Nothing is certain about life except death and taxes. Whilst death is outside our purview, we can help shed some light on taxes. Once you file your income tax return, you are subject to an assessment. Under the Income Tax Act, 1961, the most common types of assessment are as follows:
Intimation under Section 143(1)
This is the most standard type of assessment and is generated with minimal human intervention. The department matches your return with its computation and generates this intimation which is usually sent to you by email. If there is any mismatch the intimation will show a tax payable, refund due or neither. The Income Tax department must send this intimation before the completion of the relevant ‘assessment year.’ The ‘assessment year’ is the year that follows the financial year for which the returns have been filed.
If there is a refund due, wait for this to arrive by cheque or direct credit to your account. If you do not receive it or if the cheque is sent with incorrect details, you can inform the department online or through the post.
If the tax is shown as payable, you must decide whether you agree with the demand or not. If you do not agree, you can dispute the claim before your jurisdictional assessing officer. Consult a Chartered Accountant on the steps you should take.
Scrutiny Assessment under Section 143(3)
In this type of assessment, an income tax officer examines your return and income in detail. Less than 1% of returns are picked up every year for scrutiny. However getting a scrutiny notice does not automatically mean that the department thinks that you are evading tax. It simply means that it wishes to make a detailed inquiry into your return.
If you are able to substantiate your claims and produce the necessary supporting evidence, this should not be cause for concern. A notice for this type of assessment has to be served within 6 months of the end of the relevant assessment year under Section 142(1). For the financial year 2017-18 onwards, this type of assessment must be completed within 18 months of the relevant assessment year. Once the Income Tax Office makes an order for this type of assessment you can either accept the assessment or if you disagree, file an appeal with the relevant appellate authority.
Summary Assessment under Section 144
This type of assessment is made as per the best judgment of the income tax officer. It is made when a taxpayer fails to submit a return under Section 139 or in response to a scrutiny notice under Section 142(1). This type of assessment must also be made within 18 months of the end of the relevant assessment year.
Income Escaping Assessment under Section 147(1)
This type of assessment is carried out when an income tax officer has reason to believe that income chargeable to tax has escaped assessment in any assessment year. For the financial year 2017-18, this type of assessment must be completed within 9 months of serving notice for the same under Section 148(1). Notice under this section must be served within 4 years of the end of the relevant assessment year or 6 months where the income in question is more than 1 lakh and certain other conditions are satisfied. If it pertains to an asset outside India, the time limit is 16 years.
If you disagree with an assessment order in any of the cases mentioned above, you can file an appeal with the Commissioner of Income Tax and thereon to the Income Tax Appellate Tribunal, High Court and Supreme Court.