MIDHUN JOHNY GEORGE

ΙΙ PG M.COM
PG DEPARTMENT OF COMMERCE
ST.THOMAS COLLEGE, PALAI
REGULAR ASSESSMENT
Tax on regular assessment is the tax that a
taxpayer is required to pay against a notice of demand
from the income tax department.
1. Assessment on the basis of evidence or scrutiny
assessment sec. 143(3)
2. Best judgment assessment sec. 144
REGULAR ASSESSMENT U/S 143(3)
• Notice u/s 143(2) will be served with in six months of
filing the return to assessee to present before Assessing
Officer with evidence.
A.O needs to verify:
1. the correctness or completeness of the return
2. income has not been understated
3. loss declared is not excessive
4. tax has not been underpaid
Notice u/s 143(2) to:
 attend his office
 to produce on a date specified any evidence in
support of his return.

• A.O may also call for the production of any accounts

and documents by issuing notice u/s 142(1)
 INQUIRY BEFORE ASSESSMENT sec. 142

A notice requiring on a date to be specified therein:

1. To furnish a return of his income assessable under
this Act, in the prescribed form if not paid in A.Y or
2. To produce such accounts or documents as the A.O
may require or
3. To furnish in writing and verified in prescribed
manner information in such form and on such
points or matters as the A.O may require.
• A.O can also call for a statement of all assets and
liabilities of the assessee with the approval of joint
commissioner.
• The A.O shall not require the production of any
accounts relating to a period of more than three
years prior to the previous year.
 Compulsory Audit of Accounts or Tax Audit
• if A.O doubts about the correctness of accounts,
multiplicity of transactions in the accounts or due to
the specialised nature of business activity.
• Needs approval of chief commissioner or
commissioner
• By a nominated C.A
• Assessee has been given a reasonable opportunity of
being heard.
• if the assessee does not get the accounts audited as
required by the A.O ,he can make a best judgment
assessment u/s 144 and impose penaltyof 10,000/
•Expenses of audit is determined by the chief
commissioner and is paid by the Central Govt.
• The assessee has to submit audit report .
ESTIMATE BY VALUATION OFFICER
1. A.O may make a reference to V.O to estimate the
value, including fair market value of any asset ,
property or investment and submit a copy of report
2. The A.O may make a reference for valuation
whether or not he is satisfied about the correctness
or completeness of the accounts.
3. The V.O has all the powers under sec.38A of the
wealth tax Act.
4. The V.O take into account the evidence produced by
the assessee or in his possession gathered , after
giving an opportunity of being heard.
5. V.O ‘s best judgment , if the assessee does not co-
operate or comply with his direction.
6. The V.O shall send a copy of the report of the
estimate to A.O and assessee within six months
from the end of the month in which a reference is
made to him.
POWER OF JOINT COMMISSIONER
• may call for and examine records of any proceeding
either on his own motive, reference by A.O or
application by assessee.
• to issue directions and guidelines to A.O
• opportunity must be given to assessee to be heard
first, if the guidelines are prejudicial to the assessee.
ASSESSMENT AFTER EVIDENCE
• Where the notice is issued to the assessee u/s 143(2),
he will pass an order after hearing such evidence.
• An order determining the total income or loss of the
assessee and the sum payable by him or refund of
any amount due to him , on the basis of such
assessment.
Comparision of notice
Notice u/s 142(1)
 Notice to call for ROI/
books of accunts/other
information
 By issuing notice u/s 142(1)
alone, assessment is not
possible
 Can be issued even if the
assessee has not filed the
ROI
 No time limit prescribed in
law for issue of this notice.
 Books of accounts can be
asked for a limited period
ie, 3 years.
Notice u/s 143(2)
 Notice for making
assessment u/s 143(3)
 Assessment u/s 143(3) is
possible only if the notice
u/s 143(2) has been issued.
 Can be issued only if the
assessee has filed ROI
 Time limit of 12 months
prescribed for service of
notice.
 No such restrictions
BEST JUDGMENT ASSESSMENT sec. 144
• When there is an absence of evidence or
• The available evidence is insufficient to portray the
exact picture of profit or loss of the assessee.
• A.O must not act dishonestly
• Must make fair estimate of proper figureof
assessment
• Consideration of local knowledge, previous returns
and assessment.
Two type: compulsory and discretionary.
Compulsory best judgment assessment
1. Fails to submit return
2. Fail to complied with the terms of the notice u/s
142(1)- to produce accounts and documents, fails to
get the accounts audited u/s 142(2A).
3. Where the return has made and A.O considers
incorrect or incomplete and the assessee does not
produce evidence in support of his return.
Consequences
1. The assessee becomes liable to penalties u/s 272A
2. The assessee becomes liable to prosecution u/s
276CC and 276D
3. The assessee is prevented from bringing on record
any new facts before the appellate authorities if an
appeal is given
4. A refund may not be granted under this section
REMEDY AGAINST BEST JUDGMENT ASSESSMENT
Filing an appeal
• If excessive tax has been imposed
• Appeal to commissioner – Appellate Tribunal- High
Court.
• The A.O shall have to disclose the basis of judgment
before the appellate authority.
Discretionary Best Judgment Assessment
• used when the A.O is not satisfied about the
correctness of the accounts of the assessee,
• where no method of accounting has been regularly
employed,
• where income has not been computed in accordance
with the standard notified by the govt.
• Assessee can file an appeal