Assessment Procedure

Ascertaining total income is one major task of the procedure involved in levying tax on an assessee.  The task of assessing the income returned and determination of tax liability is called ‘assessment’.  The term ’assessment’ has been used in the Income-tax Act meaning differently contexts.  In certain situations, it refers to computation of income, sometimes to the determination of tax payable and in some cases to the whole procedure laid down in the Act of imposing tax liability on assessee.

Stages in Assessment:

The following are the usual stages in the process of assessment.

• Filing a Return
• Computation of taxable income
• Determination of Tax payable and issue of notice of Demand.
• The first stage in the process of assessment consists of (i) either the assessee on his own filing a return of his total income
• The second stage is concerned with computation of taxable income of the assessee.
• The third stage consists of determination of the sum payable by the assessee on the basis of such computation and finally making the assessment order and issue of notice of demand specifying the same, if any, payable by the assessee or grant of refund to him.

Stages in Assessment Procedure:

• Self Assessment [Sec. 140A]: The provisions of Section 140A apply in respect of Self Assessment.  The assessee has to submit his return of income under section 139 or 142 or 153A or 158BC.
  • Return under Section 139 for obligatory filing of return
  • Return under Section 142 is return of income in the prescribed form.
  • Return under Section 148 is return in response to notice for Assessment.
  Before submitting the return of income the assessee is supposed to find out whether any tax and/or interest is payable.
• Summary Assessment [Sec. 143(1)]: From Assessment year 1989-90new procedure of regular assessment has been prescribed.  An assessing officer can accept the return filed by the assessee as such and complete assessment accordingly. He need not investigate or verify the correctness of the particulars in the return of income.
• Scrutiny Assessment [Sec.143 (3)]: A return of income or loss has been made by the assessee. The assessing officer feels it necessary to ensure that the assessee has not understand the income or over stated the loss or has not under paid tax in any manner.
• Best Judgement Assessment [Sec.144 and 145(2)]: A best judgement assessment is an assessment by the A.O. to the best of his judgement after taking into account all relevant material which he has gathered.  Applying his own intelligence deciding on the question of income tax, if an A.O completes on assessment it is called best judgement assessment.