This simply means that the person is calculating his own tax liability and thereafter filing ITR after payment of self calculated tax. Since assessee himself calculates the tax and income, it is called as self assessment.
It is the first step in the process of assessment that is taken by the department. The system of self assessment exists only to make the work easier. There is no assessment order is given because assessment is not done by the department.
The assessee can file ITR as Self assessment under
– the different sections of 139 like return with due date
– Belated Return
– Return of Loss
– in response to notice u/s 142(1) or 148 or 153A
– when return has been filed and refund is due.
If the Department does not take the case for further assessment, then there is nothing else to do. For the time being, assessment has been completed on the part of assessee.
1. Since, assessment has not been done by the Department, it shall not be considered as ‘assessment’ in future legal proceedings.
2. Where the amount paid by the assessee u/s 140A is less than the amount required to be paid u/s 140A, then the amount paid shall be first adjusted towards the interest aforesaid and the balance towards the tax.
3. If the assessee fails to pay the whole or part of tax or interest required to be paid u/s140A, then he shall be deemed to be an assessee in default in respect of the tax and interest remaining unpaid. The assessee shall have to pay interest u/s 220 and penalty u/s 221 for being an assessee in default.
In simple words, the payment required to be made u/s 140A along with the return of income shall be as under :
Income Tax (including surcharge, if any and education cess) on the returned income
Add: Interest u/s 234A, 234B, 234C
Add: Relief of tax u/s 89/90/90A/91
Add: MAT credit u/s 115JAA/AMT credit u/s 115JD
Less: Advance Tax
2. Regular Scrutiny Assessment u/s 143(3):
Notice for regular scrutiny assessment is to be issued u/s 143(2).
– The notice can be issued only when the assessee has furnished Return of Income u/s 139(1) or 142(1).
– Notice shall be served within six months of expiry of relevant financial year.
– The AO is not required to possess any ‘reasons to believe’ for the assessment. He may require documents of proof from the assessee. The AO shall recompute the tax liability after making his own assessment which can even reduce the income or increase the loss of the assessee.
– The duty of AO is to ensure that whether the assessee has not understated the income or has stated excessive loss or has not paid taxes.
– The assessment is completed with an order in writing by AO.
Goetze (India) Ltd. (Supreme Court): The Supreme Court held that a claim can be made before the Assessing Officer in the assessment proceedings only through a revised return and not through a letter. Therefore, if a deduction has not been claimed in t he return and the assessee wants to claim the said deduction in the assessment proceedings then he can do so, only by filing a revised return.
3. Best Judgement Assessment u/s 144:
Under this, AO determine the income and tax payable by the assessee based on records possessed to the best of his judgement.
Such an assessment can be done in the cases where assessee,
– fails to furnish ITR u/s 139(1)
– also has not furnished u/s 139(4)
– fails to comply with the terms of notice u/s. 142(1)
– fails to comply with the direction issued u/s. 142(2A)
– fails to comply with the terms of notice u/s. 143(2)
The AO is required to give show cause notice to the assessee in which he shall be asked to show cause as to why a best judgement assessment should not be made on him. The AO shall not make the assessment unless he gives an opportunity of being heard to the assessee.
Under this, AO cannot assess income less than the returned income and loss higher than the returned loss as can be done under Regular Scrutiny Assessment u/s 143(3).
The assessment order should be a speaking order.
Assessment u/s 144 can be resorted if AO is not satisfied with the correctness or completeness of the Books of Accounts.
4. Assessment Reassessment of Income Escaping Assessment u/s 147:
Where the AO has reasons to believe that any income chargeable to tax for any AY has escaped assessment, then he may subject to Sec 148/153, assess or reassess such income and also any other income which has escaped assessment and which comes to his notice subsequently during the course of proceedings under this Section.
Notice for Income Escaping Assessment is to issued u/s 148.
– Why assessment u/s 147 can be considered as ‘assessment’ or ‘reassessment’ as the case may be?
Because, Income escaping assessment can be done in every case:
Whether the assessee has filed returned or not
Whether the assessment has been undertaken previously or not.
– The AO is mandatorily required to ‘record his reasons’ for such assessment. He should have ‘reasons to believe’ that income chargeable to tax has escaped assessment.
‘Reasons to believe’ includes retrospective change of law, any evidence, mistake apparent from records.
The most important part is that it is only necessary that there is prima facie some material on basis of which the case can be reopened. The sufficiency or even correctness of material is not to be considered at the stage of opening/reopening of case.
– Under this, AO cannot assess income less than the returned income and loss higher than the returned loss as can be done under Regular Scrutiny Assessment u/s 143(3).
5. Summary Assessment u/s 143(1):
It is not an actual assessment. Under this, the Return of Income filed by the assesse will not be scrutinized, rather whatever has been claimed by the assessee will be accepted only after confirming the arithmetical accuracy.
-The total income shall be computed after making the following adjustments:
(i) the arithmetical error
(ii) an incorrect claim
– The tax and interest, if any shall be calculated based on above income.
– The sum payable or refund amount, as the case may be.
– The intimation shall be prepared and generated and sent to the assessee with respect to sum payable or refund amount, as the case may be.
– In case of refund, such amount shall be granted to the assessee.
The intimation u/s 143(1) shall be deemed as notice of demand u/s 156. The demand should be paid within 30 days from the date of receipt of such intimation, otherwise the assessee shall be deemed as assessee in default.
No revision can be made against the intimation u/s 143(1). It can only be rectified u/s 154.
6. Protective Assessment:
There is no provision in the Act for defining the manner for such kind of assessment.
Wherever the department has been in doubt on account of pending litigation as to how exactly an assessment had been framed against the assessee, the AO has been making an assessment in a manner in which he thought the assessment should be done and apprehending that such assessment may be aside in the pending litigation, he would make another assessment as per the stand of the assessee for the purpose of protecting the interest of the revenue.
In simple words, when department is in doubt between two or more assesses as to whom income should be allocated, department on the basis of its own judgement allocate such income to any one assessee out of them for the time being upto the final outcome of original assessment. It can be termed as temporary allocation of income.
There is no provision in the Act stipulating that such protective assessment has also to be made along with the original assessment.
7. Block Assessment u/s 158BC:
A Block assessment is in addition to regular assessments proceedings and not in substitution of any one of them. The scope of block assessment is limited to materials undefined during search and can only be done on the basis of evidence found as a result of search or requisition.
Such an assessment is known as ‘Block assessment’ because under this an assessee is required furnish documents or other details of undisclosed income for certain block period.
No notice u/s 148 is required to be issued for the purpose of proceeding under this Chapter.
The assessee shall be not entitled to file revised return.
The AO shall pass an order of assessment and determine the tax payable by the assessee based on his findings and judgement.
(Author is a Licentiate Company Secretary and CA Final student of ICAI and she can be reached For any queries or suggestions, at email@example.com)