ASSESSMENT PROCEDURE

(FOR DEPARTMENTAL EXAMS)

BY
S. MOHD. MUSTAFA, IRS,
JCIT, TPO, CHENNAI
 RETURN OF INCOME
SEC.139(1) – WHO IS LIABLE TO FILE RETURN?
EVERY PERSON-
(A) BEING A COMPANY OR A FIRM; OR
(B) BEING OTHER THAN A COMPANY OR A FIRM, IF HIS (OR
ANY OTHER PERSON’S OF WHICH HE IS ASSESSABLE) TOTAL
INCOME DURING THE PREVIOUS YEAR EXCEEDED THE
MAXIMUM AMOUNT NOT CHARGEABLE TO INCOME TAX.
WHEN?
ON OR BEFORE DUE DATE.
HOW?
IN THE PRESCRIBED FORM, VERIFIED IN THE PRESCRIBED
MANNER AND SETTING FORTH PRESCRIBED PARTICULARS
 RETURN OF INCOME (CONTD.)
WHO ELSE HAVE TO FILE?
FOURTH PROVISO TO SEC.139:
A RESIDENT PERSON (OTHER THAN NOT ORDINARILY RESIDENT) - IF, AT ANY TIME
DURING PREVIOUS YEAR-
(a) HOLDS, AS A BENEFICIAL OWNER OR OTHERWISE, ANY ASSET (INCLUDING
FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA OR HAS SIGNING
AUTHORITY IN ANY ACCOUNT LOCATED OUTSIDE INDIA; OR
(b) IS A BENEFICIARY IN ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY
ENTITY) LOCATED OUTSIDE INDIA
FIFTH PROVISO TO SEC.139:
INDIVIDUAL BENEFICIARY NEED NOT FILE IF INCOME FROM SUCH ASSET IS INCLUDIBLE
IN THE INCOME OF BENEFICIAL OWNER
SIXTH PROVISO TO SEC.139:
INDIVIDUAL, HUF, AOP, BOI, AJP – IF TOTAL INCOME WITHOUT CLAIMING DEDUCTION
U/S 10(38), 10A, 10B, 10BA OR CHAPTER-VIA EXCEEDED THE NON-TAXABLE LIMIT.
 SEC.139 - RETURN OF INCOME
• EXPLN.2 TO SEC.139(1)- WHAT IS “DUE DATE”?
1. 30TH SEPTEMBER FOR-
COMPANY; OR PERSON (OTHER THAN COMPANY)
WHOSE ACCOUNTS ARE TO BE AUDITED; OR
WORKING PARTNER OF FIRM WHOSE ACCOUNTS
ARE TO BE AUDITED
2. 30TH NOVEMBER FOR –
ASSESSEE REQUIRED TO FILE REPORT U/S 92E
3. 31ST JULY FOR –
ANY OTHER ASSESSEE
RETURN FORM & MODE OF FILING
RETURN FORMS ARE PRESCRIBED IN RULE 12.
MODE OF FILING IS ALSO PRESCRIBED IN R.12:-
COMPULSORILY ELECTRONICALLY FOR ALL. BUT
INDIVIDUALS OR HUF FILING RETURN IN ITR-1 OR
ITR-2 (FOR A.Y.2017-18) CAN ALSO FILE PAPER
RETURN IF:-
1) ASSESSEES ARE OF THE AGE OF 80 OR MORE; OR
2) TOTAL INCOME DOES NOT EXCEED 5 LAKHS AND
NO REFUND IS CLAIMED
 RETURN OF LOSS
• SEC. 139(3)-
• PERSON WHO SUSTAINED LOSS UNDER
“BUSINESS/PROFESSION” OR “CAPITAL GAINS”
AND CLAIMS CARRY FORWARD TO FILE
RETURN WITHIN TIME U/S 139(1).
 BELATED RETURN
• S.139(4)-
• PERSON, WHO DID NOT FILE WITHIN TIME U/S
139(1) - MAY FILE BEFORE END OF ASST.
YEAR OR COMPLETION OF ASST., WHICHEVER
IS EARLIER.
• CONSEQUENCES-
1. LIABLE FOR INTEREST U/S 234A
2. NOT ELIGIBLE FOR INTEREST U/S 244A (FOR
REFUND) FOR PERIOD OF DELAY
 LIABILITY TO FILE RETURN
IN SPECIAL CASES
• 139(4A)- PERSON IN RECEIPT OF INCOME FROM TRUST PROPERTY
• 139(4B)- CEO OF POLITICAL PARTY
• 139(4C)-
(a)- RESEARCH ASSOCIATION. U/S 10(21)
(b)-NEWS AGENCY U/S 10(22B)
(c)- ASSOCIATION OR INSTITUTION U/S 10(23A)
(ca)- PERSON U/S 10(23AAA) (W.E.F. 1-4-2018)
(d)- INSTITUTION U/S 10(23B)
(e) – FUND/INSTITUTION/TRUST/UNIVERSITY/EDUCATIONAL INSTITUTION/HOSPITAL/MEDICAL INSTITUTION U/S
10(23C)
(ea)-MUTUAL FUND U/S 10(23D)
(eb)-SECURITISATION TRUST U/S 10(23DA)
(eba)- INVESTOR PROTECTION FUND U/S 10(23EC) OR (23ED) (W.E.F. 1-4-2018)
(ebb)-CORE SETTLEMENT GUARANTEE FUND U/S 20(23EE) (W.E.F. 1-4-2018)
(ec)-VENTURE CAPITAL COMPANY/FUND U/S 10(23FB)
(f)- TRADE UNION U/S 10(24)
(fa)- BOARD OR AUTHORITY U/S 10(29A) (W.E.F. 1-4-2018)
(g)- BODY/AUTHORITY/BOARD/TRUST/COMMISSION U/S 10(46)
(h)- INFRASTRUCTURE DEBT FUND U/S 10(47)
• 139(4D)-UNIVERSITY/COLLEGE/INSTITUTION U/S 35
• 139(4E)-BUSINESS TRUST
• 139(4F)-INVESTMENT FUND U/S 115UB
 REVISED RETURN
• 139(5)- RETURN FILED U/S 139(1) OR 139(4)
MAY BE REVISED BEFORE –
(A) THE END OF ASST. YEAR;
(B) COMPLETION OF ASSESSMENT*,
WHICHEVER IS EARLIER
*REFERS TO ASSESSMENT U/S 143(3) OR 147
CLAIM FOR DEDUCTION CAN BE MADE ONLY THRO’
REVISED RETURN- GOETZE (INDIA) LTD. (2006)
157 TAXMAN 1 (SC)
 DEFECTIVE RETURN
• 139(9)- IF A.O. CONSIDERS RETURN IS DEFECTIVE,
HE MAY GIVE ASSESSEE AN OPPORTUNITY TO
RECTIFY WITHIN 15 DAYS (OR EXTENDED PERIOD
ALLOWED ON APPLICATION).
IF NOT RECTIFIED, IT WILL BE TREATED AS
INVALID AND ATTRACTS PROVISIONS FOR
FAILURE TO FILE THE RETURN.
IF DEFECT IS RECTIFIED BEYOND PERMITTED
PERIOD BUT BEFORE ASSESSMENT, A.O. MAY
CONDONE THE DELAY.
 DEFECTIVE RETURN (CONTD.)
• 139(9)- WHEN A RETURN IS DEFECTIVE?
• EXPLANATION TO SEC.139(9)- UNLESS ALL THE FOLLOWING CONDITIONS ARE
FULFILLED-
(a) ANNEXURES, STATEMENTS & COLUMNS IN RETURN FORM DULY FILLED IN
(aa)…
(b) COMPUTTION OF TAX ATTACHED
(bb) REPORT U/S 44AB ATTACHED
(c) PROOF OF TDS, TCS, AT & SELF-ASST. TAX ATTACHED
(d) COPIES OF FINANCIAL STATEMENTS ATTACHED
(e) WHERE BOOKS HAVE BEEN AUDITED, COPIES OF AUDITED ACCOUNTS
ATTACHED
(f) WHERE BOOKS ARE NOT MAINTAINED, STATEMENT INDICATING
TURNOVER/GROSS RECEIPTS/GROSS PROFIT/EXPENSES/NET PROFIT AND BASIS OF
SUCH COMPUTATION/TOTAL SUNDRY DEBTORS/CREDITORS/STOCK-IN-
TRADE/CASH BALANCE AT YEAR END ATTACHED.
BUT AS PER RULE 12 RETURNS ARE TO BE ANNEXURE-LESS ENABLED U/S 139C
 SEC.140 – RETURN BY WHOM TO BE
VERIFIED
• SEC.140-
• (a) INDIVIDUAL –
(i) HIMSELF
(ii) IF HE IS ABSENT FROM INDIA - HIMSELF OR DULY
AUTHORISED PERSON (THRO’ POA)
(iii) IF HE IS MENTALLY INCAPACITATED – GUARDIAN OR
PERSON COMPETENT TO ACT
(iv) IF, FOR ANY REASON HE IS NOT ABLE TO SIGN, DULY
AUTHORISED PERSON (THRO’ POA)
(b) HUF- KARTA AND WHERE HE IS ABSENT FROM
INDIA/MENTALLY INCAPACITATED, ANY OTHER ADULT
MEMBER
 SEC.140 – RETURN BY WHOM TO BE
VERIFIED (CONTD.)
(c) COMPANY- BY M.D. OR IF, FOR ANY REASON HE IS NOT
ABLE TO SIGN OR NO M.D. ANY DIRECTOR
PROVISO-IF CO. IS NON-RESIDENT, POA HOLDER
2ND PROVISO- LIQUIDATOR – IF BEING WOUND UP, ETC
PRINCIPAL OFFICER- IF MANAGEMENT IS TAKEN OVER BY GOVT.
(cc) FIRM – BY M.P. OR IF, FOR ANY REASON HE IS NOT ABLE TO SIGN
OR NO M.P. ANY PARTNER (NOT MINOR)
(cd) LLP-DESIGNATED PARTNER OR IF, FOR ANY REASON HE IS NOT
ABLE TO SIGN OR NO D.P., ANY PARTNER
(d) LOCAL AUTHORITY – PRINCIPAL OFFICER
(dd) POLITICAL PARTY – C.E.O. OF SUCH PARTY
(e) ANY OTHER ASSOCIATION – ANY MEMBER OR PRINCIPAL OFFICER
(f) ANY OTHER PERSON – THAT PERSON OR SOME PERSON
COMPETENT TO ACT ON HIS BEHALF
 SEC.140A- SELF-ASSESSMENT
• 140A(1)-TAX PAYABLE ON RETURN U/S
139/142/148/153A/158BC/115WD/115WH
TO BE PAID, WITH DUE INTEREST U/S 234,
BEFORE FILING & PROOF ATTACHED
EXPLANATION:
IF AMOUNT PAID IS LESS THAN PAYABLE, PAID
AMOUNT SHALL FIRST BE ADJUSTED
TOWARDS INTEREST & BALANCE, IF ANY,
TOWARDS TAX.
 SEC.140A- SELF-ASSESSMENT
(CONTD.)
• 140A(1A)- INTEREST PAYABLE U/S 234A SHALL BE
COMPUTED ON THE BASIS OF TAX ON DECLARED
TOTAL INCOME AS REDUCED BY-
(a) ADVANCE TAX
(b) TDS OR TCS
(c) RELIEF CLAIMED U/S 90/91
(d) RELEIF CLAIMED U/S 90A
(e) TAX CREDIT SET 0FF CLAIMED U/S 115JAA OR
115JD
 SEC.140A- SELF-ASSESSMENT
(CONTD.)
• 140A(1B)- INTEREST PAYABLE U/S 234B SHALL BE
COMPUTED ON ASSESSED TAX (OR ON SHORTAGE OF
A.T. PAID OVER ASSESSED TAX)
EXPLANATION: ASSESSED TAX MEANS TAX ON
DECLARED TOTAL INCOME AS REDUCED BY-
(i) DUE TDS OR TCS ON INCOME INCLUDED IN
COMPUTATION
(ii) RELIEF CLAIMED U/S 90/91
(iii) RELEIF CLAIMED U/S 90A
(iv) TAX CREDIT SET 0FF CLAIMED U/S 115JAA OR 115JD
 SEC.140A- SELF-ASSESSMENT
(CONTD.)
• 140A(2)- AFTER A REGULAR ASSESSMENT U/S
115WE/115WF/143/144 OR ASSESSMENT U/S
153A/158BC, AMOUNT PAID U/S 140A(1)
SHALL BE DEEMED TO HAVE BEEN PAID
TOWARDS SUCH REGULAR ASSESSMENT OR
ASSESSMENT
 SEC.140A- SELF-ASSESSMENT
(CONTD.)
• 140A(3)- ASSESSEE WHO HAS FAILED TO PAY
WHOLE/PART OF TAX OR INTEREST DUE U/S
140A(1) SHALL, WITHOUT PREJUDICE TO ANY
OTHER CONSEQUENCES, BE DEEMED TO BE
AN ASSESSEE IN DEFAULT AND ALL THE
PROVISIONS OF THE ACT SHALL APPLY.
 142- INQUIRY BEFORE ASSESSMENT
142(1) –FOR THE PURPOSE OF MAKING AN ASSESSMENT, AN
A.O. MAY SERVE ON ANY PERSON WHO HAS MADE A RETURN
U/S 139 OR IN WHOSE CASE TIME ALLOWED U/S 139(1) HAS
EXPIRED A NOTICE REQUIRING HIM ON A DATE SPECIFIED –
(i) IF HE HAS NOT MADE A RETURN WITHIN TIME U/S
139(1) OR *BEFORE END OF ASST. YEAR TO FURNISH A
RETURN
(ii) TO PRODUCE ACCOUNTS/DOCUMENTS CALLED FOR
(iii) TO FURNISH INFORMATION (INCLUDING A STATEMENT
OF ALL ASSETS & LIABILITIES, WHETHER INCLUDED IN
THE ACCOUNTS OR NOT) CALLED FOR
*REQUIRES AMENDMENT CONSEQUENT TO SEC.139(4)
 142- INQUIRY BEFORE ASSESSMENT
(CONTD.)
• PROVISO TO SEC.142(1)-
(a) PRIOR APPROVAL OF JOINT
COMMISSIONER TO BE OBTAINED BEFORE
CALLING FOR STATEMENT OF ASSETS &
LIABILITIES
(b) A.O. SHALL NOT REQUIRE ACCOUNTS
RELATING TO A PERIOD MORE THAN 3 YEARS
PRIOR TO THE PREVIOUS YEAR
 TYPES OF NOTICES U/S 142(1)

1. U/S 142(1)(i):
TO FURNISH RETURN OF INCOME
2. U/S 142(1)(ii):
TO PRODUCE, OR CAUSE TO BE PRODUCED, ACCOUNTS
OR DOCUMENTS
3. U/S 142(1)(iii):
TO FURNISH INFORMATION (INCLUDING A STATEMENT
OF ALL ASSETS & LIABILITIES, WHETHER INCLUDED IN
ACCOUNTS OR NOT)
 NOTICE U/S 142(1)(i)

WHEN CAN BE ISSUED?

FROM:
ONLY AFTER “DUE DATE” FOR FILING RETURN FOR
RELEVANT PERSON
TILL:
*THE END OF ASST. YEAR (MY VIEW)
*CONSEQUENT TO AMENDMENT IN SEC.139(4)
EVEN THOUGH THE REQUIRED AMENDMENT NOT
MADE IN SECTION 142(1)(i) WHICH AUTHORISES
ISSUE AFTER THE END OF ASST. YEAR.
 NOTICE U/S 142(1)(i)

WHETHER PRIOR APPROVAL REQUIRED?

NO.
WHETHER SATISFACTION TO BE RECORDED?
NOT COMPULSORY. PREFERABLE TO RECORD
REASON FOR ISSUE, i.e.,
(A) STOP-FILER OR NON-FILER
(B) CONDUCT OF SURVEY OR SEARCH
(C) AIR/CIB/ANY OTHER INFORMATION
TO ENABLE APPROPRIATE FOLLOW-UP BY
YOURSELF/SUCCESSOR
 NOTICE U/S 142(1)(i)
PURPOSE OF ISSUE?
MAKING AN ASSESSMENT
CAN PROCEEDINGS BE DROPPED?
YES, AFTER RECORDING SATISFACTION THAT ASSESSEE IS NOT
LIABLE TO FILE RETURN. MATERIAL TO BE PLACED ON
RECORD.
WHETHER ASSESSMENT U/S 143(3) IS COMPULSORY IN ALL
CASES?
A. NO (IF NOTICES WERE ISSUED ONLY TO CALL FOR
RETURNS IN CASES OF NON-FILERS/STOP FILERS)
B. YES (IN SEARCH & OTHER CASES – AS PER BOARD’S
INSTRUCTIONS FOR SELECTION FOR SCRUTINY ISSUED
ANNUALLY)
 NOTICE U/S 142(1)(ii)
WHEN CAN BE ISSUED?
1. WHEN A RETURN HAS BEEN FILED U/S 139 OR IN
RESPONSE TO NOTICE U/S 142(1)/148/153A/153C -
AFTER ISSUE OF NOTICE U/S 143(2) & BEFORE
COMPLETION OF ASSESSMENT - WHETHER THERE
IS COMPLIANCE TO NOTICE U/S 143(2) OR NOT
2. WHEN NO RETURN IS FILED IN RESPONSE TO
NOTICE U/S 142(1)/148/153A/153C
 NOTICE U/S 142(1)(ii)
WHAT CAN BE CALLED FOR?
1. ACCOUNTS OR DOCUMENTS IN POSSESSION OR
CONTROL OF ASSESSEE (6 ITR 445). EVEN IF SEIZED,
ASSESSEE COULD TAKE COPIES & PRODUCE (89 ITR
281). ASSESSEE TO PROVE THAT REQUIRED BOOKS
DO NOT EXIST (9 ITR 225).
2. ACCOUNTS OR DOCUMENTS HAVING A BEARING ON
MAKING OF ASSESSMENT {122 ITR 55 (SC)}
WHAT CAN NOT BE CALLED FOR?
ACCOUNTS RELATING TO A PERIOD MORE THAN 3 YEARS
PRIOR TO THE PREVIOUS YEAR
 NOTICE U/S 142(1)(iii)

WHEN CAN BE ISSUED?

1. WHEN A RETURN HAS BEEN FILED U/S 139 OR IN
RESPONSE TO NOTICE U/S 142(1)/148/153A/153C -
AFTER ISSUE OF NOTICE U/S 143(2) & BEFORE
COMPLETION OF ASSESSMENT – WHETHER THERE
IS COMPLIANCE TO NOTICE U/S 143(2) OR NOT
2. WHEN NO RETURN IS FILED IN RESPONSE TO
NOTICE U/S 142(1)/148/153A/153C
 NOTICE U/S 142(1)(iii)
WHAT CAN BE CALLED FOR?
FURNISHING IN WRITING & VERIFIED IN THE PRESCRIBED
MANNER “INFORMATION IN SUCH FORM & ON SUCH POINTS
OR MATTERS A.O. MAY REQUIRE (INCLUDING A STATEMENT
OF ALL ASSETS & LIABILITIES, WHETHER INCLUDED IN THE
ACCOUNTS OR NOT)”
WHETHER ANY APPROVAL IS REQUIRED?
PRIOR APPROVAL OF RANGE-HEAD IS REQUIRED BEFORE
CALLING FOR STATEMENT OF ALL ASSETS & LIABILITIES NOT
INCLUDED IN ACCOUNTS
 NOTICE U/S 142(1)(iii)
AS ON WHAT DATE THIS STATEMENT TO BE CALLED FOR?
AS ON 1ST APRIL AND 31ST MARCH OF PREVIOUS YEAR

HOW THIS STATEMENT WILL BE USEFUL FOR ASSESSMENT?

1. TO COMPARE THE INCREASE IN ASSETS WITH ADMITTED
INCOME
2. TO DETECT BOGUS LIABILITIES
3. TO DETECT UNDER-VALUATION OF ASSETS
4. TO MAKE ASSESSEE COMMIT WITH REGARD TO HIS CAPITAL
(TO PREVENT INFLATED CAPITAL BUILDUP IN FUTURE),
DRAWINGS, COST OF IMPROVEMENT, EXEMPT
INCOME/RECEIPTS, ETC
 142- INQUIRY BEFORE ASSESSMENT
(CONTD.)
• 142(2)- FOR THE PURPOSE OF OBTAINING
FULL INFORMATION IN RESPECT OF INCOME
OR LOSS, A.O. MAY MAKE SUCH INQUIRY AS
HE CONSIDERS NECESSARY
 142(2A)- SPECIAL AUDIT
HAVING REGARD TO –
NATURE & COMPLEXITY OF ACCOUNTS,
VOLUME OF ACCOUNTS,
DOUBTS ABOUT CORRECTNESS OF ACCOUNTS,
MULTIPLICITY OF TRANSACTIONS IN ACCOUNTS OR
SPECIALISED NATURE OF BUSINESS AND
INTERESTS OF REVENUE,
IF A.O. , AT ANY STAGE OF PROCEEDINGS BEFORE HIM,
OPINES THAT IT IS NECESSARY, HE MAY, WITH PRIOR
APPROVAL OF CCIT OR CIT, DIRECT THE ASSESSEE TO GET
ACCOUNTS AUDITED BY AN ACCOUNTANT U/S 288(2)
NOMINATED BY CCIT/CIT AND TO FURNISH A REPORT
 142(2A)- SPECIAL AUDIT (CONTD.)
• PROVISO TO SEC.142(2A)- A.O. SHALL NOT DIRECT SPECIAL AUDIT
WITHOUT GIVING OPPORTUNITY OF HEARING
• 142(2B) – 142(2A) SHALL HAVE EFFECT EVEN IF ACCOUNTS HAVE
BEEN ALREADY AUDITED
• 142(2C) – REPORT SHALL BE FILED WITHIN THE PERIOD SPECIFIED
BY A.O.
PROVISO- A.O. MAY, SUO MOTO OR ON APPLICATION FOR GOOD &
SUFFICIENT REASONS, EXTEND THE PERIOD BUT TOTAL PERIOD
SHALL NOT EXCEED 180 DAYS OF DATE OF RECEIPT OF DIRECTION
U/S 142(2A)
• 142(2D) – EXPENSES OF SPECIAL AUDIT DIRECTED ON OR AFTER
1-4-2007 SHALL BE DETERMINED BY CCIT/CIT & PAID BY CENTRAL
GOVT.
 142(3) - OPPORTUNITY TO ASSESSEE

• ASSESSEE SHALL (EXCEPT IN CASE OF ASST.

U/S 144) BE GIVEN AN OPPORTUNITY OF
HEARING IN RESPECT OF -
ANY MATERIAL GATHERED U/S 142(2)
OR
ANY AUDIT U/S 142(2A)
PROPOSED TO BE UTILISED FOR ASSESSMENT
 142A- ESTIMATE BY VALUATION
OFFICER
• 142A(1) – FOR MAKING ASSESSMENT OR RE-ASSESSMENT, IF AN
ESTIMATE OF VALUE OF INVESTMENT U/S 69/69B OR VALUE OF
BULLION/JEWELLERY/OTHER ARTICLE U/S 69A/69B OR FAIR
MARKET VALUE OF PROPERTY U/S 56(2) IS REQUIRED, A.O. MAY
REQUIRE VALUATION OFFICER (V.O.) TO MAKE AN ESTIMATE &
REPORT
• 142A(2) – A.O. MAY MAKE A REFERENCE WHETHER OR NOT HE IS
SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE
ACCOUNTS OF THE ASSESSEE
• 142A(3)- V.O. SHALL HAVE ALL POWERS U/S 38A OF W.T. ACT, 1957.
• 142A(6)- V.O. SHALL SEND HIS REPORT WITHIN SIX MONTHS FROM
THE END OF THE MONTH IN WHICH REFERENCE IS MADE.
• 142A(7) - ON RECEIPT OF REPORT, A.O. MAY, AFTER GIVING AN
OPPORTUNITY TO ASSESSEE, TAKE INTO ACCOUNT SUCH REPORT
 SEC.143(1)- PROCESSING
RETURNS FILED U/S 139 OR IN RESPONSE TO NOTICE U/S 142(1)
SHALL BE PROCESSED AS UNDER-
(a) TOTAL INCOME OR LOSS SHALL BE COMPUTED AFTER MAKING
THE FOLLOWING ADJUSTMENTS-
(i) ARITHMETICAL ERROR
(ii) INCORRECT CLAIM, IF IT IS APPARENT FROM INFORMATION IN
RETURN
(iii) DISALLOWANCE OF B/F LOSS IF THAT LOSS RETURN WAS FILED
BEYOND DUE DATE
(iv) DISALLOWANCE OF EXPENDITURE AS PER AUDIT REPORT NOT
TAKEN INTO ACCOUNT
(v) DISALLOWANCE OF DEDUCTION U/S 10AA, 80-IA, 80-IAB, 80-IC,
80-ID, 80-IE IF RETURN WAS FILED BEYOND DUE DATE
(vi) ADDITION OF INCOME AS PER 26AS/16A/16 NOT INCLUDED
 SEC.143(1)- PROCESSING (CONTD.)
EXPLANATION TO SEC.143(1)-
(a)INCORRECT CLAIM, IF IT IS APPARENT FROM INFORMATION IN
RETURN, MEANS A CLAIM, ON THE BASIS OF ENTRY IN THE RETURN-
(i) AN ITEM, WHICH IS INCONSISTENT WITH ANOTHER ENTRY OF
SAME OF SOME OTHER ITEM IN SUCH RETURN;
(ii) IN RESPECT OF WHICH INFO. REQUIRED TO BE FURNISHED TO
SUBSTANTIATE SUCH ENTRY HAS NOT BEEN SO FURNISHED
(iii) IN RESPECT OF A DEDUCTION, WHERE IT EXCEEDS SPECIFIED
STATUTORY LIMIT EXPRESSED AS AMOUNT OR % OR RATIO OR
FRACTION
(b) ACK. OF RETURN SHALL BE DEEMED TO BE INTIMATION WHERE
NO SUM IS PAYABLE/REFUNDABLE OR NO ADJUSTMENT IS MADE
 SEC.143(1)- PROCESSING (CONTD.)

• FIRST PROVISO TO SEC.143(1)(a):

• NO ADJUSTMENT WITHOUT INTIMATION IN
WRITING OR IN ELECTRONIC MODE
• SECOND PROVISO:
• RESPONSE FROM ASSESSEE SHALL BE
CONSIDERED.
• IF NO RESPONSE WITHIN 30 DAYS OF ISSUE OF
INTIMATION, ADJUSTMENT SHALL BE MADE
SEC.143(1)- PROCESSING (CONTD.)
• SEC.143(1)-
(b) TAX, INTEREST SHALL BE COMPUTED
(c) SUM PAYABLE/REFUNDABLE SHALL BE
DETERMINED AFTER ADJUSTMENT OF
TDS/TCS/AT/RELIEF U/S 90/90A/91/REBATE
UNDER CHAPTER VIII/140A/PAID OTHERWISE
(d) INTIMATION SHALL BE SENT SPECIFYING SUM
PAYABLE/REFUNDABLE
(e) REFUND SHALL BE GRANTED
SEC.143(1)- PROCESSING (CONTD.)
• FIRST PROVISO TO SEC.143(1)-
INTIMATION SHALL ALSO BE SENT IF LOSS IS
ADJUSTED BUT NO SUM IS
PAYABLE/REFUNDABLE
• SECOND PROVISO TO SEC.143(1)-
NO INTIMATION SHALL BE SENT AFTER EXPIRY
OF ONE YEAR FROM THE END OF FINANCIAL
YEAR IN WHICH RETURN IS FILED.
SEC.143(1)- PROCESSING (CONTD.)
• 143(1A) – CENTRALISED PROCESSING OF RETURNS
• 143(1B) - ENABLING GOVT. TO ISSUE NOTIFICATION
TO GIVE EFFECT TO CENTRALISED PROCESSING
• 143(1C) - NOTIFICATION TO BE LAID BEFORE
PARLIAMENT
• 143(1D) – PROCESSING SHALL NOT BE NECESSARY
BEFORE ONE YEAR FROM END OF YEAR OF FILING
WHERE A NOTICE HAS BEEN ISSUED U/S 143(2) BUT
TO BE DONE BEFORE ORDER U/S 143(3).
• (FA 2017)- NEW 143(1D) WILL NOT APPLY FOR
RETURNS FOR AY 2017-18 ONWARDS
 SEC. 143(2) – NOTICE FOR SCRUTINY
• 143(2) – WHERE A RETURN IS FURNISHED U/S 139 OR IN
RESPONSE TO NOTICE U/S 142(1), A.O. OR PRESCRIBED I.T.
AUTHORITY SHALL-
IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE
THAT ASSESSEE HAS NOT UNDERSTATED INCOME OR HAS
NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID
THE TAX IN ANY MANNER, SERVE A NOTICE REQUIRING, ON
A SPECIFIED DATE, ATTENDANCE OR PRODUCTION OF
EVIDENCE BEFORE AO WHICH ASSESSEE MAY RELY IN
SUPPORT OF RETURN.
NO NOTICE SHALL BE SERVED AFTER 6 MONTHS FROM THE
END OF FINANCIAL YEAR IN WHICH RETURN IS FILED
 NOTICE U/S 143(2)
WHEN CAN BE ISSUED?
ONLY WHEN RETURN IS FILED.
FROM:
ANY DAY AFTER RETURN IS FILED
TILL:
6 MONTHS FROM THE END OF FINANCIAL YEAR IN
WHICH RETURN IS FILED.
e.g. IF RETURN IS FILED ON 1-4-2015, TILL 30-9-
2016
 NOTICE U/S 143(2) (CONTD.)
LIMITATION – FOR ISSUE OR SERVICE?
FOR SERVICE.
MODES OF SERVICE:
1. BY REGISTERED POST WITH ACK. DUE
2. BY SPEEDPOST WITH ACK. DUE
3. PERSONAL SERVICE (THROUGH NOTICE
SERVER/ITI) (WITH TEAR-OFF SLIP OR SPARE
COPY OF NOTICE)
ADDITIONALLY BY E-MAIL OF DIGITALLY SIGNED
NOTICE.
 SEC.143(3)- ASSESSMENT ORDER
• 143(3)- AFTER HEARING THE EVIDENCES
PRODUCED BY ASSESSEE AND REQUIRED BY
A.O. AND AFTER TAKING INTO ACCOUNT ALL
MATERIALS GATHERED, A.O. SHALL, BY ORDER
IN WRITING, MAKE ASSESSMENT OF TOTAL
INCOME OR LOSS AND DETERMINE THE SUM
PAYABLE OR REFUNDABLE
 SEC. 143(3)- SPECIAL CASES
• FIRST PROVISO TO SEC.143(3)- IN THE CASE OF
(a)- RESEARCH ASSN. U/S 10(21)
(b)-NEWS AGENCY U/S 10(22B)
(c)- ASSN. OR INSTN. U/S 10(23A)
(d)- INSTITUTION U/S 10(23B)
(e) – FUND/INSTITUTION/TRUST/UNIVERSITY/EDUCATIONAL
INSTITUTION/HOSPITAL/MEDICAL INSTITUTION U/S 10(23C)
NO ASST. ORDER SHALL BE MADE, WITHOUT GIVING EFFECT TO
SEC.10, UNLESS A.O. INTIMATED CENTRAL GOVT./PRESCRIBED
AUTHORITY CONTRAVENTION OF
SEC.10(21)/(22B)/(23A)/(23B)/(23C) AND APPROVAL GRANTED HAS
BEEN WITHDRAWN OR NOTIFICATION ISSUED HAS BEEN
RESCINDED
 SEC. 143(3)- SPECIAL CASES
• SECOND PROVISO TO SEC.143(3)- IF A.O. IS
SATISFIED THAT ACTIVITIES OF UNIVERSITY,
COLLEGE OR INSTITUTION U/S 35 ARE NOT
BEING CARRIED OUT AS PER THE CONDITIONS
FOR APPROVAL, HE MAY, AFTER GIVING A
REASONABLE OPPORTUNITY, RECOMMEND TO
CENTRAL GOVT. TO WITHDRAW APPROVAL
AND THE GOVT. MAY BY ORDER WITHDRAW
AND FORWARD A COPY TO UNIVERSITY, ETC,
AND A.O.
 SEC. 143(3)- SPECIAL CASES
• THIRD PROVISO TO SEC.143(3)-
A.O. SHALL NOT GIVE EFFECT TO SEC.10(23C)
IN CASE OF A TRUST OR INSTITUTION IF FIRST
PROVISO TO SEC.2(15) BECOME APPLICABLE,
WHETHER OR NOT THE APPROVAL
/NOTIFICATION IS WITHDRAWN/RESCINDED
 SEC.143(4)
• WHERE ASST. IS MADE U/S 143(3) OR 144-
(a) SUM PAID U/S 143(1) SHALL BE DEEMED
TO HAVE BEEN TOWARDS SUCH ASST.
(b) IF REFUND DUE IS NIL OR LESS THAN
REFUNDED U/S 143(1), WHOLE OR EXCESS
REFUND SHALL BE DEEMED TO BE TAX
PAYABLE AND PROVISIONS SHALL
ACCORDINGLY APPLY.
 SEC. 144- BEST JUDGEMENT ASST.
• 144(1)- IF ANY PERSON-
(a) FAILS TO FILE RETURN U/S 139(1)/(4)/(5); OR
(b) FAILS TO COMPLY WITH NOTICE U/S 142(1) OR
DIRECTION U/S 142(2A); OR
(c) FAILS TO COMPLY WITH NOTICE U/S 143(2),
A.O., AFTER CONSIDERING ALL MATERIAL GATHERED BY
HIM, SHALL, AFTER GIVING AN OPPORTUNITY, MAKE
ASSESSMENT OF TOTAL INCOME ON LOSS TO THE BEST
OF HIS JUDGEMENT AND DETERMINE THE SUM PAYABLE
SEC. 144- BEST JUDGEMENT ASST.
• FIRST PROVISO TO SEC.144(1)-
OPPORTUNITY BY WAY OF SHOW CAUSE
NOTICE

SECOND PROVISO TO SEC.144(1)-

NOT NECESSARY TO GIVE OPPORTUNITY IF
NOTICE U/S 142(1) HAS BEEN ISSUED BEFORE
MAKING OF ASSESSMENT.
 SEC.144A- DIRECTIONS OF JCIT
• A JCIT MAY -
ON HIS OWN ; OR
ON REFERENCE BY A.O.; OR
ON APPLICATION OF ASSESSEE
CALL FOR & EXAMINE THE RECORD OF PENDING
ASSESSMENT AND IF HE CONSIDERS, HAVING REGARD TO
NATURE OF THE CASE OR AMOUNT INVOLVED OR ANY
OTHER REASON, NECESSARY HE MAY ISSUE DIRECTIONS
FOR GUIDANCE AND THEY SHALL BE BINDING ON A.O.
PROVISO:- DIRECTIONS PREJUDICIAL TO ASSESSEE SHALL
NOT BE ISSUED WITHOUT OPPORTUNITY TO ASSESSEE
EXPLANATION: DIRECTIONS ON LINE OF INVESTIGATION
SHALL NOT BE DEEMED PREJUDICIAL TO ASSESSEE
 REFERENCES TO CIT, ETC
• SEC.144BA-
REFERENCE TO CIT IN CASES OF
IMPERMISSIBLE AVOIDANCE AGREEMENT
UNDER CHAPTER X-A

SEC.144C-
REFERENCE TO DISPUTE RESOLUTION PANEL
IN CASES OF TRANSFER PRICING
 SEC.145- METHOD OF ACCOUNTING
• SEC.145(1)-
INCOME CHARGEABLE UNDER “BUSINESS” OR “OTHER
SOURCES” SHALL, SUBJECT TO SEC.145(2), BE COMPUTED
WITH EITHER CASH OR MERCANTILE SYSTEM.
SEC.145(2)-
CENTRAL GOVT. MAY NOTIFY ACCOUNTING STANDARDS
(ICDS) TO BE FOLLOWED BY ANY CLASS OF
ASSESSEES/INCOME
SEC.145(3)- IF A.O. IS NOT SATISFIED ABOUT –
CORRECTNESS OR COMPLETENESS OF ACCOUNTS; OR
METHOD OF ACCOUNTING U/S 145(1) OR ACCOUNTING
STANDARDS HAVE NOT BEEN REGULARLY FOLLOWED,
HE MAY MAKE ASSESSMENT U/S 144.
 NOTIFIED ICDS
CBDT NOTIFICATION DATED 29TH SEPTEMBER 2016:-
I-ACCOUNTING POLICIES
II-VALUATION OF INVENTORIES
III-CONSTRUCTION CONTRACTS
IV-REVENUE RECOGNITION
V-TANGIBLE FIXED ASSETS
VI-EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES
VII-GOVERNMENT GRANTS
VIII-SECURITIES
IX-BORROWING COSTS
X-PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT
ASSETS
 SEC.145A- METHOD OF ACCOUNTING IN
CERTAIN CASES
• 145A(a)- VALUATION OF PURCHASE & SALE OF GOODS AND
INVENTORY SHALL BE-
(i) IN ACCORDANCE WITH ACCOUNTING METHOD REGULARLY
EMPLOYED; AND
(ii) FURTHER ADJUSTED TO INCLUDE TAX, DUTY, CESS OR FEE,
ACTUALLY PAID OR INCURRED TO BRING THE GOODS TO
PLACE OF ITS LOCATION & CONDITION AS ON VALUATION
DATE
EXPLANATION: TAX, DUTY, ETC, TO INCLUDE ALL PAYMENTS EVEN
IF RIGHTS ARISE AS A CONSEQUENCE TO SUCH PAYMENT

145(b)-INTEREST RECEIVED ON COMPENSATION/ENHANCED

COMPENSATION SHALL BE DEEMED TO BE INCOME OF THE
YEAR OF RECEIPT
SEC.153-TIME LIMIT FOR COMPLETION
• S.153(1) – ASSESSMENT SHALL BE MADE U/S 143/144 WITHIN 21
MONTHS FROM END OF A.Y.
• (FA 2017) FOR AY 2018-19 – WITHIN 18 MONTHS
FOR AY 2019-20 ONWARDS – WITHIN 12 MONTHS
• S.153(2) – ASSESSMENT SHALL BE MADE U/S 147 WITHIN 9 MONTHS
FROM END OF F.Y. IN WHICH NOTICE WAS SERVED
• (FA 2017) NOTICES SERVED ON OR AFTER 1-4-2019 = 12 MONTHS
• S.153(3)-ORDER OF FRESH ASSESSMENT U/S 254/263/264, SETTING ASIDE
OR CANCELLING AN ASSESSMENT, SHALL BE MADE WITHIN 9 MONTHS
FROM END OF F.Y. IN WHICH ORDER U/S 254 IS RECEIVED BY
PCCIT/CCIT/PCIT/CIT OR ORDER U/S 263/264 IS PASSED
• (FA 2017) ORDERS RECEIVED/PASSED ON OR AFTER 1-4-2019 = 12
MONTHS
• S.153(4)- IF REFERENCE U/S 92CA(1) IS MADE (TPO), ABOVE PERIOD SHALL
BE EXTENDED BY 12 MONTHS
SEC.153-TIME LIMIT FOR COMPLETION
(CONTD.)
• S.153(5)- IF ORDER U/S 250/254/260/262/263/264 IS TO BE GIVEN EFFECT,
WHOLLY OR PARTLY, OTHERWISE THAN BY FRESH ASSESSMENT, IT SHALL
BE GIVEN WITHIN 3 MONTHS FROM END OF THE MONTH IN WHICH
ORDER U/S 250/254/260/262 IS RECEIVED BY PCCIT/CCIT/PCIT/CIT OR
ORDER U/S 263 /264 IS PASSED BY PCIT/CIT.
• FIRST PROVISO:
IF, FOR REASONS BEYOND A.O.’s CONTROL, IT IS NOT POSSIBLE TO DO SO
WITHIN 3 MONTHS, PCIT/CIT, ON RECEIPT OF WRITTEN REQUEST FROM
AO, IF SATISFIED, MAY ALLOW FURTHER 6 MONTHS.
• SECOND PROVISO:
IF ORDER U/S 250/254/260/262/263/264 REQUIRES VERIFICATION OF
ANY ISSUE BY WAY OF SUBMISSION OF ANY DOCUMENT BY
ASSESSEE/ANY OTHER PERSON OR IF HERING IS TO BE PROVIDED TO
ASSESSEE, ORDER SHALL BE MADE WITHIN TIME U/S 153(3)
SEC.153-TIME LIMIT FOR COMPLETION (CONTD.)

S.153(6)-
(I) IF ASSESSMENT/RE-ASST. IS MADE ON ASSESSEE OR
ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT
TO ANY FINDING OR DIRECTION IN AN ORDER U/S 250,
254, 260, 262, 263 OR 264 OR OF ANY COURT IN OTHER
THAN APPEAL/REFERENCE PROCEEDINGS – BEFORE 12
MONTHS FROM THE END OF MONTH IN WHICH ORDER IS
RECEIVED OR PASSED BY PCIT/CIT
(b) IF ASST. IS MADE ON A PARTNER IN CONSEQUENCE OF
ASSESSMENT OF FIRM U/S 147 – BEFORE 12 MONTHS
FROM END OF MONTH IN WHICH ORDER IS PASSED ON
FIRM.
SEC.153-TIME LIMIT FOR COMPLETION (CONTD.)

• 153(7): IF EFFECT TO ORDER REFERRED U/S-S

(5) OR (6) IS TO BE GIVEN & IF SUCH ORDER
HAS BEEN RECEIVED/PASSED BEFORE 1-6-
2016, IT SHALL BE DONE ON OR BEFORE 31-3-
2017.
• 153(8): ORDER REVIVED U/S 153A(2) SHALL BE
MADE WITHIN ONE YEAR FROM END OF
MONTH OF REVIVAL OR AS PER 153B(1),
WHICHEVER IS LATER.
SEC.153-TIME LIMIT FOR COMPLETION (CONTD.)

• EXPLANATION 1 TO SEC.153 (EXCLUSIONS IN COMPUTING LIMITATION) :

(i) TIME TAKEN TO COMPLY WITH SEC.129
(ii) PERIOD OF STAY BY ANY COURT
(iii) PERIOD FROM DATE OF INTIMATION TO CENTRAL GOVT./PRESCRIBED
AUTHORITY CONTRAVENTION OF SEC.10(21), (22B), (23A), (23B),
(23C)(iv)/(v)/(vi)/(via) AND DATE OF RECEIPT OF ORDER WITHDRAWING
APPROVAL OR RESCINDING THE NOTIFICATION BY A.O.
(iv) PERIOD FROM DATE OF DIRECTION U/S 142(2A) AND
(a) LAST DATE ON WHICH THE REPORT IS REQUIRED TO BE
FURNSIHED; OR
(b) DATE ON WHICH COURT’S ORDER SETTING ASIDE DIRECTION
U/S 142(2A) IS RECEIVED BY PCIT/CIT
(v) PERIOD FROM DATE OF MAKING A REFERENCE TO VALUATION
OFFICER AND DATE OF RECEIPT OF RECEIPT OF REPORT
(vi) PERIOD (NOT EXCEEDING 60 DAYS) FROM DATE OF RECEIPT OF
DECLARATION U/S 158A(1) AND DATE OF ORDER U/S 158A(3)
SEC.153-TIME LIMIT FOR COMPLETION (CONTD.)

(vii) IF APPLICATION BEFORE ITSC IS REJECTED OR IS NOT ALLOWED TO

BE PROCEEDED WITH, PERIOD FROM DATE OF APPLICATION TO DATE
OF RECEIPT OF ORDER U/S 245D(1) BY PCIT/CIT
(viii) PERIOD FROM DATE OF APPLICATION TO AAR TO DATE ON WHICH
ITS REJECTION ORDER IS RECEIVED BY PCIT/CIT
(ix) PERIOD FROM DATE OF APPLICATION TO AAR TO DATE OF RECEIPT
OF RULING BY PCIT/CIT
(x) PERIOD FROM DATE OF MAKING OF REFERENCE (OR FIRST OF
REFERENCES) FOR EXCHANGE OF INFORMATION U/S 90 OR 90A AND
DATE OF LAST RECEIPT OF INFORMATION BY PCIT/CIT OR ONE YEAR,
WHICHEVER IS LESS; OR
(xi) PERIOD FROM DATE OF RECEIPT OF REFERENCE U/S 144BA(1) AND
DATE OF RECEIPT OF DIRECTION U/S 144BA(3) OR (6) OR (5) BY AO
SEC.153-TIME LIMIT FOR COMPLETION (CONTD.)

FIRST PROVISO: IF REMAINING PERIOD U/S-S (1),

(2), (3) AND (8) IS LESS THAN 60 DAYS, IT SHALL BE
EXTENDED TO 60 DAYS.
SECOND PROVISO: IF PERIOD AVAILABLE TO TPO IS
EXTENDED TO 60 DAYS U/S 92CA(3A) AND IF
PERIOD TO AO IS LESS THAN 60 DAYS, IT SHALL BE
EXTENDED TO 60 DAYS.
THIRD PROVISO: WHERE A PROCEEDING BEFORE
ITSC ABATES U/S 245HA, REMAINING PERIOD
SHALL BE NOT LESS THAN ONE YEAR
ALL THE BEST