Assessment of Income: Meaning, Scope, Procedure & Time Limit – Section 143(1)

Assessment Of Income-Meaning And Scope/Procedure/Time Limit of Assessment Under Section 143(1)- Processing of Returns

RETURN OF INCOME: – The Income-Tax Act, 1961 contains the provisions for filling of Return of Income. Return of Income is the format in which the assessee furnishes information as to his total income and tax payable. In short, it is the declaration of income by the assessee in the prescribed format.

ASSESSMENT MEANING AS PER INCOME-TAX ACT, 1961: –

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 u/s 139. 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”.

Under the Income Tax Law, there are four Types of Assessments: –

• Summary Assessment u/s 143(1)
• Scrutiny Assessment u/s 143(3)
• Best Judgement Assessment u/s 144
• Income Escaping Assessment u/s 147

SUMMARY ASSESSMENT [SECTION 143(1)]: –

• MEANING: –

It is a type of assessment carried out without any human intervention. In this type of assessment, the information submitted by the assessee in his return of income is cross-checked against the information that the income tax department has access to.

• SCOPE OF ASSESSMENT U/S 143(1)- PROCESSING OF RETURNS: –

Where a return has been made u/s 139, or in response to a notice u/s 142(1), such return shall be processed in the following manner, namely: –

(a) The Total Income or loss shall be computed after making the following adjustments: –

• • Any Arithmetical Error in the Return.
  • Any Incorrect claim if such incorrect claim is apparent from any information in the return.
  • 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).
  • Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.
  • 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)
  • Addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return.

Note: – No such Adjustments shall be made unless an intimation is given to the assessee of such adjustments 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.

• PROCEDURE OF ASSESSMENT UNDER SECTION 143(1):-

♦ After correcting arithmetical error or incorrect claim (if any), 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.

• TIME LIMIT: –

Assessment u/s 143(1) can be made within a period of 9 months from the end of Financial Year in which the Return was made.

Keep following my posts to learn about other types of assessments.