Dear Readers, now these days Income Tax Department is very active in tax collection matters to achieve their targeted collection. Income Tax law mainly permits self-Assessment by assesse, related to their Income Tax Liability, however, from huge database of assesses limited numbers of returns are selected for scrutiny assessment. Now, Income tax department is using artificial intelligence as well as third party information to match the details of assesse with their filed ITR and on the basis of which a little number of assesse were selected for Scrutiny assessment. To make assessment process corruption free and to make whole process transparent, now Income Tax department has started Faceless Scrutiny which is done through online process. Section 143 of Income Tax Act, 1961 governs are Assessment proceedings.

Scrutiny Assessment

FAQ’s on Scrutiny Assessment under Section 143 (3) of Income Tax Act

Q.1 I have filed my ITR within specified time period and my return is processed under Section 143 (1) without any discrepancy. Whether, my ITR can be selected for Scrutiny Assessment?

Ans. Yes, your ITR can be selected for Scrutiny Assessment.

Q.2 Where there is any specified time limit for issuance of Scrutiny Notice under Section 143 (2) of Income Tax Act, 1961?

Ans Yes, there is specified time limit for issuance of Scrutiny Notice. No notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.

Q.3 I have received notice under Section 143 (2) of Income Tax Act, 1961, now what I have to do.

Ans. After receipt of Notice under Section 143 (2), a questioner is sent to assesee and you have to submit your reply and related information online within specified time period.

Q.4 What is difference between Limited Scrutiny and Complete Scrutiny?

Ans In case of Limited Scrutiny, notices will contain the issue(s) identified for examination. The Scope of enquiry shall be restricted to the limited Scrutiny issues.

However, a case selected for Limited scrutiny may be converted into complete scrutiny, if during the assessment preceding Assessing Officer finds that amount of income escaping exceeds the specified threshold limit.

In case of complete scrutiny, AO has the power to verify all details related to books of accounts, external confirmation or any other information which is available with him.

Q.5 I have received scrutiny notice, if I will not reply to this Notice and do not submit any information, what will be the consequences?

Ans If assesse do not co-operate during assessment proceedings and no reply is received or proper reply is not received than AO has the power under Section 144 of Income Tax Act, 1961 to make Best Judgement Assessment on the basis of Information available within him.

In many cases, it is observed that Section 144 is more painful in comparison to case handled properly, so you must reply to all scrutiny notices.

Q.6 I have received Scrutiny notice, whether it is mandatory to appoint any professional/ Tax consultant to appear before Income Tax Officer?

Ans. No, it is not mandatory to take help of professional/Tax Consultant, however, it is advised to take their help, because mostly taxpayers are not aware about the Income Tax law and how to reply to these notices, so it is suggested that, you should take help of expert. If you have in-depth knowledge of your case, you have the liberty to give reply of your notices by yourself.

Q.7 I have submitted my reply to department, however, they are not satisfied with my submission and raise a demand. Whether there is any other option from where I get relief?

Ans. Yes, if assesse is not satisfied with AO order then, he has the liberty to go for appeal before CIT (A), where he has the option to give justification of its claim.

For awareness purpose, I have already written an article on CIT Appeal which is accessible from below link.

The Author “CA. Shiv Kumar Sharma” can be reached at mail – and Mobile/Whatsapp – 9911303737 

Author Bio

Qualification: CA
Company: Shiv Kumar Sharma & Associates
Location: Delhi, Delhi, India
Member Since: 03 Dec 2018 | Total Posts: 116
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. I am writing Articles for, and in the expert panel of ca View Full Profile

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February 2024