
• Disregard returns filed after the permitted period for the purpose of Section 139.
• Proceed under this Chapter without requiring a separate notice under Section 148.
• Not allow filing of a revised return.

Extension of time to file a return

The fifth proviso to Section 158BC(1)(a) permits the AO to extend the time limit by 30 days if:

• The due date for filing the return for the previous year immediately preceding the year of search has not expired on the date of search or requisition;
• The assessee is liable to audit under Section 44AB for that previous year;
• The accounts of that previous year are not audited on the date of notice, and the assessee seeks an extension in writing to enable audit.

Filing of return in Form ITR-B

• Rule 12AE prescribes Form ITR-B for filing returns under Section 158BC.
• Returns must be filed electronically.
• Companies, political parties and assessees liable to audit under Section 44AB must use DSC; others may use DSC or EVC.

Determination of undisclosed income

Under Section 158BC(1)(b), the AO shall determine undisclosed income in accordance with Section 158BB. For this purpose, the AO may:

• Conduct enquiries under Section 142;
• Issue notice under Section 143(2) to require evidence in support of the return;
• Determine the total income under Section 143(3);
• Make a best-judgment assessment under Section 144 if the return is not filed;
• Apply accounting provisions under Sections 145, 145A and 145B.

Assessment or reassessment order

After determining the undisclosed income, the AO shall:

• Pass an assessment or reassessment order for the block period;
• Compute the tax payable accordingly.

The provisions of Section 144C (Dispute Resolution Panel) do not apply to orders under this section.

Handling of seized or requisitioned assets

Section 158BC(1)(d) mandates that assets seized or requisitioned shall be dealt with in accordance with Section 132B, which governs the adjustment and application of seized assets.

Returns not processed under section 143(1)

Returns filed under Section 158BC are excluded from processing under Section 143(1). This reflects the special and independent nature of block assessments.

Approval for the issue of notice

Before issuing the notice under Section 158BC(1)(a), the AO must obtain prior approval from an Additional Commissioner, Additional Director, Joint Commissioner or Joint Director.

Assessment of Undisclosed Income of Any Other Person

Introduction

Section 158BD governs cases where undisclosed income detected during a search under Section 132 or requisition under Section 132A pertains to a person other than the person searched (specified person). In such situations, the Assessing Officer (AO) who conducted the search must transfer the seized or requisitioned material and related information to the AO having jurisdiction over the “other person,” who will then undertake block assessment proceedings.

Block period of the other person

The first proviso to Section 158BD prescribes how to determine the block period for the other person:

• Where the search involves one specified person

The block period for the other person is identical to that of the specified person.

• Where the search involves multiple specified persons

The block period for the other person shall be the same as that of the specified person whose block period ends on the latest date. This ensures uniformity where multiple search cases are linked to the undisclosed income of a common other person.

Abatement of proceedings for the other person

Sections 158BA(2) and 158BA(3) stipulate the abatement of pending proceedings for assessment, reassessment, or recomputation, including transfer pricing references, for years falling in the block period.

For an “other person,” the second proviso to Section 158BD clarifies that the date of receipt by the jurisdictional AO of the seized material, requisitioned items, or relevant information shall be treated as the date of initiation of search or requisition for the purpose of determining abatement.

This ensures that assessments for the other person are aligned with the timing of material transfer rather than the date of the original search.

Limitation Period for the Completion of Block Assessment

Introduction

Section 158BE prescribes the time limits for completing a block assessment. The assessment must be completed within a specified period from the end of the quarter in which the last authorisation for a search under Section 132 or a requisition under Section 132A was executed or made.

Primary limitation period

• The order under Section 158BC must be passed within 12 months from the end of the quarter in which the last authorisation for search or requisition was executed or made.
• For “other persons” covered under Section 158BD, the period is 12 months from the end of the quarter in which the notice under Section 158BC is issued.

Extended limitation period

Where the AO grants an extension of 30 days to file the block return under the fifth proviso to Section 158BC(1)(a), the limitation period is correspondingly extended to 13 months under:

• Section 158BE(1) for the searched person;
• Section 158BE(3) for the other person.

Additional time for transfer pricing references

If a reference is made to the Transfer Pricing Officer under Section 92CA(1) during the block assessment, the time limit for passing the order is extended by an additional 12 months.

Exclusions from the limitation period

The following time periods are excluded from the computation of the limitation period:

• Time taken for reopening proceedings, wholly or partly, or allowing rehearing when jurisdiction is changed.
• Period during which assessment proceedings remain stayed by an order or injunction of any court, ending on the date the Principal CIT/CIT receives the order vacating the stay.
• Period between:
  • Intimation to the Central Government/ prescribed authority regarding contravention of conditions by specified institutions; and
  • Receipt of the order withdrawing approval/ rescinding notification.
• Period from the date of the AO’s direction for special audit or valuation till:
  • The date the assessee is required to furnish the report; or
  • Where challenged, the date the Principal CIT/CIT receives the order setting aside the direction.
• Period between the reference made to the Valuation Officer and receipt of the valuation report.
• Period from the date of application before the Authority for Advance Ruling or Board for Advance Rulings until the date the Principal CIT/CIT receives the order rejecting the application or the ruling.
• Period from the date of the competent authority’s reference for exchange of information until the earlier of:
  • The date the information was last received; or
  • One year.
• Period from receipt of reference relating to an arrangement under General Anti-Avoidance Rules until the AO receives direction or order.
• Period (maximum 180 days) from:
  • The date of initiation of search/ requisition;
  • Until seized books, documents, money, bullion, jewellery, valuables or information are handed over to the AO having jurisdiction over:
    • the searched person;
    • the person to whom valuables belong; or
    • the person to whom seized books or documents pertain.
  • Period from the date of AO’s reference to withdraw registration/ approval of trusts or institutions (under Section 10(23C)(iv),(v),(vi),(via) or Section 11) until receipt of the order by the AO.

Minimum available time of 60 days

Where, after excluding the above periods, the time remaining to complete the assessment is less than 60 days, it shall be extended to 60 days.
If such an extended period expires before the end of a month, it shall stand extended to the end of that month.

Levy of Interest and Penalty in Block Assessment

Introduction

Sections 158BF and 158BFA govern the levy of interest and penalty in block assessments under Chapter XIV-B. Section 158BF provides immunity from the levy of specified interest and penalty for undisclosed income assessed for the block period, while Section 158BFA empowers authorities to levy interest and penalty in defined circumstances and prescribes procedural and time-limit requirements.

Immunity from penalty and interest (Section 158BF)

No interest shall be levied on the undisclosed income of the block period under:

• Section 234A– default in furnishing return of income;
• Section 234B– default in payment of advance tax;
• Section 234C– deferment of advance tax.

Further, no penalty for under-reporting or misreporting of income under Section 270A shall be imposed in respect of undisclosed income assessed or reassessed for the block period.

Levy of interest and penalty (Section 158BFA)

If the assessee fails to furnish the return of undisclosed income within the period specified in Section 158BC or does not file it at all:

• Interest at 5% per month or part there of applies on the tax on undisclosed income;
• Computed from the day immediately following the due date specified in the notice until completion of the assessment.

Further, under Section 158BFA(2):

• AO or CIT(A) may impose a penalty equal to 50% of the taxon the undisclosed income determined under Section 158BC.
• Penalty applies only to the portion of undisclosed income exceeding the amount declared in the return.

Immunity from penalty

Immunity applies to penalties under:

• Section 158BFA(2);
• Section 271AAD (false entry/omission);
• Section 271D (contravention of Section 269SS);
• Section 271DA (contravention of Section 269ST);
• Section 271E (contravention of Section 269T).

Conditions for immunity

The following conditions must be fulfilled:

• Filing of return under Section 158BC;
• Payment of tax due or offering seized money for adjustment;
• Furnishing proof of tax payment along with the return;
• No appeal against the assessment of disclosed income.

Immunity is not available where undisclosed income determined by the AO exceeds the income declared in the return; a penalty applies on such excess.

Procedure for imposing a penalty

• Opportunity of being heard

The assessee must be granted a reasonable opportunity before the levy of a penalty.

• Authority and approval requirement

Penalty may be imposed only with prior approval of the Additional Commissioner, Additional Director, Joint Commissioner, or Joint Director if:

• Penalty exceeds 2 lakh, or
• Penalty is to be imposed by a Dy. CIT, Asst. CIT, Dy. Director or Asst. Director.

• Communication of penalty order

A copy of the penalty order must be sent to the Assessing Officer, except where the AO himself passes the order.

Limitation period for imposition of penalty

Time limits vary depending on the appellate or revisional proceedings:

• Where the assessment is in appeal before CIT(A)

Penalty to be imposed before the later of:

• End of the financial year in which proceedings are completed;
• Six months from the end of the financial year in which the CIT(A)’s order is received by the Principal CIT/CIT.
  • Where the assessment is in appeal before the ITAT

Penalty to be imposed before the later of:

• End of the financial year in which proceedings are completed;
• Six months from the end of the financial year in which the ITAT’s order is received.
  • Where assessment is in revision

Penalty to be imposed within six months from the end of the financial year in which the revisional order is passed.

• In any other case

Penalty to be imposed before the later of:

• End of the financial year in which proceedings are completed;
• Six months from the end of the financial year in which the notice for penalty is issued.

Exclusions for Computing Limitation Period

The following periods are excluded when computing the limitation:

• Time given to the assessee for being reheard;
• Period during which penalty proceedings are stayed by a court, from the date of stay until the Principal CIT/CIT receives a certified copy vacating the stay.

Where, after such exclusions, the remaining limitation period is less than 60 days, it is extended to:

• 60 days, or
• End of the month if the extended period ends within a month.

Income Tax Rules

Rule – 12D

³⁸[Prescribed income-tax authority under section 133C.

12D. The prescribed income-tax authority under section 133C shall be an income-tax authority not below the rank of Assistant Commissioner of Income-tax who has been authorised by the Central Board of Direct Taxes to act as such authority for the purposes of that section.]

Note:

³⁸ Substituted by the IT (First Amdt.) Rules, 2019, w.e.f. 30-1-2019 [as corrected by Corrigendum GSR 93(E), dated 5-2-2019]

Rule – 12E

³⁹[Prescribed authority under sub-section (2) of section 143.

12E. The prescribed authority under sub-section (2) of section 143 shall be an income-tax authority not below the rank of an Income-tax Officer who has been authorised by the Central Board of Direct Taxes to act as income-tax authority for the purposes of sub-section (2) of section 143.]

Note:

³⁹ Inserted by the IT (Thirty-first Amdt.) Rules, 2016, w.e.f. 16-11-2016

Rule – 12F

⁴⁰[Prescribed income-tax authority under second proviso to clause (i) of sub-section (1) of section 142.

12F. The prescribed income-tax authority under second proviso to clause (i) of sub-section (1) of section 142 shall be an income-tax authority not below the rank of Income-tax Officer who has been authorised by the Central Board of Direct Taxes to act as such authority for the purposes of that clause.]

Note:

⁴⁰ Inserted by the IT (Twenty-ninth Amdt.) Rules, 2021, w.e.f. 13-9-2021

Rule – 14

Form of verification under section 142.

14. The information which a person is required by the Assessing Officer to furnish under clause (ii) of sub-section (1) of section 142 shall be verified in the following manner, namely :—

“I declare that to the best of my knowledge and belief, the information furnished in the statement/statements is correct and complete and other particulars shown therein are truly stated.”

Rule – 14A

⁴³[Forms for report of audit or inventory valuation under section 142(2A).

14A. (1) The report of audit of the accounts of an assessee which is required to be furnished under clause (i) of sub-section (2A) of section 142 shall be in Form No. 6B.

(2) The report of inventory valuation of an assessee which is required to be furnished under clause (ii) of sub-section (2A) of section 142 shall be in Form No. 6D.]

Note:

⁴³ Substituted by the IT (Twenty-second Amdt.) Rules, 2023, w.e.f. 27-9-2023

Rule – 14B

⁴⁴[Guidelines for the purposes of determining expenses for audit or inventory valuation.

14B. (1) Every Chief Commissioner shall for the purposes of clause (i) and clause (ii) of sub-section (2A) of section 142 shall maintain a panel of—

(i) accountants, out of the persons referred to in the Explanation to sub-section (2) of section 288; and

(ii) cost accountants, out of the persons referred to in the Explanation to section 142.

(2) Where the Assessing Officer directs—

(i) for audit under clause (i) of sub-section (2A) of section 142 on or after the 1st day of June, 2007; or

(ii) for inventory valuation under clause (ii) of sub-section (2A) of section 142 on or after the 1st day of April, 2023,

the expenses of, and incidental to, audit or inventory valuation (including the remuneration of the Accountant or Cost Accountant, qualified Assistants, semi-qualified and other Assistants who may be engaged by such Accountant or Cost Accountant) shall not be less than three thousand seven hundred and fifty rupees and not more than seven thousand and five hundred rupees for every hour of the period as specified by the Assessing Officer under sub-section (2C) of section 142.

(3) The period referred to in sub-rule (2) shall be specified in terms of the number of hours required for completing the report.

(4) The Accountant or Cost Accountant referred to in clause (i) or clause (ii) of sub-section (2A) of section 142 shall maintain a time-sheet and shall submit it to the Chief Commissioner or Commissioner, along with the bill.

(5) The Chief Commissioner or the Commissioner shall ensure that the number of hours claimed for billing purposes is commensurate with the size and quality of the report submitted by the Accountant or Cost Accountant.]

Note:

⁴⁴ Substituted by the IT (Twenty-second Amdt.) Rules, 2023, w.e.f. 27-9-2023

Rule – 15

Notice of demand for regular assessment, etc.

15. (1) Subject to the provisions of rules 38 and 48A, the notice of demand under section 156 shall be in Form No. 7.

(2) [Omitted by the IT (Third Amdt.) Rules, 1964, w.e.f. 27-7-1964.]

Rule – 38

PART VII

PAYMENT OF ADVANCE TAX

Notice of demand.

38. Notwithstanding anything contained in rule 15, the notice of demand under section 156 to be served upon the assessee in pursuance of an order under section 210 shall be in Form No. 28.

Rule – 125

Electronic payment of tax.

125. (1) The following persons shall pay tax electronically on or after the 1st day of April, 2008:—

(a) a company; and

(b) a person (other than a company), to whom the provisions of section 44AB are applicable.

(2) For the purposes of this rule :—

(a) “pay tax electronically” shall mean, payment of tax by way of—

(i) internet banking facility of the authority bank; or

(ii) credit or debit cards;

(b) the word “tax” shall have the meaning as assigned to it in clause (43) of section 2 of the Act and shall include interest and penalty.

Rule – 127

54[Service of notice, summons, requisition, order and other communication.

127. (1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as “communication”) may be delivered or transmitted shall be as per sub-rule (2).

(2) The addresses referred to in sub-rule (1) shall be—

(a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282—

i. the address available in the PAN database of the addressee; or

ii. the address available in the income-tax return to which the communication relates; or

iii. the address available in the last income-tax return furnished by the addressee; or

iv. in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs:

Provided that the communication shall not be delivered or transmitted to the address mentioned in items (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication:

55[Provided further that where the communication cannot be delivered or transmitted to the address mentioned in items (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address:—

i. the address of the assessee as available with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or

ii. the address of the assessee as available with the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or

iii. the address of the assessee as available with the insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938); or

iv. the address of the assessee as furnished in Form No. 61 to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (Intelligence and Criminal Investigation) under sub-rule (1) of rule 114D; or

v. the address of the assessee as furnished in Form No. 61A under sub-rule (1) of rule 114E to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (Intelligence and Criminal Investigation); or

vi. the address of the assessee as available in the records of the Government; or

vii. the address of the assessee as available in the records of a local authority as referred to in the Explanation below clause (20) of section 10 of the Act;]

(b) for communications delivered or transmitted electronically—

i. email address available in the income-tax return furnished by the addressee to which the communication relates; or

ii. the email address available in the last income-tax return furnished by the addressee; or

iii. in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs; or

iv. any email address made available by the addressee to the income-tax authority or any person authorised by such income-tax authority.

(3) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the procedure, formats and standards for ensuring secure transmission of electronic communication and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to such communication.]

Notes:

⁵⁴ Inserted by the IT (Eighteenth Amdt.) Rules, 2015, w.e.f. 2-12-2015.

⁵⁵ Inserted by the IT (Twenty-fifth Amdt.) Rules, 2017, w.e.f. 20-12-2017.

Rule – 132

⁶⁶[Application for recomputation of income under sub-section (18) of section 155.

132. (1) An application requesting for recomputation of total income of the previous year without allowing the claim for deduction of surcharge or cess, which has been claimed and allowed as deduction under section 40 in the said previous year, shall be made in Form No. 69 on or before the 31st day of March, 2023.

(2) Form No. 69 shall be furnished electronically to the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or the person authorized by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).

(3) Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall lay down the procedures and standards for furnishing and verification of Form No. 69 and to forward the application received in Form No. 69 to the Assessing Officer.

(4) The Assessing Officer shall, on receipt of the application in Form No. 69, recompute the total income by amending the relevant order and issue notice under section 156 specifying the time period within which amount of tax payable, if any, is to be paid,—

(i) for the assessment year relevant to the previous year referred to in sub-rule (1); and

(ii) for the assessment years subsequent to the assessment year referred to in clause (i), if the order for such assessment year results in variation in carry forward of loss or allowance for unabsorbed depreciation or credit for tax under section 115JAA or section 115JD.

(5) The assessee shall, after making the payment of the tax determined under sub-rule (4), furnish the details of payment of tax in Form No. 70 to the Assessing Officer within thirty days from date of making the payment.]

Note:

⁶⁶ Inserted by the IT (Thirty-second Amdt.) Rules, 2022, w.e.f. 1-10-2022

Rule – 134

⁶⁸[Application under sub-section (20) of section 155 regarding credit of tax deduction at source.

134. (1) The application required to be made by the assessee under sub-section (20) of section 155 shall be in Form No. 71.

(2) Form No. 71 shall be furnished to the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).

(3) Form No. 71, shall be furnished electronically,—

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the procedures for furnishing Form No. 71 and shall also be responsible for formulating and evolving appropriate security, archival and retrieval policies in relation to the form so furnished.

(5) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, or any person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall forward Form No. 71 to the Assessing Officer.]

Note:

⁶⁸ Inserted by the IT (Twentieth Amdt.) Rules, 2023, w.e.f. 1-10-2023

Income Tax Forms

Form No. : 1

¹[Appendix IV

FORM NO. 1

[See rule 11UE (1)]

Undertaking under sub-rule (1) of rule 11UE of the Income-tax Rules, 1962

To,
Principal Commissioner/Commissione
………………….. ………………………. ……………………

Sir/Madam,

I …………………………………….. (name in block letters) son/daughter of …………………………………………. designation ………………………………….. and nationality …………………………………. and related passport number………………………………….. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) …………………………………………………………………. on behalf of ………………………………………… (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be ,hereby declare as follows:

a. That specified orders have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012 and particulars of such specified orders are provided in Part A of the Annexure.

b. The declarant has (strike off the options that are not applicable),

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings constituted under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and has irrevocably withdrawn, on a with prejudice basis, all such appeals or applications or petitions or proceeding and evidence thereof is furnished herewith and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the declarant, are provided in Part C of the Annexure;

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the declarant have been disposed of and no further appeal or application or petition or proceeding has been filed by the declarant and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part C of the Annexure;

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The declarant further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the declarant and their status as on the date of this undertaking, are provided in Part D of the Annexure;

c. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the declarant, are provided in Part E of the Annexure;

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the declarant have been disposed of and no further proceeding has been initiated by the declarant and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part E of the Annexure;

iv. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. Particulars of such pending proceeding and notices filed by the declarant are provided in Part F of the Annexure. The declarant hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders;

v. received or got any awards, orders, judgments or any other reliefs issued in favour of the declarant, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the declarant or by India and any Indian affiliate. The declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs or relief in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment or any other relief issued in favour of the declarant. The declarant hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part G of the Annexure;

.d. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part B of the Annexure;

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The declarant has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments and evidence thereof is furnished herewith. Particulars of such proceeding, initiated and withdrawn or discontinued by the declarant, are provided in Part H of the Annexure;

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the declarant have been disposed of and no further proceeding has been filed by the declarant and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part H of the Annexure;

iv. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, the declarant has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian Affiliate. The declarant hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding are provided in Part I of the Annexure. The declarant also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e).

e. The declarant hereby undertakes as follows:

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c), and (d) above, and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, declarant shall act in accordance with this undertaking and in full cooperation with the Republic of India;

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the declarant or by Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For the avoidance of doubt, the declarant’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d) above. For further avoidance of doubt, the declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian affiliate to set aside such award, order or judgement ordered, issued or passed in favour of the declarant. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order;

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the declarant.

f. The declarant specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

g. The declarant hereby undertakes to irrevocably terminate, release, discharge and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the declarant under any law for the time being in force, in equity, under any statute or under any agreement entered into by Republic of India with any country or territory outside Republic of India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the declarant or by Republic of India and any Indian affiliate. For the avoidance of doubt, the declarant’s above waiver includes an irrevocable waiver of any claim against India and any Indian Affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the declarant hereby undertakes (for itself and on behalf of all related parties) to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

h. The declarant further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking. Where any such claim or right is transferred, the declarant confirms that it has provided the particulars of all the interested parties in Part L, and the undertakings from each of such interested parties is attached with this undertaking in accordance with Part M of the Annexure.

i. In the event that, notwithstanding the foregoing, any person asserts, brings, files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releasees”) at any time on or after the date of furnishing this undertaking, the declarant shall indemnify, defend and hold harmless such releasees from and against any and all costs, expenses (including attorney’s fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The declarant specifically represents that, to the best of its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking, no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliates. To avoid any doubt, the declarant’s indemnity of releasees under this clause shall include any claim brought by any third party alleging that it has obtained the declarant’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

j. For the removal of any doubt, the declarant fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releasees against any related claim by any person. If the declarant fails to obtain any release from such person, the declarant warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

k. The declarant further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any person (including but not limited to any related party or interested party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The declarant shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where this Form is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice or press release shall include, among other things, confirmation that,—

i. the declarant (and its related parties) forever irrevocably forgo any reliance on any right and provisions under any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the declarant has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliates with respect to any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate, including by related parties or interested parties, contrary to the release; and

iv. the declarant confirms it will treat any such award, judgment or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

l. The declarant confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

m. The declarant represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j)under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against the declarant in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law.

n. The declarant confirms that by submitting the present undertaking, it fulfills the conditions specified in the Explanation below the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9.

o. The details of the bank account in which the refund may be credited are provided in Part J of the Annexure.

p. The details of all the interested parties are provided in Part K and Part L of the Annexure. The undertaking in Part M of the Annexure by each of such persons is attached with this undertaking. The declarant represents and warrants that:

i. all such undertakings have been executed and delivered by the person who has full legal power and authority to execute and deliver such undertakings;

ii. the execution, delivery and performance of this undertaking has been duly authorised by all necessary corporate action; and

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against such person in accordance with its terms. Such separate, related undertakings may take the same form as this undertaking.

q. The declarant is or is not covered under sub-rule (6) of rule 11UF and in case if the declarant is not covered under said sub-rule all the conditions provided under sub-rule (2) of rule 11UE have been fulfilled.

r. This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant income-tax authorities, tribunals or courts in Republic of India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that I am aware of all the consequences and implications of this undertaking.

Place:…………………………………

Signature:………………………………….

Date: …………………………………………………………………………………………………………………………….

Attachments

1. The Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking

2. An indemnity bond to the effect of clause (i) and clause (j) of the undertaking attached in Part N of the undertaking.

3. Copy of the public notice referred to in clause (k) of the undertaking, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to this undertaking.

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the signatory’s power and authority to give the undertaking on behalf of the declarant; and

b. record the declarant’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at________________ place_______________ on this the_________ day________________ of ______ month_______________ , year_______________ .

Place: ……………………

Date:……………………..

Signature…………………………

 

Annexure

Part A– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding , if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)

Part B– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(5)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part C: Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part D – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clauses (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part E – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (ii) and (iii) of clause (c) of the undertaking:

Sr. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country) where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing of or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority).
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part F – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part G – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part H – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part I – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part J – Details of bank account in Republic of India to which the refund is to be remitted

Sl. No.	Bank Name and Address	Account Number and other required details for remittance
(1)	(2)	(3)

Part K– Details of all the companies or entities in the entire chain of holding of the declarant till the ultimate holding company or entity of the declarant:

Sl. No.	Name of holding company	Percentage of the ownership by such holding company in the declarant as on the date of undertaking	If the ownership in the declarant is not held directly by such holding company, the chain of ownership with the names of all the companies in the chain of ownership
(1)	(2)	(3)	(4)

Part L- Details of all the interested parties other than the interested parties covered under Part K

Sl. No.	Name of such persons whose interest may be affected directly or indirectly by this undertaking	Nature of interest of such person	Amount of interest of such person (Rs), if available
(1)	(2)	(3)	(4)

PART M Undertaking by person(s) declared in Part K and Part L of the Undertaking

To,
Principal Commissioner/Commissioner
……………….. ……………………… ………….

Sir/Madam,

I………………….. (name in block letters) son/daughter of…………………………………………….. designation ……………….. .and nationality …………………………. .and related passport number……………………………… (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) ………………………………. on behalf of …………………………………. . (name of the interested party) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) …………………………………………. . and being duly authorised and competent to represent the interested party in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be , hereby declare as follows:

(a) The particulars of specified orders that have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside Republic of India made before the 28th day of May, 2012 in the case of declarant and the nature of interest of the interested party in such specified orders are provided in Part MA of the Annexure.

(b) The interested party has (strike off options that are not applicable):

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn all such appeals or applications or petitions or proceeding or such appeals or applications or petitions or proceeding have been disposed at any time before the date of filing Form No. 1, and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the interested party, are provided in Part MC of the Annexure.

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the interested party have been disposed of and no further appeal or application or petition or proceeding has been filed by the interested party and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part MC of the Annexure.

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The interested party further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the interested party and their status as on the date of this undertaking, are provided in Part D of the Annexure. Particulars of any appeals or applications or petitions or proceeding as described in this clause (b) which are not covered by the sub-clauses (i) and (ii) are also provided in Part MD of the Annexure.

(c) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the interested party, are provided in Part ME of the Annexure.

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the interested party have been disposed of and no further proceeding has been initiated by the interested party and evidence thereof is furnished herewith. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part ME of the Annexure.

iv. has initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside Republic of India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e). Particulars of such pending proceeding and notices filed by the interested party are provided in Part F of the Annexure. The interested party hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of any proceeding for arbitration, conciliation or mediation, or notices thereof, which are not covered by the sub-clause (i) and sub- clause (ii), are also provided in Part MF of the Annexure.

v. received or got any awards, orders, judgements or any other reliefs issued in favour of the interested party, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. The interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic to set aside such award, order or judgment issued in favour of the interested party. The interested party hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part MG of the Annexure.

(d) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part MB of the Annexure.

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The interested party has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and withdrawn or discontinued by the interested party, are provided in Part MH of the Annexure.

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the interested party have been disposed of and no further proceeding has been filed by the interested party and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part MH of the Annexure.

iv. initiated proceeding to enforce or pursue attachments in respect of any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, interested party has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding, are provided in Part MI of the Annexure. Particulars of any such proceeding, to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief, which are not covered by the sub-clauses (i) and (ii), are also provided in Part MI of the Annexure. The interested party also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e) below.

(e) The interested party hereby undertakes as follows: –

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against Republic of India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c) and (d) and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, interested party shall act in accordance with this undertaking and in full cooperation with the Republic of India.

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order, judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d). The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For further avoidance of doubt, the interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian Affiliate to set aside such award, order or judgment ordered, issued or passed in favour of the interested party. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order.

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the interested party.

(f) The interested party specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

(g) The interested party hereby undertakes to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the interested party under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s above waiver includes an irrevocable waiver of any claim against India and any Indian affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the interested party hereby undertakes to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

(h) The interested party further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking.

(i) In the event that, notwithstanding the foregoing, any person asserts, brings , files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releasees”)at any time on or after the date of furnishing this undertaking, the interested party shall indemnify, defend and hold harmless such releasee from and against any and all costs, expenses (including attorneys’ fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The interested party specifically represents that, to the best of its knowledge, after

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking.

no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliate. To avoid any doubt, the interested party’s indemnity of releasees shall include any claim brought by any third party alleging that it has obtained the interested party’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

(j) For the avoidance of any doubt, the interested party fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releasees against any related claim by any person. If the interested party fails to obtain any release from such person, the interested party warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

(k) The interested party further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any party (including but not limited to any related party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The interested party shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where Form No. 3 is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice shall include, among other things, confirmation that,-

i. the interested party forever irrevocably forgoes any reliance on any right and provisions under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the interested party has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliate with respect to any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate contrary to the release; and

iv. the interested party confirms it will treat any such award, judgment, or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

(l) The interested party confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

(m) The interested party represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the interested party, enforceable against the interested party in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law; and

(n) This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant Income-tax authorities, tribunals or courts in India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that, I am aware of all the consequences and implications of this undertaking.

Place: ……………….. .

Date: ……………………….. .

Signature………………………………………….

Attachments

1. The Board Resolution and legal authorisation, as referred to in clause (m) of Part M.

2. An indemnity bond to the effect of clauses (i) and (j) of Part M in Part N of the undertaking in Form No. 1;

3. Copy of the public notice referred to in clause (k) of Part M, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to Part M of this undertaking

Notes:

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number/Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the Signatory’s power and authority to give the undertaking on behalf of the interested party; and

b. record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at ___________place_________ on this the ___day ____of ___month ______ ,_year ________ .

Place: ……………..

Date: ……………….

Signature…………….

Annexure

Part MA– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Nature of interest of the interested party
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)

Part MB– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(6)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part MC – Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal of such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part MD – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part ME – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clauses (ii) and (iii) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MF – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part MG – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (Including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part MH – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MI – Particulars of the proceeding under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part N

INDEMNITY BOND

This Indemnity Bond (“Bond”) is made on this………….. day of……….. , 2021 by………….. (name in block letters) son/daughter of………………….. designation and nationality……………………… and related passport number…………….. (hereinafter referred to as “Signatory”) having Permanent Account Number/Aadhaar Number/Tax Deduction Account Number (See Note 1)………………. on behalf of……………. (name of the declarant or interested party, as the case may be) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number………………………… (See Note 2) and being duly authorised and competent to represent the declarant or interested party, as the case may be, in this regard pursuant to Board Resolution or legal authorisation (See Note 3), of the FIRST PART.

And

The Republic of India and any Indian affiliate (hereinafter collectively referred to as “releasees”) of the OTHER PART WHEREAS:

A. The Income-tax Rules, 1962 have been amended and the Income-tax (31st Amendment) Rules, 2021 have come into force from the date of their publication in the Official Gazette.

B. The declarant or interested party, as the case may be, has filed an undertaking under sub-rule (1) of rule 11UE of the Income -tax Rules, 1962, to which this indemnity bond is annexed. Any defined terms not defined herein shall have the same meaning as the definitions given under rule 11UE and the undertaking.

C. Pursuant to the above, the declarant or interested party, as the case may be, has agreed to indemnify, defend and hold harmless the Republic of India and Indian affiliates from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of any claim at any time after the date of furnishing the undertaking in Form No. 1 by any person, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, and the declarant or interested party, as the case may be, has agreed to furnish an indemnity bond to this effect, such that the declarant or interested party, as the case may be, fully assumes the risk of any omission or mistake with respect to identification and procurement of authorisations and undertakings from any related parties or interested parties as provided in the undertaking, and securing the Republic of India and Indian affiliates from any claim related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief or to the dispute underlying the award against the Republic of India or Indian affiliates in connection with the relevant order or orders.

D. Accordingly the declarant or interested party, as the case may be, is executing this Indemnity Bond in favour of the Republic of India on the terms appearing hereunder.

NOW THIS INDEMINTY BOND WITNESSETH AS FOLLOWS:

1. In the event that any person or entity asserts, brings, files or maintains any claim against any releasee at any time on or after the date of furnishing this undertaking, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, against the Republic of India or Indian affiliates in connection with the relevant order or orders, the declarant or interested party, as the case may be, shall indemnify, defend and hold harmless such releasees from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim.

2. The declarant or interested party, as the case may be, specifically represents that, to the best of
its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. withdrawal of all pending proceeding as outlined in this undertaking,

that no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, or any aspect of the dispute underlying the award shall remain outstanding against the Republic of India or other releasee.

Explanation I.-For the removal of any doubt, the declarant’s or interested party’s indemnity of releasees under this clause shall include any claim brought by any third party alleging that it has obtained declarant’s or interested party’s, as the case may be, claims under an award, judgment or court order or the relevant order or orders.

Explanation II.- the declarant or interested party, as the case may be, fully assumes the risk through this indemnity of any omission or mistake with respect to securing releasees against any related claim by any person. If the declarant or interested party, as the case may be, fails to obtain any release from such person, the declarant or interested party, as the case may be, indemnifies through this document the releasees from any defense costs, court costs, and damages.

3. This Indemnity Bond shall be governed by the relevant laws of India and the Delhi High Court shall have sole jurisdiction to entertain and try any dispute or difference arising out of or in connection with the terms of this Bond.

IN WITNESS WHEREOF the undersigned herein has signed and set his hands on this ………………. day of………… , 2021.

For and on behalf of the declarant or interested party, as the case may be,

Name and address of Witness

Signature of the Witness

1.

2.

Place:
Date:
Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant or interested party, as the case may be, are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the declarant or interested party, as the case may be; and

(b) record the declarant or interested party’s power and authority, as the case may be, to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking).]

Form No. : 2

¹[FORM NO. 2
[See rule 11UF]
Form for Certificate Under sub-rule (2) of rule 11UF

<Name of the declarant>
Address of the declarant
Sir/Madam

1. The……………………… (name of the declarant) (hereinafter referred to as the declarant) with Permanent Account Number/Aadhaar number/Tax Deduction Account Number/Company Identification Number and Taxpayer Identification Number……….. has filed an undertaking in Form No. 1 dated………. under sub-rule (1) of the rule 11UE of the rules.

2. Pursuant to the undertaking filed by the declarant in Form No. 1 under sub-rule (1) of rule 11UE, the provisions of fifth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act shall be applicable to the orders mentioned below, subject to the fulfilment of the conditions specified in said proviso read with relevant rules and fulfilment of the undertakings by the declarant in Form No. 1:

TABLE

Sl. No.	Sl. No. of the Table in Part A of Form No. 1 where the relevant order is mentioned	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or Penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding, if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
				Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)

3. Demand recovered, as per the column (11) of the Table above, shall be refunded to the declarant, subject to the conditions under sub-rule (2) of the rule 11UE and the provisions of the Act, without any interest as per the provisions of the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act, attachments, if any, the details whereof are provided in column (13) of the Table, shall be revoked and appeals or applications or petitions or proceeding, if any, filed by any income-tax authority or any other person representing the Republic of India with respect to the specified orders, as per column (2) of the Table, shall be withdrawn or intimation shall be sent to the concerned person, on the issue of Form No. 4, as per the procedure provided in sub-rule (16) of rule 11UF. Further, no interest under section 244A of the Act will be payable to the declarant as per the provisions of sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act.

Certificate No…….
Place…..
Date………..

………………………….

(Principal Commissioner/Commissioner of Income-tax) ]

Form No. : 2A

FORM NO. 2A [Omitted by the IT (Tenth Amdt.) Rules, 2001, w.e.f. 2-7-2001. Earlier, existing Form No. 2A was inserted by the IT (Third Amdt.) Rules, 1994, w.e.f. 1-6-1994; substituted by the IT (Fourth Amdt.) Rules, 1995, w.e.f. 1-6-1995; amended by the IT (Fourth Amdt.) Rules, 1998, w.e.f. 1-4- 1998 and later on substituted by the IT (Fifth Amdt.) Rules, 2000, w.e.f. 11-5-2000.]

Form No. : 2B

FORM NO. 2B [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2B was inserted by the IT (Sixteenth Amdt.) Rules, 1995, w.e.f. 23-8-1995; amended by the IT (Eighth Amdt.) Rules, 1999, w.e.f. 18-5-1999, IT (Sixth Amdt.) Rules, 2000, w.e.f. 11-5-2000 and later on substituted by the IT (Fifteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

Form No. : 2C

FORM NO. 2C [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2C was inserted by the IT (Eighth Amdt.) Rules, 1997, w.e.f. 27-6-1997; substituted by the IT (Eleventh Amdt.) Rules, 1998, w.e.f. 25-8-1998; amended by the IT (Seventh Amdt.) Rules, 2000, w.e.f. 11-5-2000 and IT (Eighteenth Amdt.) Rules, 2002, w.e.f. 29-7-2002 and later on substituted IT (Sixteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

Form No. : 2E

FORM NO. 2E [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2E was inserted by the IT (Sixth Amdt.) Rules, 2003, w.e.f. 14-5-2003 and later on amended by the IT (Ninth Amdt.) Rules, 2004, w.e.f. 14-7-2004 and IT (Sixteenth Amdt.) Rules, 2005, w.e.f. 20-6-2005.]

Form No. : 3

1 [FORM NO. 3
[See rule 11UF]

Intimation for Withdrawal under sub-rule (3) of rule 11UF of the Income- tax Rules, 1962

To,

The Principal Commissioner/Commissioner

………………………………………. ……………………………….

Sir/Madam,

I……………… (name in block letters) son/daughter of ………………… designation ……………..and nationality ………………..and related passport number………………. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number ………………………(see Note 1) on behalf of …………………….. (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be, hereby confirm that the declarant has received an order in Form No. 2 dated________

Pursuant thereto, I confirm that the pending appeals or applications or petitions, arbitration, conciliation, mediation, claims or other proceeding, if any, as referred in Part D, Part F, Part G, Part I and Part M of the undertaking in Form No. 1 dated…… have been irrevocably, on a with prejudice basis, withdrawn or discontinued and are not being pursued. The evidence of action taken in this regard are enclosed herewith.

Place…………….
Date…………….

………………..
Signature/Verification

Attachments

1. Attach the Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking.

2. Attach the evidence of action taken as referred above.

VERIFICATION

Verified that the contents of this intimation are true to the best of my knowledge and belief. No part of the intimation is false and nothing has been concealed or misstated therein.

Verified at……place………. on this the ……. day …………. of…. month……….,…year………..

Place: ……………..
Date: …………….

Signature
………………………………..

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking and such Board resolution or legal authorisation shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the interested party; and

(b) record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.]

Form No. : 3AA

FORM NO. 3AA [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 3AA was inserted by the IT (Fourteenth Amdt.) Rules, 2002, w.e.f. 1-4-2003 and later on amended by the IT (Fifteenth Amdt.) Rules, 2004, w.e.f. 1-4-2005.]

Form No. : 3AAA

FORM NO. 3AAA [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 3AAA was inserted by the IT (Sixth Amdt.) Rules, 1986, w.e.f. 1-4-1987 and later on amended by the IT (Ninth Amdt.) Rules, 1987 and IT (Fourteenth Amdt.) Rules, 2002, w.e.f. 1-4-2003.]

Form No. : 3AB

FORM NO. 3AB [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999. Earlier, Form No. 3AB was inserted by the IT (Amdt.) Rules, 1978 and amended by the IT (Sixth Amdt.) Rules, 1986, w.e.f. 1-4-1987.]

Tax Reference Tables

Rectification, Assessment, and Appeal

Rectification of Mistake – If there is any mistake in the order passed by the Income-tax authorities, the said authority can rectify such mistake under section 154. The power to rectify the mistake may be exercised by the authority concerned on his own initiative or when the mistake is brought to his notice by the assessee concerned.

RECTIFICATION OF MISTAKE [SECTION 154]
Which order can be rectified?	If any mistake is apparent from the record, the Income-tax authority can rectify such mistake. The Income-tax authority can rectify the mistakes which are apparent in the following orders: (a) Any order passed by it; (b) Intimation issued after processing of Income-tax return; (c) Intimation issued after processing of statement of Tax Deducted or Tax Collected at source. The Income-tax authority cannot rectify that part of his order, which has been considered and decided in any proceeding by way of appeal or revision. However, a mistake in the order, which was not the subject matter of appeal or revision, can be rectified by the authority which has passed that order.
Who can rectify the mistake?	The power to rectify the mistake may be exercised by the authority concerned on his own initiative. The authority can exercise this power if mistake has been brought to his notice by the assessee or deductor or collector. If there is a mistake in an order passed by the Joint Commissioner (Appeals) or Commissioner (Appeals), the Joint Commissioner (Appeals) or Commissioner (Appeals) can rectify the mistake if it has been brought to his notice by the assessee or deductor or collector or the Assessing Officer. Further, if there is a mistake in an order passed by the Appellate Tribunal, the Tribunal can rectify the mistake if it has been brought to his notice by the assessee or the Assessing Officer.
Time limit for rectification of order	Order passed by Assessing Officer or CIT (Appeals) or JCIT (Appeals) An order of rectification is required to be passed within a period of 4 years from the end of the financial year in which the order (sought to be rectified) was passed. However, where an application for rectification is made by the assessee, deductor, or collector, the income tax authority is required to pass an order rectifying the mistake within a period of 6 months from the end of the month in which the application is received by it. Order passed by ITAT Where rectification is to be made by the Appellate Tribunal, it shall be made within a period of 6 months from the end of the month in which such order was passed. The rectification can be made when the mistake was brought to its notice by the assessee or the Assessing Officer. Where such rectification is prejudicial to the assessee, he shall be provided an opportunity of being heard. Order passed by TPO for determination of ALP Where Transfer Pricing Officer has passed an order, under Section 92CA, determining the Arm’s Length Price in relation to an International Transaction or specified transaction and it contains a mistake apparent from the record, the Assessing officer is required to rectify the order to correct such mistake. Such rectification can be made any time within 4 years from the end of the previous year in which the order of Transfer Pricing Officer was passed. Failure to comply with conditions of Section 35ABA Where an assessee was allowed deduction for expenditure incurred on the acquisition of any right to use spectrum for telecommunication services under Section 35ABA, but subsequently he failed to comply with the provisions of this section, the Assessing Officer shall rectify the assessment order to disallow the deduction. Such rectification can be made any time within 4 years from the end of the previous year in which failure takes place. Increase in book profit due to APA or Secondary Adjustment Where the book profit of the assessee has increased due to an advance pricing agreement or secondary adjustment, the Assessing Officer shall, on an application made by the assessee in this behalf, re-compute the book profit of the past years and tax payable thereon. Consequently, the Assessing Officer needs to amend the assessment order within 4 years from the end of the financial year in which such application is received by him. Foreign Co. fails to comply with conditions of Section 115JH Section 115JH provides that where a foreign company has been treated as resident in India in the relevant previous year, and it has not been a resident in India in any of earlier previous years, certain provisions as notified by the Central Government shall apply with exceptions, modifications, and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which such failure takes place. Foreign Co. fails to comply with conditions of Section 115JG Section 115JG provides that where a foreign company is engaged in the banking business in India through its branch situated in India and such branch is converted into a subsidiary company (an Indian company) then certain provisions as notified by the Central Government shall apply with exceptions, modifications and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which failure takes place.
Appeal against rectification order	Assessee aggrieved by a rectification order passed by the competent authority having the effect of enhancing assessment or reducing refund or order refusing to allow claim made by the assessee can prefer an appeal before CIT(A) or JCIT(A) or make an application for revision. However, the appeal cannot be preferred against an assessment order passed on the invocation of GAAR. However, the appeal shall be filed with the Income Tax Appellate Tribunal (ITAT): (a) Where rectification order is passed by the Commissioner (Appeals); (b) Where rectification order is passed by the Joint Commissioner (Appeals); (c) Where rectification order is passed against assessment orders which were passed by the assessing officer in pursuance of the directions of the Dispute Resolution Penal; or (d) Where rectification order is passed against assessment orders which were passed by the assessing officer to invoke the provisions of GAAR.

Assessment of Income – 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”.

The assessment also includes re-assessment under section 147/148 and best judgment assessment under section 144. Under the Income-tax Law, there are four major assessments as given below:

• Assessment under section 143(1), i.e., Summary assessment.
• Assessment under section 143(3), i.e., Scrutiny assessment.
• Assessment under section 144, i.e., Best judgment assessment.
• Assessment under section 147, i.e., Income escaping assessment.

SUMMARY ASSESSMENT [SECTIONS 143(1)]
What is summary assessment?	Summary Assessment is a preliminary assessment on the basis of return submitted by the assessee. It is completed without calling the assessee and without passing a regular assessment order.
Scope of summary assessment	The summary assessment (also known as ‘Intimation’) is done through computerized processing at Centralized Processing Centre, Bengaluru. In this, all Income-tax returns filed under section 139 or in response to a notice under section 142(1) are processed to verify and fix the arithmetical errors, apparent errors, tax calculation, and tax payments. At this stage, no verification of the income is undertaken. However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. Income-tax return is processed to compute total income or loss after making the following adjustments: However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. 1. Any arithmetical error in the return 2. An incorrect claim apparent from any information in the return 3. Any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed [effective from 01-04-2025] 4. Disallowance of loss claimed if return of the previous year for which set-off of loss is claimed was furnished beyond the due date 5. Disallowance of expenditure or increase in income indicated in the audit report but not considered in computing the total income in the return; 6. Disallowance of deduction claimed under Section 10AA or Chapter VI-A under the heading “C-Deductions in respect of certain in comes”, if the return of income is furnished beyond the specified due date. Meaning of ‘Incorrect Claim’ ‘An incorrect claim apparent from any information in the return’ means a claim. On the basis of an entry in the Income-tax return: (a) Which is in consistent with an other entry of the same or some other item in such return (b) In respect of which, information required to be furnished to substantiate such claim, has not been furnished (c) In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
Re-computation of tax after adjustments	The CPC is required to process the return to ascertain if any tax or interest is due from the assessee or refund is due to him. It is determined after rectifying the arithmetical error or incorrect claim in the Income-tax return. Thus, the tax and interest, if any, shall be re-computed on the basis of the adjusted income. Before making any adjustment, an opportunity shall be provided to the assesses to explain and rectify the same within 30 days from the date of issue of such intimation. The response to such adjustment has to be submitted through the e-filing account of the assessee without any need to visit the income tax department. The response so received from the assessee shall be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation is to be made.
Issue of intimation to the assessee	If any tax or interest is found due from the assessee, the CPC is required to send an intimation to the assessee. Intimation shall be made in writing or electronic mode. The intimation sent to him is deemed to be a ‘Notice of Demand’. The assesses is required to pay such tax within 30 days from the date of receipt of intimation failing which he is treated as an assessee-in-default. Consequently, recovery proceedings can be started against him. Where any refund is found due to the assessee on the basis of the return, the CPC is required to grant the same to the assessee and send an intimation to him.
Time limit for issue of intimation	If any sum is found due from the assessee or any sum is found due to the assessee, the CPC is required to send an intimation to him within 9 months from the end of the financial year in which the return is furnished. However, the intimation may not be issued, and acknowledgement of the return shall be deemed to be the intimation, if no sum is payable by, or refundable to, the assessee, and where no adjustment has been made.
Appeal against intimation	Assessee aggrieved by adjustments made under intimation can prefer an appeal before CIT(A) or make an application for revision.

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SCRUTINY ASSESSMNET [Section 143(3)]
What is scrutiny assessment?	Scrutiny Assessment is a detailed examination of the Income-tax return submitted by the assessee. All Income-tax returns are first examined at Centralized Processing Centre, Bengaluru which is called ‘Summary Assessment’. Thereafter, a certain percentage of tax returns are selected every year for scrutiny assessment, wherein the department verifies the correctness and completeness of income, deductions claimed, tax liability, etc. This assessment is done by passing an assessment order.
Type of scrutiny assessment	The scrutiny assessment can be either limited scrutiny or complete scrutiny. The CBDT introduced the concept of ‘Limited Scrutiny’ to limit the scope of income tax scrutiny. In such cases, the notices shall contain the issues identified for examination and the same shall be communicated to the assessee. The enquiry shall remain confined only to the specific reasons/ issues for which the case has been picked up for scrutiny. These cases shall be completed expeditiously in a limited number of hearings.
Manner of conducting scrutiny assessment	Section 144B has made it mandatory to conduct the scrutiny assessment under Section 143, the best judgment assessment under Section 144, and the re-assessment under Section 147 in a faceless manner. Such faceless assessment shall be made in respect of those territorial areas, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be prescribed by the Board. Therefore, the assessment of the total income or loss of the assessee under Section 143(3) shall be conducted in a faceless manner. All scrutiny assessments, other than those covered under Section 144B, shall be conducted electronically.
Time limit for issue of notice	To carry out an assessment under section 143(3), the Assessing Officer shall serve a notice on the taxpayer in accordance with provisions of section 143(2) within a period of 3 months from the end of the financial year in which the return is filed.
Deemed validity of notice served	Section 292BB provides that even an improper notice shall be deemed to be valid and served on the assessee if: (a) The assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) He has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (c) served upon him in an improper manner.
Time limit for completion of scrutiny assessment	The time limit for making an assessment under Section 143(3) is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards] Note: If reference is made to TPO, the period available for assessment shall be extended by 12 months. If the return has been furnished under section 139(8A), the order of assessment shall be passed within 12 months from the end of the financial year in which such return was furnished.
Appeal against assessment order	Assessee aggrieved by assessment order passed for scrutiny assessment can prefer an appeal before CIT(A) or make an application for revision. However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT.
Grievance against high-pitched scrutiny assessment	Assessee aggrieved by high-pitched and unreasonable additions made by the assessing officer can prefer to file a grievance before the Local Committee. The Local Committees are constituted by the CBDT in each Principal CCIT region to quickly resolve such grievances.

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BEST JUDGMENT ASSESSMENT [SECTION 144]
What is Best Judgment Assessment?	Best Judgment Assessment means the estimation of the taxable income of an assessee by the Assessing Officer on the basis of available information and resources. This assessment takes place if the assessee does not cooperate in assessment proceedings or if correct profit cannot be calculated on the basis of books of accounts maintained by the assessee. The Best Judgment Assessment can be classified into the following two categories: (a) Compulsory Best Judgment Assessment (b) Discretionary Best Judgment Assessment
What is compulsory Best Judgment Assessment?	The Assessing Officer is bound to make an assessment to the best of his judgment in the following specified cases. In case of failure to file a valid return The Assessing Officer shall make Best Judgment Assessments in the following cases: (a) The assessee failed to file the Income-tax return on or before the due date; (b) The assessee failed to file the belated return; (c) The assessee failed to file an updated return; (d) If the Assessing Officer issues a notice under Section 142 to the assessee to file the Income-tax return but he failed to file it in response to such notice. In case of failure to produce evidence If any person, after having filed a return, fails to comply with the notice issued under section 143(2) requiring his presence or production of evidence and documents, the Assessing Officer is required to make an assessment to the best of his judgment. In case of failure to get the special audit or inventory valued If any person fails to comply with the direction issued under Section 142(2A) requiring him to get his accounts audited or inventory valued, the Assessing Officer is required to make an assessment to the best of his judgment. In case of a defective return Where an assessee fails to rectify the defects within the time allowed for same, he can apply to Assessing Officer for condonation of delay in removing the defects. If such condonation is allowed and the assessee has removed the defects, the return filed by him will be treated as a valid return.
What is Discretionary Best Judgment Assessment?	If Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where no method of accounting or Accounting Standards have been regularly employed by the assessee, the Assessing Officer may make the assessment to the best of his judgment.
Time limit for completion of Best Judgment Assessment	The time limit for making an assessment under Section 144 is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards] Note: If reference is made to TPO, the period available for assessment shall be extended by 12 months. If the return has been furnished under section 139(8A), the order of assessment shall be passed within 12 months from the end of the financial year in which such return was furnished.
Appeal against Best Judgment Assessment	Assessee aggrieved by the assessment order passed under this provision can prefer an appeal before CIT(A) or make an application for revision.

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INCOME ESCAPING ASSESSMENT [SECTION 147]
When can AO make re-assessment?	The Assessing Officer can make the re-assessment of an income escaping assessment if the following conditions are satisfied: (a) Any income chargeable to tax has escaped assessment for any assessment year; and (b) The assessing officer follows the provisions of Sections 148 to 153. If the above conditions are satisfied, the assessing officer can assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. It is imperative to note that for the purpose of assessment or reassessment or re-computation under this section, the Assessing Officer can assess or reassess all those incomes which have escaped assessment and which come to his notice subsequently in the course of such proceeding notwithstanding that the procedure prescribed in Section 148A was not followed before issuing such notice for such income.
When is an income deemed to have escaped assessment?	The Assessing Officer can initiate the proceedings if he has the information which suggests that some income has escaped the assessment. Sub-section (3) of Section 148 define the situation in which an assessing officer shall be deemed to have the information which suggests that the income chargeable to tax has escaped the assessment. The notice under Section 148 can be issued by the Assessing Officer after following the procedure laid down in Section 148A. If during such process, the assessing officer concludes that the information in possession does not justify such proceedings, he may pass an order that it is not a fit case for assessment under Section 147. In other words, the assessing officer can do the re-assessment under Section 147 only if there is an income which has escaped assessment and which has been enquired in the manner laid down in Section 148A. If the Assessing Officer concludes, on the basis of his enquiry and the reply submitted by the assessee, that there is an income which has escaped assessment, he can initiate the proceedings under Section 148 and complete it under Section 147. When an information suggests that income has escaped assessment? The following information shall be deemed to be suggesting that the income chargeable to tax has escaped assessment: Any information in the case of the assessee for the relevant assessment year as per the ‘Risk Management Strategy’ formulated by the CBDT from time to time; Any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of the Income-tax Act; Any information received under an agreement referred to in section 90 or section 90A; Any information made available to the Assessing Officer under the Scheme notified under section 135A; or Any information which requires action in consequence of the order of a Tribunal or a Court. Any information in the case of assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the section 133A, on or after 01-09-2024.
Notice to file return of income	Before issuing a notice under Section 148, the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Officer shall decide, after passing an order, whether it is a fit case for the issue of notice under Section 148 and serve a copy of such order along with such notice on the assessee. The aforesaid procedure does not apply in case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A (Faceless Collection of Information). To make an assessment or reassessment or re-computation in Section 147, a notice is required to be issued to the assessee under Section 148 requiring him to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act. The assessee shall be required to furnish the return of income within such period as specified in the notice. Such period shall not exceed 3 months from the end of the month in which such notice is issued. Such return shall be furnished in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Where the return is furnished beyond the prescribed period such return shall not be deemed to be a return under Section 139.
When can a notice be issued?	The notice can be issued only if the Assessing Officer has the information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year. Further, prior approval of the specified authority is also required to be obtained before issuing such notice by the Assessing Officer. Specified authority shall be the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be.
Time limit to issue notice	The notice should be issued by the Assessing Officer within the following time limit: (effective from 01-09-2024) Particulars Time Limit If escaped income is less than Rs. 50 lakh Issue of notice under section 148 to re-open assessment within 3 years and 3 months from the end of the relevant assessment year Issue of notice to show cause under section 148A within 3 years from the end of the relevant assessment year If escaped income is Rs. 50 lakh or more Issue of notice under section 148 to re-open assessment within 5 years and 3 months from the end of the relevant assessment year Issue of notice to show cause under section 148A within 5 years from the end of the relevant assessment year
Course of Action for Assessee	Co-operate with the Assessing Officer On receipt of notice under section 148A for conducting the enquiries by the Assessing Officer, the assessee should co-operate in the proceedings and file his replies which shall be important factors in deciding whether it is a fit case for the issue of notice under section 148 or not. File Income-tax return The assessee can file a fresh return of income wherein he can declare his true income. The income may be more than what he had already declared in the original return or it may be the same. Participate in the Assessment Proceedings The assessee should submit his response to the notices issued during the course of Assessment. If the Assessing Officer passes any adverse order, the assessee can go in appeal against the order of assessment.
Time limit for completion of assessment	The reassessment under Section 147 must be completed within 12 months from the end of the financial year in which notice was served.
Re-assessment proceedings to be dropped	Where an assessment has been reopened, the assessee (if he has not preferred an appeal or applied for revision) can claim that the re-assessment proceedings shall be dropped if he shows that: (a) He had been assessed on an amount, which is not lower than what he would be rightly liable for, even if income alleged to have escaped assessment had been taken into account; (b) The assessment or computation had been properly made.
Deemed validity of notice served	Section 292BB of the Income-tax Act provides that even an improper notice shall be deemed to be valid and served on the assessee if: (a) the assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) he has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (a) (c) served upon him in an improper manner.
Appeal against assessment order	Assessee aggrieved by reassessment order passed under Section 147 can prefer an appeal before CIT(A) or make an application for revision. If the order is passed by an Assessing Officer (below the rank of Joint Commissioner), an assessee can file an appeal before JCIT (A). However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT.

Appeals under Income-tax law – An appeal is a process by which a person (assessee or revenue) aggrieved by an order passed by the tax authority or judicial authority, as the case may be, can challenge it before the higher judicial authorities. The party challenging such order is known as the appellant, and the other party is known as the respondent.

APPEAL TO JCIT(A) OR CIT(A) [SECTION 246 OR 246A]
Who can file an appeal?	Any assessee aggrieved by the orders passed by an Assessing Officer (below the rank of Joint Commissioner) can prefer an appeal against such order before the Joint Commissioner of Income Tax (Appeals). Further, the proviso to Section 246(1) provides that no appeal shall be filed before the JCIT(A) if an appealable order is passed by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner. The Joint Commissioner of Income-tax (Appeals) and Commissioner of Income-tax (Appeals) is the first appellate authority. The taxpayer aggrieved by an assessment order, order imposing a penalty, or any other order, can file an appeal before the CIT(A) having jurisdiction over him.
Order against which appeal can be filedbefore the JCIT(A)	Section 246 specifies the orders against which an appeal can be filed before the Joint Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Joint Commissioner of Income-tax (Appeals) is given below: (a) An intimation issued under Section 143(1) where the assessee objects to the making of adjustment. (b) any order of assessment passed under Section 143(3) or best judgment assessment order passed under Section 144 where- the assessee objects to the amount of income assessed or the amount of tax determined or amount of loss computed or status under which he is assessed, i.e., individual, HUF, and so on; (c) An order of assessment, reassessment, or recomputation under Section 147; (d) An order being an intimation under Section 200A(1), i.e., processing of TDS statement; (e) An order being an intimation under Section 206CB(1), i.e., processing of TCS statement; (f) An order being an intimation under Section 206C(6A) treating a collector of TCS as assessee-in-default; (g) An order under Section 201 treating a deductor as an assessee in default; (h) An order imposing a penalty under Chapter XXI; (i) A rectification under Section 154 or Section 155 amending any of the orders mentioned above.
Order against which appeal can be filed before the CIT(A)	Section 246A specifies the orders against which an appeal can be filed before the Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Commissioner of Income-tax (Appeals) is given below: (a) Order passed against the taxpayer in a case where the taxpayer denies the liability to be assessed under Income Tax Act. (b) Intimation issued under section 143(1)(1B) where adjustments have been made in income offered to tax in the return of income. (c) Intimation issued under section 200A(1) where adjustments are made in the filed statement. (d) Assessment order passed under section 143(3) except in case of an order passed in pursuance of directions of the Dispute Resolution Panel (e) An assessment order passed under section 144. (f) Order of Assessment, Re-assessment, or Re-computation passed after reopening the assessment under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel (g) An order referred to in section 150. (h) An order of assessment or reassessment passed under section 153A or under section 158BC in case of search/seizure. (i) Order made under section 92CD(3). (j) Rectification order passed under section 154 or under section 155. (k) Order passed under section 163 treating the taxpayer as an agent of non-resident. (l) Order passed under section 170(2)/(3) assessing the successor of the business in respect of income earned by the predecessor. (m) Order passed under section 171 recording the finding about the partition of a Hindu Undivided Family. (n) Order passed by Joint Commissioner under section 115VP(3) refusing approval to opt for tonnage-tax scheme to qualifying shipping companies. (o) Order passed under section 201(1)/206C(6A) deeming the person responsible for deduction of tax at source as assessee-in-default due to failure to deduct tax at source or to collect tax at source or to pay the same to the credit of the Government. (p) Order determining refund passed under section 237. (q) Order imposing penalty under section(s) 221/271/271A/271AAA/271F/271FB/272A/272AA/272B/272BB/275(2)/158BFA(2)/271B/271BB/271C/271CA/271D/271E/271AAB. (r) Order imposing a penalty under Chapter XXI. (s) Order passed by the AO under section 239A (t) Order passed under section 158BC(1)(c) in respect of search initiated under section 132, or books of account, other documents or any assets requisitioned under section 132A, on or after 01-09-2024.
Time limit for filing appeal	As per Section 249(2), an appeal should be presented within 30 days of the following date: (a) Where the appeal relates to any assessment or penalty, the date of service of notice of demand relating to the assessment or penalty. (b) In any other case, the date on which intimation of the order sought to be appealed against is served.
Document to be submitted	Form No. 35 (including the statement of facts and grounds of Appeal) One certified copy of the order, appealed against Notice of demand in original Copy of challans of fees and the details of the challan (i.e., BSR code, date of payment of fee, serial number, and amount of fee).
Fees for filing appeal	The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows: Where assessed income is Amount of Fees Less than or equal to Rs. 1,00,000 Rs. 250 More than Rs. 1,00,000 but up to Rs. 2,00,000 Rs. 500 More than Rs. 2,00,000 Rs. 1,000 Where the subject matter of appeal relates to any other matter Rs. 250
Time limit for disposal of the appeal	Where it is possible, the JCIT(A) or CIT(A) shall dispose off the appeal within a period of 1 year from the end of the financial year in which the appeal is filed. The order should be issued within 15 days of the last hearing.

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APPEALTO ITAT [SECTION 253]
Introduction	Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income-tax Act. Any appeal against an order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) lies with the ITAT. An order passed by the appellate tribunal shall be final unless a question of law arises out of such order.
Order against which appeal can be filed by the taxpayer	An assessee can prefer an appeal with the ITAT against the following orders: (a) Order passed by the JCIT(A) or CIT(A) under Section 250 in an appeal filed by the assessee; (b) Rectification order passed by the JCIT(A) or CIT(A) under Section 154; (c) Penalty order passed by the JCIT(A) or CIT(A) under Section 270A for under-reporting or misreporting of income; (d) Penalty order passed by the JCIT(A) or CIT(A) under Section 271A on failure to keep, maintain, or retain books of account, documents, etc., as required under Section 44AA; (e) Penalty order passed by the CIT(A) under Section 271AAB for undisclosed income unearthed during the search proceedings; (f) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAC for unexplained incomes; (g) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAD for false or omission of entry; (h) Penalty order passed by the JCIT(A) or CIT(A) under Section 271J for furnishing inaccurate information in a report or a certificate; or (i) Penalty order passed by the CIT(A) under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement. (j) An order passed by the assessing officer under Section 115VZC excluding any company from the tonnage taxation Scheme; (k) Following orders passed by the Principal Commissioner or Commissioner: Order under Section 12AA or Section 12AB; Refusing to register the trust or institution under Section 80G; Revisionary order under Section 263; Penalty order under Section 270A for under-reporting or misreporting of income; Penalty order under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement; Rectification order under section 154 to amend any of the above orders. (l) Following orders passed by the specified income-tax authorities (PCCIT, CCIT, PDGIT, DGIT, PDIT, or DIT): Revisionary order under Section 263; Penalty order under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement ; Rectification order under section 154 to amend any of the above orders. (m) An order passed by the Principal Commissioner or Commissioner under sub-clauses (iv), (v), (vi), or (via) of Section 10(23C). (n) Following assessment orders passed under the direction of DRP: Scrutiny assessment under Section 143(3); Income escaping assessment under Section 147; Assessment in case of search and requisition under Section 153A; Assessment of other person under Section 153C; or Rectification order under Section 154 in respect of the above referred-to orders. (o) Following assessment orders passed by the assessing officer after obtaining approval of the Principal Commissioner or Commissioner under Section 144BA to invoke the provisions of GAAR: Scrutiny assessment under Section 143(3); Income escaping assessment under Section 147; Assessment in case of search and requisition under Section 153A; Assessment of other person under Section 153C; or Rectification order under Section 154 or Section 155 in respect of the above referred-to orders.
Order against which appeal can be filed by the PCIT or CIT	If the Principal Commissioner of Income-Tax or Commissioner of Income-Tax objects to the order passed by the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals) under section 154 or section 250, then he may direct the Assessing Officer to make an appeal to the ITAT against the orders of the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals). This is called as departmental appeal, i.e., the Income-Tax department moving to ITAT against the order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-Tax (Appeals). The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 50,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	Appeal to ITAT is to be filed within a period of 60 days from the date on [within 2 months from the end of the month in (from 01-10-2024] which the order sought to be appealed against is communicated to the taxpayer or the Principal Commissioner of Income-Tax or Commissioner of Income-Tax (as the case may be). On receipt of the notice that an appeal has been filed before the Tribunal, the assessing officer or the assessee may file a memorandum of cross objection in Form 36A within 30 days of the receipt of the notice.
Document to be submitted	Form No. 36 – in triplicate. Order appealed against – 2 copies (including one certified copy). Order of Assessing Officer – 2 copies Grounds of appeal before first appellate authority – 2 copies. Statement of facts filed before first appellate authority – 2 copies. In case of an appeal against the penalty order – 2 copies of the relevant assessment order. In case of an appeal against an order under section 143(3), read with section 144A – 2 copies of the directions of the Joint Commissioner under section 144A. In case of an appeal against the order under section 143, read with section 147 – 2 copies of the original assessment order, if any. Copy of challan for payment of the fee.
Fees for filing appeal	The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows: Where assessed income is Amount of Fees Less than or equal to Rs. 1,00,000 Rs. 500 More than Rs. 1,00,000 but up to Rs. 2,00,000 Rs. 1,000 More than Rs. 2,00,000 1% of assessed income* subject to a maximum of Rs. 10,000 Where Appeal is filed u/s 253(2)or a memorandum of a Cross objection referred u/s 253(4) NIL Where the application is for a stay of demand Rs. 500 Where the application is under section 254(2) Rs. 50 Where the subject matter of appeal relates to any other matter Rs. 500 * Assessed income means total income as computed by the Assessing Officer.
Time limit for disposal of the appeal	Where it is possible, the ITAT shall dispose off the appeal within a period of 4 years from the end of the financial year in which the appeal is filed.

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APPEAL TO HIGH COURT [SECTION 260A]
Introduction	High Court is the third appellate authority in the Income-tax Act. Appeal against an order passed by the Appellate Tribunal order lies with the High Court.
Order against which appeal can be filed	The appeal can be filed if the High Court is satisfied that the case involves a substantial question of law. The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax or an assessee aggrieved by an order passed by the Appellate Tribunal may file an appeal before the High Court. The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 1,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	Appeal to the High Court is to be filed within a period of 120 days from the date on which the order against which the appeal is being filed is received by the taxpayer or the PCCIT or CCIT or PCIT or CIT (as the case may be). The appeal to the High Court shall be filed in the form of a Memorandum of Appeal precisely stating therein the substantial question of law involving the appeal.
Fees for filing appeal	The fee for filing the appeal to the High Court shall be such fee as may be specified in the relevant law relating to Court fees for filing of appeals to the High Court.

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APPEAL TO SUPREME COURT [SECTION 261]
Introduction	The Supreme Court is the fourth and last appellate authority under the Income-tax Act.
Order against which appeal can be filed	Appeal against the order of the High Court lies with the Supreme Court. However, no appeal can be filed before the Supreme Court unless the High Court certifies the case fit for filing an appeal to the Supreme Court. The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 2,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	No time limit has been prescribed for filing an appeal to the Supreme Court.

Tutorials

Various assessments under the Income-tax LawVarious assessments under the Income-tax Law

Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing up his return of income. Once the return of income is filed up 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), i.e., Summary assessment without calling the assessee.
• Assessment under section 143(3), i.e., Scrutiny assessment.
• Assessment under section 144, i.e., Best judgment assessment.
• Assessment under section 147, i.e., Income escaping assessment.

Assessment under section 143(1)

This is a preliminary assessment and is referred to as summary assessment without calling the assessee (i.e., taxpayer).

Scope of assessment under section 143(1)

Assessment under section 143(1) is like preliminary checking of the return of income. At this stage no detailed scrutiny of the return of income is carried out. At this stage, the total income or loss is computed after making the following adjustments (if any), namely:-

(i) any arithmetical error in the return; or

(ii) an incorrect claim (*), if such incorrect claim is apparent from any information in the return;

(iii) Any such inconsistency in the return with respect to the information in the return of any preceding previous year, as may be prescribed.

(iv) disallowance of loss claimed, if return of the previous year for which set-off of loss is claimed was furnished beyond the due date specified under section 139(1); or

(v) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; or

(vi) disallowance of deduction claimed u/s 10AA, 80IA to 80-IE, if the return is furnished beyond the due date specified under section 139(1); or

However, no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. Further, the response received from the assessee, if any, shall be considered before making any adjustment, and in case where no response is received within 30 days of the issue of such intimation, such adjustments shall be made.

For the above purpose “an incorrect claim apparent from any information in the return” means a claim on the basis of an entry in the return :-

(i) of an item which is inconsistent with another entry of the same or some other item in such return;

(ii) in respect of which the information is required to be furnished under the Act to substantiate such entry and has not been so furnished; or

(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

Procedure of assessment under section 143(1)

• After correcting arithmetical error or incorrect claim (if any) as discussed above, the tax and interest and fee*, if any, shall be computed on the basis of the adjusted income.
• Any sum payable by or refund due to the taxpayer shall be intimated to him.
• An intimation shall be prepared or generated and sent to the taxpayer specifying the sum determined to be payable by, or the amount of refund due to the taxpayer.
• An intimation shall also be sent to the taxpayer in a case where the loss declared in the return of income by the taxpayer is adjusted but no tax or interest is payable by or no refund is due to him.
• The acknowledgement of the return of income shall be deemed to be the intimation in a case where no sum is payable by or refundable to the assessee or where no adjustment is made to the returned income.

*As per section 234F, a fee shall be levied where the return of income is not filed within the due dates prescribed under section 139(1). Fee for default in furnishing return of income shall be Rs. 5,000 if return has been furnished after the due date prescribed under section 139(1). However, it shall be Rs. 1,000 if the total income of an assessee does not exceed Rs. 5 lakh.

Time-limit

Assessment under section 143(1) can be made within a period of 9 months from the end of the financial year in which the return of income is filed.

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 is to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income.

Scope of assessment under section 143(3)

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.

Procedure of assessment under section 143(3)

• If the Assessing Officer considers it necessary or expedient to ensure that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, then he will serve on the taxpayer a notice requiring him to attend his office or to produce or cause to be produced any evidence on which the taxpayer may rely, in support of the return.
• To carry out assessment under section 143(3), the Assessing Officer shall serve such notice in accordance with provisions of section 143(2).
• Notice under section 143(2)should be served within a period of three months from the end of the financial year in which the return is filed.
• The taxpayer or his representative (as the case may be) will appear before the Assessing Officer and will place his arguments, supporting evidences, etc., on various matters/issues as required by the Assessing Officer.
• After hearing/verifying such evidence and taking into account such particulars as the taxpayer may produce and such other evidence as the Assessing Officer may require on specified points and after taking into account all relevant materials which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the taxpayer and determine the sum payable by him or refund of any amount due to him on the basis of such assessment.

Faceless Assessment [Section 144B]

Faceless assessment means the assessment proceedings conducted electronically in “e- proceeding” facility through assessee’s registered account in the designated portal. Designated portal means the web portal designated as such by the Principal Chief Commissioner or Principal Director General, in charge of the National Faceless Assessment Centre.

The CBDT had issued the instructions, guidelines and notice formats for conducting scrutiny assessments electronically.

Scope of faceless assessment

The provision provides that the assessment, re-assessment or recomputation under Section 143(3), Section 144, or Section 147 shall be made in a faceless manner in respect of the specified territorial areas, persons, income or class of cases.

Authorities to conduct the faceless assessment

For the purpose of faceless assessment, the CBDT is empowered to set up the following centres and units by specifying their respective jurisdiction:

(a) National Faceless Assessment Centre (NFAC);

(b) Assessment Units (AU);

(c) Verification Units (VU);

(d) Technical Units (TU); and

(e) Review Units (RU).

National Faceless Assessment Centre

The purpose of this centre is to facilitate the conduct of faceless assessment proceedings in a centralized manner.

Assessment Units

It shall perform the function of making the assessment, which includes identification of points or issuing material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for making the faceless assessment.

The term “assessment unit”, wherever used in this provision, shall refer to an Assessing Officer having powers so assigned by the Board

Verification Units

It shall perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification.

The function of the verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of this Act. The request for verification may also be assigned by the NFAC to such a verification unit.

Technical Units

It shall perform the function of providing technical assistance, which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management, any other technical matter or an agreement entered into under Section 90 or Section 90A which may be required in a particular case or a class of cases, under this section.

Review units

It shall perform the function of the review of the Income Determination Proposal, which includes checking the following:

(a) Whether the relevant and material evidence has been brought on record;

(b) Whether the relevant points of fact and law have been duly incorporated in the proposal;

(c) Whether the issues requiring addition or disallowance have been incorporated in the proposal;

(d) Arithmetical correctness of modifications proposed, if any; and

(e) Any other functions required for the purposes of review.

The term ‘review unit’, wherever used in this provision, shall refer to an Assessing Officer having powers so assigned by the Board

Time-limit

As per Section 153, the time limit for making assessment under section 143(3) is:-

1) Within 21 months from the end of the assessment year in which the income was first assessable. [For assessment year 2017-18 or before]

2) Within 18 months from the end of the assessment year in which the income was first assessable. [for assessment year 2018-19]

3) Within 12 months from the end of the assessment year in which the income was first assessable [Applicable for assessment year 2019-20]

4) Within 18 months from the end of the assessment year in which the income was first assessable [Applicable for assessment year 2020-21]

5) Within 9 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2021-22]

6) Within 12 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2022-23 and onwards]

Note:

• If reference is made to TPO, the period available for assessment shall be extended by 12 months.
• If return has been furnished under section 139(8A), the order of assessment shall be passed within 9 months from the end of financial year in which such return was furnished.
• If return of income is furnished in consequence of an order under section 119(2)(b), the order shall be passed within 12 months from the end of the Financial Year in which return is furnished. [effective from 01-10-2024]

Assessment under section 144

This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered. This assessment is carried out in cases where the taxpayer fails to comply with the requirements specified in section 144.

Scope of assessment under section 144

As per section 144, the Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:-

• If the taxpayer fails to file the return required within the due date prescribed under section 139(1)or a belated return under section 139(4)or a revised return under section 139(5), or an updated return under section 139(8A).
• If the taxpayer fails to comply with all the terms of a notice issued under section 142(1).

Note: The Assessing Officer can issue notice under section 142(1) asking the taxpayer to file the return of income if he has not filed the return of income or to produce or cause to be produced such accounts or documents as he may require and 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 taxpayer, whether included in the accounts or not) as he may require.

• If the taxpayer fails to comply with the directions issued under section 142(2A).

Note : Section 142(2A) deals with special audit. As per section 142(2A), if the conditions justifying special audit as given in section 142(2A) are satisfied, then the Assessing Officer will direct the taxpayer to get his:

a) Accounts audited from a chartered accountant;

b) Inventory valued by a cost accountant. [inserted by Finance Act 2023]

nominated by the principal chief commissioner or Chief Commissioner or Principal Commissioner or Commissioner and to furnish a report of such audit in the prescribed form.

• If after filing the return of income the taxpayer fails to comply with all the terms of a notice issued under section 143(2), i.e., notice of scrutiny assessment.
• If the assessing officer is not satisfied about the correctness or the completeness of the accounts of the taxpayer or if no method of accounting has been regularly employed by the taxpayer.

From the above criteria, it can be observed that best judgment assessment is resorted to in cases where the return of income is not filed by the taxpayer or if there is no cooperation by the taxpayer in terms of furnishing information/explanation related to his tax assessment or if books of accounts of taxpayer are not reliable or are incomplete.

Procedure of assessment under section 144

• If the conditions given above calling for best judgment are satisfied, then the Assessing Officer will serve a notice on the taxpayer to show cause why the assessment should not be completed to the best of his judgment.
• No notice as given above is required in a case where a notice under section 142(1)has been issued prior to the making of an assessment under section 144.
• If the Assessing Officer is not satisfied by the arguments of the taxpayer and he has reason to believe that the case demands a best judgment, then he will proceed to carry out the assessment to the best of his knowledge.
• If the criteria of the best judgment assessment are satisfied, then after taking into account all relevant materials which the Assessing Officer has gathered, and after giving the taxpayer an opportunity of being heard, the Assessing Officer shall make the assessment of the total income or loss to the best of his knowledge/judgment and determine the sum payable by the taxpayer on the basis of such assessment.

Time-Limit

As per Section 153, the time limit for making assessment under section 144 is:-

1) Within 21 months from the end of the assessment year in which the income was first assessable. [For assessment year 2017-18 or before]

2) 18 months from the end of the assessment year in which the income was first assessable. [for assessment year 2018-19]

3) Within 12 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2019-20]

4) Within 18 months from end of the assessment year in which income was first assessable [Applicable for assessment year 2020-21]

5) Within 9 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2021-22]

6) Within 12 months from end of the assessment year in which income was first assessable. [Applicable for assessment year 2022-23 and onwards]

Notes:

• If reference is made to TPO, the period available for assessment shall be extended by 12 months.
• If return has been furnished under section 139(8A), the order of assessment shall be passed within 9 months from the end of financial year in which such return was furnished.
• If return of income is furnished in consequence of an order under section 119(2)(b), the order shall be passed within 12 months from the end of the Financial Year in which return is furnished. [effective from 01-10-2024]

Assessment under section 147

The Finance Act, 2021 has substituted the existing sections 147, 148, 149 and 151 and also inserted a new section 148A making a complete change in the assessment proceedings related to Income escaping assessment and search-related cases. The new provisions related to re-assessment are as follow:

If any income of an assessee has escaped assessment for any assessment year, the Assessing Officer may, subject to the new provisions of sections 148 to 153, assess or reassess such income and also any other income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for such assessment year

It is imperative to note that once assessment or reassessment or re-computation has started, the Assessing Officer is empowered to assess or reassess the income which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under this procedure notwithstanding that the procedure prescribed in new section 148A was not followed before issuing such notice for such income

The Assessing Officer is required to make an assessment or re-assessment as per the following procedures:

Issue of Notice

The Assessing Officer shall serve on the assessee a notice under Section 148 along with a copy of the order passed under clause (d) of section 148A, requiring him to furnish return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year. The return shall be furnished within the period specified in the notice (not exceeding 3 months) from the end of the month in which such notice is issued.

Circumstances in which notice can be issued

Notice is required to be issued only when information with the Assessing officer suggests that the income chargeable to tax has escaped assessment. Prior approval of specified authority is also required to be obtained before issuing such notice by the Assessing Officer.

When it shall be deemed that Income has escaped Assessment?

In cases other than Search, Survey or Requisition

(a) The information suggesting that the income chargeable to tax has escaped assessment means any information flagged in the case of the assessee for the relevant assessment year as per the ‘Risk Management Strategy’ formulated by the CBDT from time to time;

(b) Any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of the Income-tax Act;

(c) Any information received under an agreement referred to in section 90 or 90A;

(d) Any information made available to the Assessing Officer under the Scheme notified under section 135A; or

(e) Any information which requires action in consequence of the order of a Tribunal or a Court.

(f) Any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of section 133A, on or after 01-09-2024.

(g) Procedure before Issuance of Notice

The Assessing Officer shall be required to follow the below procedure as laid down in Section 148A before issuing a notice under new Section 148 in cases other than search, survey or requisition.

Assessing Officer shall provide an opportunity of being heard to assessee by serving upon him a notice to show cause as to why a notice under section 148 should not be issued in his case. The notice to show cause shall be accompanied by the information that suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year.

On receipt of the notice, the assessee may furnish his reply within such period, as may be specified in the notice. Then AO, based on material available on record and taking into account the reply of the assessee, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 148.

However, this procedure shall not apply to income chargeable to tax escaping assessment for any assessment year in the case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A.

Approval of higher authorities to be obtained in Search, Survey and Requisition Cases

The Finance Act, 2022 has inserted a new Section 148B, w.e.f., Assessment Year 2022-23, to provide that no order of assessment or reassessment or recomputation under the Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director.

The above mentioned four clauses of Explanation 2 to section 148 provide cases of deemed information. If situations, circumstances, or actions as described in these 4 clauses exist, then it will be a case of deemed information, and the AO can acquire jurisdiction to issue a notice under Section 148.

Time limit for Issuance of Notice

Time limit for issuance of notice under section 148 of the Income-tax Act:

Particulars	Time Limit
Issuing notice under section 148: (applicable from 01-04-2024 till 31-08-2024) If the escaped assessment amounts to or likely to amounts to — (i) less than Rs. 50,00,000	Within 3 years from end of relevant assessment year
(ii) Rs. 50,00,000 or more	Within 10 years from end of relevant assessment year
Issuing notice under section 148: (applicable from 01-09-2024) If the escaped assessment amounts to or likely to amounts to — (i) less than Rs. 50,00,000	Within 3 years and 3 months from end of relevant assessment year
(ii) Rs. 50,00,000 or more	Within 5 years and 3 months from end of relevant assessment year
Issuing notice under section 148A: (applicable from 01-09-2024) If the escaped assessment amounts to or likely to amounts to — (i) less than Rs. 50,00,000	Within 3 years from end of relevant assessment year
(ii) Rs. 50,00,000 or more	Within 5 years from end of relevant assessment year

Faceless assessment of income escaping assessment [Section 151A]

With effect from 01-11-2020, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has inserted a Section 151A to empower the Central government to make a scheme to carry out the following functions in a faceless manner:

(a) Assessment, reassessment or recomputation under Section 147 (‘re-assessment’);

(b) Issuance of notice under section 148 for conducting re-assessment; or

(c) Sanction under section 151 for the issue of notice under section 148 for conducting re-assessment.

Such a scheme is to be formed to impart greater efficiency, transparency and accountability by:

(a) Eliminating the interface between the Income-tax authority and the assessee or any other person to the extent technologically feasible;

(b) Optimising utilisation of the resources through economies of scale and functional specialisation; and

(c) Introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction.

W.e.f., Assessment Year 2021-22, the Finance Act 2021 amended the Section 151 to provide that conducting of enquiries or issuing show-cause notice or passing an order under new Section 148A (before issuance of notice under new Section 148) in a faceless manner shall be notified subsequently.

MCQ ON VARIOUS ASSESSMENTS UNDER THE INCOME TAX LAW

Q1. The checking of the return of income by the taxpayer before filing the return of income is called assessment.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

Once the return of income is filed up 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”.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q2. Assessment under section 143(1), is known as scrutiny assessment.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

Assessment under section 143(1) is like preliminary checking of the return of income. At this stage no detailed scrutiny of the return of income is carried out. This assessment is known as Summary assessment without calling the assessee

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q3. Assessment under section 144 is known as best judgment assessment

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

Assessment under section 144 is known as best judgment assessment. This is an assessment carried out as per the best judgment of the Assessing Officer. This assessment is carried out in a case where the taxpayer fails to comply with the requirements specified in section 144.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q4. Which of the following can be corrected while processing the return of income under section 143(1)?

(a) any arithmetical error in the return (b) any mistake in the return of income

(c) any error in the return of income (d) any claim by the taxpayer which is against law

Correct answer : (a)

Justification of correct answer :

Assessment under section 143(1) is like preliminary checking of the return of income. At this stage no detailed scrutiny of the return of income is carried out. At this stage, the total income or loss is computed after making the following adjustments (if any), namely:-

(i) any arithmetical error in the return; or

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return.

Thus, option (a) is the correct option.

Q5. Assessment under section 143(1) can be made within a period of from the end of the financial year in which the return of income is filed.

(a) one year (b) six months

(c) nine months (d) 18 months

Correct answer : (c)

Justification of correct answer :

Assessment under section 143(1) can be made within a period of nine months from the end of the financial year in which the return of income is filed.

Thus, option (c) is the correct option.

Q6. Notice under section 143(2) (i.e. notice of scrutiny assessment) should be served within a period of from the end of the financial year in which the return is filed.

(a) three months (b) one years

(c) two years (d) eighteen months

Correct answer : (a)

Justification of correct answer :

To carry out assessment under section 143(3), the Assessing Officer should serve a notice under section 143(2). Notice under section 143(2) should be served within a period of three months from the end of the financial year in which the return is filed.

Thus, option (a) is the correct option.

Q7. Assessment under section 143(3) for assessment year 2022-23 shall be made within a period of months from the end of the relevant assessment year.

(a) 24 months (b) 36 months

(c) 12 months (d) 18 months

Correct answer : (c)

Justification of correct answer :

As per section 153, assessment under section 143(3) for assessment year 2022-23 shall be made within a period of 12 months from the end of the relevant assessment year.

Thus, option (c) is the correct option.

Q8. Assessment under section 144 for assessment year 2022-23 shall be made within a period of months from the end of the relevant assessment year.

(a) 24 months (b) 36 months

(c) 12 months (d) 18 months

Correct answer : (c)

Justification of correct answer :

As per section 153, assessment under section 144 for assessment year 2022-23 shall be made within a period of 12 months from the end of the relevant assessment year.

Thus, option (c) is the correct option.

Q9. The objective of carrying out assessment under section 147 is to bring under the tax net any money, bullion, jewellery, valuable article, etc. which are undisclosed.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

The objective of carrying out assessment under section 147 is to bring under the tax net any income which has escaped assessment in original assessment

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q10. Assessment under section 147 shall be made within a period of two year from the end of the financial year in which notice under section 148 is served on the taxpayer.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

As per Section 153, the time limit for making assessment under section 147 is:-

1) Within 9 months from the end of the financial year in which the notice under section 148 was served (if notice is served before 01-04-2019).

2) 12 months from the end of the financial year in which notice under section 148 is served (if notice is served on or after 01-04-2019).

Note:- If reference is made to TPO, the period available for assessment shall be extended by 12 months.

Thus, the statement given in the question is false and hence, option (b) is the correct option.