Information

Notices from IT Department is one of the worst news any Individual can expect. This can be received for various reasons like like not filing income tax return, wrong filing of tax return or other instances where the tax department requires additional information or documents. However, taxpayer must not get panicked and should take basic steps to understand the nature of notice, the request or order in the notice.

Our Dedicated team of tax experts will help you to understand and determining the necessary course of action to comply like Notices received with submitting the response or filing an appeal.

Type of Notice :-

Section Income Tax Assessments Notice Under Income Tax Assessment
140 A Self Assessment Tax
142 (1) Inquiry Notice u/s 142(1) is usually served to call upon documents and details from the tax payers, and to take a particular case under assessment. This notice can be sent to assessee before or after assessment of his tax return.
143 (1) Summary Assessment Income tax department carries out a preliminary assessment of all the returns filed and intimate taxpayers the result of such preliminary assessment. Such intimation to the taxpayers post preliminary assessment is called intimation under Section 143(1).
143 (3) Scrutiny Assessment A Scrutiny Notice is a random notice issued by the Income Tax Department under section 143(2), in case if Assessing Officer(AO) finds some mistakes or has doubts regarding an individual’s income. Scrutiny Assessment is done under section 143(3). During the scrutiny assessment, the concerned AO will try to find out whether the reported income, deductions and claims, etc. made by you in your tax return are genuine and correct.
144 Best Judgement Assessment In a best judgment assessment an assessing officer makes an assessment based on his best reasoning. It is normally made in the following circumstances
  1. When an assessee fails to file a return under section 139(1) of the Act or a revised return under section 139(4) or 139(5) of the Act
  2. When an assessee fails to comply with the terms and conditions laid down in the provisions relating to a notice under section 142 or fails to get his accounts audited as per section 142(2A) of the Act
  3. When an assessee after filing a return fails to comply with the terms of a notice as given in section 143(2) for production of evidence or documents
147 Reassessment proceedings / Income escaping assessment u/s 147 Income Escaping Assessment u/s 147 is to bring any income which has escaped assessment in the original assessment under the tax net. Assessing officer must have reasons to believe.No reassessment notice can be served just to make an enquiry or verification.
156 Draft Orders in respect of Transfer Pricing Assessments Section 156 tax notice is the notice of demand issued by the Income Tax Department when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed. The section 156 tax notice of demand will specify the sum which is payable.This demand notice is generally accompanied by an intimation notice under section 143(1) or along with the assessment order that is issued on completion of the scrutiny proceedings. Notice of Demand u/s 156 is issued in respect of every assessment order for addition to income.

Process :-

  1. Assessment of Notice from Income Tax Department
  2. Filing or Revising Return/Submission of Documents
  3. Follow up & Visit IT Department
  4. Filing of Appeal (if required)
  5. Completion of Assessment

FAQ :-

What is 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.

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

What is the scope of assessment under section 143(3) i.e. scrutiny assessment?​​

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.

What is assessment under section 144?​​

This Assessment is known as Best Judgement Assessment as it is carried out as per the best judgement of the assessing officer. Best Judgement Assessment is resorted due to certain failure on part of the tax payer.

Under what circumstances the Assessing Officer will proceed for making assessment under section 144 i.e. best judgment assessment?​​

Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:

  1. If the taxpayer fails to file the return of income as 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)
  2. If the taxpayer fails to comply with all the terms of a notice issued under section 142 (1)
  3. If the taxpayer fails to comply with the directions issued under Section 142 (2A) (Special Audit)
  4. If after filing the return of income, the taxpayer fails to comply with all the terms of a notice issued under section 142(2A) , i.e. , notice of scrutiny assessment
What is assessment under section 147? ​

This is an income escaping assessment. This assessment is carried out if the Assessing Officer has a reason to believe that any income has escaped assessment.

What are the circumstances under which assessment under section 147 i.e. income escaping assessment can be carried out?​

​​​In the following cases, it will be deemed that income chargeable to tax has escaped assessment:

  1. Where no return of income has been filed by tax payer although his total income exceeds the maximum amount which is not chargeable to income tax
  2. Where a return of income has been furnished by the taxpayer but no assessment has been made and it is noticed by the Assessing Officer that the taxpayer has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
  3. Where the taxpayer has failed to furnish a report in respect of any international transaction which he was required to file under section 92E ​.
  4. Where an assessment has been made, but:
    1. income chargeable to tax has been under assessed; or
    2. income has been assessed at low rate; or
    3. income has been made the subject of excessive relief; or
    4. excessive loss or depreciation allowance or any other allowance has been computed;
  5. Where a person is found to have any asset (including financial interest in any entity) located outside India.​
  6. It is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax.
  7. Where a return of income has been furnished by the assessee and on the basis of information or document received from the prescribed income-tax authority, under section 133C (2), it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
What recourse is available to me if I am not satisfied with the order passed by my Assessing Officer?
  • If you are not satisfied with the order passed by your Assessing Officer then you can file an appeal to the higher authority. The first appellate authority is the Commissioner (Appeals).
  • Subsequently, the matter can be taken to the Income-tax Appellate Tribunal, then to the High Court and the Supreme Court.
  • Alternatively, instead of going for the appeal mechanism, you can make an application of revision to the Commissioner of Income-tax.​
What if number of members fall below 7 after incorporation?

The Income Tax maintains a predetermined set of guidelines for identifying and scrutinizing such cases. Some of the most common scrutinies are done on the following basis:-

  1. Understated income
  2. Shown excessive loss
  3. Tax underpaid or misappropriation
Information

Notices from IT Department is one of the worst news any Individual can expect. This can be received for various reasons like like not filing income tax return, wrong filing of tax return or other instances where the tax department requires additional information or documents. However, taxpayer must not get panicked and should take basic steps to understand the nature of notice, the request or order in the notice.

Our Dedicated team of tax experts will help you to understand and determining the necessary course of action to comply like Notices received with submitting the response or filing an appeal.

Section Income Tax Assessments Notice Under Income Tax Assessment
140 A Self Assessment Tax
142 (1) Inquiry Notice u/s 142(1) is usually served to call upon documents and details from the tax payers, and to take a particular case under assessment. This notice can be sent to assessee before or after assessment of his tax return.
143 (1) Summary Assessment Income tax department carries out a preliminary assessment of all the returns filed and intimate taxpayers the result of such preliminary assessment. Such intimation to the taxpayers post preliminary assessment is called intimation under Section 143(1).
143 (3) Scrutiny Assessment A Scrutiny Notice is a random notice issued by the Income Tax Department under section 143(2), in case if Assessing Officer(AO) finds some mistakes or has doubts regarding an individual’s income. Scrutiny Assessment is done under section 143(3). During the scrutiny assessment, the concerned AO will try to find out whether the reported income, deductions and claims, etc. made by you in your tax return are genuine and correct.
144 Best Judgement Assessment In a best judgment assessment an assessing officer makes an assessment based on his best reasoning. It is normally made in the following circumstances
  1. When an assessee fails to file a return under section 139(1) of the Act or a revised return under section 139(4) or 139(5) of the Act
  2. When an assessee fails to comply with the terms and conditions laid down in the provisions relating to a notice under section 142 or fails to get his accounts audited as per section 142(2A) of the Act
  3. When an assessee after filing a return fails to comply with the terms of a notice as given in section 143(2) for production of evidence or documents
147 Reassessment proceedings / Income escaping assessment u/s 147 Income Escaping Assessment u/s 147 is to bring any income which has escaped assessment in the original assessment under the tax net. Assessing officer must have reasons to believe.No reassessment notice can be served just to make an enquiry or verification.
156 Draft Orders in respect of Transfer Pricing Assessments Section 156 tax notice is the notice of demand issued by the Income Tax Department when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed. The section 156 tax notice of demand will specify the sum which is payable.This demand notice is generally accompanied by an intimation notice under section 143(1) or along with the assessment order that is issued on completion of the scrutiny proceedings. Notice of Demand u/s 156 is issued in respect of every assessment order for addition to income.
  1. Assessment of Notice from Income Tax Department
  2. Filing or Revising Return/Submission of Documents
  3. Follow up & Visit IT Department
  4. Filing of Appeal (if required)
  5. Completion of Assessment
What is 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.

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

What is the scope of assessment under section 143(3) i.e. scrutiny assessment?​​

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.

What is assessment under section 144?​​

This Assessment is known as Best Judgement Assessment as it is carried out as per the best judgement of the assessing officer. Best Judgement Assessment is resorted due to certain failure on part of the tax payer.

Under what circumstances the Assessing Officer will proceed for making assessment under section 144 i.e. best judgment assessment?​​

Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:

  1. If the taxpayer fails to file the return of income as 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)
  2. If the taxpayer fails to comply with all the terms of a notice issued under section 142 (1)
  3. If the taxpayer fails to comply with the directions issued under Section 142 (2A) (Special Audit)
  4. If after filing the return of income, the taxpayer fails to comply with all the terms of a notice issued under section 142(2A) , i.e. , notice of scrutiny assessment
What is assessment under section 147? ​

This is an income escaping assessment. This assessment is carried out if the Assessing Officer has a reason to believe that any income has escaped assessment.

What are the circumstances under which assessment under section 147 i.e. income escaping assessment can be carried out?​

​​​In the following cases, it will be deemed that income chargeable to tax has escaped assessment:

  1. Where no return of income has been filed by tax payer although his total income exceeds the maximum amount which is not chargeable to income tax
  2. Where a return of income has been furnished by the taxpayer but no assessment has been made and it is noticed by the Assessing Officer that the taxpayer has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
  3. Where the taxpayer has failed to furnish a report in respect of any international transaction which he was required to file under section 92E ​.
  4. Where an assessment has been made, but:
    1. income chargeable to tax has been under assessed; or
    2. income has been assessed at low rate; or
    3. income has been made the subject of excessive relief; or
    4. excessive loss or depreciation allowance or any other allowance has been computed;
  5. Where a person is found to have any asset (including financial interest in any entity) located outside India.​
  6. It is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax.
  7. Where a return of income has been furnished by the assessee and on the basis of information or document received from the prescribed income-tax authority, under section 133C (2), it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
What recourse is available to me if I am not satisfied with the order passed by my Assessing Officer?
  • If you are not satisfied with the order passed by your Assessing Officer then you can file an appeal to the higher authority. The first appellate authority is the Commissioner (Appeals).
  • Subsequently, the matter can be taken to the Income-tax Appellate Tribunal, then to the High Court and the Supreme Court.
  • Alternatively, instead of going for the appeal mechanism, you can make an application of revision to the Commissioner of Income-tax.​
What if number of members fall below 7 after incorporation?

The Income Tax maintains a predetermined set of guidelines for identifying and scrutinizing such cases. Some of the most common scrutinies are done on the following basis:-

  1. Understated income
  2. Shown excessive loss
  3. Tax underpaid or misappropriation