Summary assessment and scrutiny assessment

To know the need for assessment of return of income. To understand various types of income tax return and their due dates for filing. To understand different types of assessment and to analyse summary assessment and scrutiny assessment. To know the procedure and time limit for carrying out summary assessment and scrutiny assessment. Finally, the webinar would touch upon relevant judicial precedents.

1. Summary Assessment and Scrutiny Assessment CA. Divakar Vijayasarathy

2. Credits and Acknowledgments Bharathi Priya R D Thirumal V Jugal Gala

3. Legends Used in the Presentation ITD Income Tax Department AO Assessing Officer AY Assessment Year CBDT Central Board of Direct Taxes CG Central Government FY Financial Year HMRC HM Revenue & Customs IRAS Inland Revenue Authority of Singapore PY Previous Year

4. Presentation Schema

5. Assessment

6. Types of Return of Income

7. Due Dates for Filing Return of Income

8. Types of Assessment Four Major Assessment Summary assessment – Sec 143(1) Scrutiny assessment – Sec 143(3) Best Judgement assessment – Sec 144 Income Escaping assessment – Sec 147

9. Summary Assessment - Sec 143(1) For e.g. Return is filed on 31 st August 2019 for AY 2019-20 Time limit for summary assessment will be 31 st March 2021 (one year from the end of the FY)

10. Computation of Total Income/Loss In Summary Assessment, the total income or loss is computed after making the following adjustments

11. Incorrect Claim “ An incorrect claim apparent from any information in the return” means a claim on the basis of an entry in the return

12. Manner of Adjustment

13. Procedure for Summary Assessment

14. Scrutiny Assessment – Sec 143(3)

15. Scope of Scrutiny Assessment The objective of scrutiny assessment is to confirm that the taxpayer Has not understated the income Has not computed excessive loss Has not underpaid the tax in any manner or or

16. Procedure for Scrutiny Assessment

17. Denial of Exemption in Case of Specified Entities In case of specified funds or institutions, assessment shall not be made without giving effect to provisions of Sec 10 unless Above two provisions shall not apply in the case of a trust or institution whose object is ‘advancement of any other object of general public utility’ and its commercial receipts during the PY has exceeded 20% of its total receipts from commercial activities undertaken.

18. Time Limit for Completion of Assessment – Sec 153 Assessment Year Time limit for Scrutiny Assessment For AY 2017-18 or before 21 months form the end of the AY in which the income was first assessable For AY 2018-19 18 months form the end of the AY in which the income was first assessable For AY 2019-20 onwards 12 months form the end of the AY in which the income was first assessable If reference is made to Transfer Pricing Officer (TPO) the period available for assessment shall be extended by 12 months

19. Notice of Demand

20. E-Assessments – Sec 143(3A)

21. Appeals and Rectification Intimation under Sec 143(1) Assessment Order under 143(3) Appealable Orders Appeal Authority Commissioner of Income-tax (Appeals) [CIT(A)] Rectification under Sec 154 All orders made under the Act are rectifiable Provided the mistake is apparent from record

22. Caveats and Suggestions Payment of demand must be made within 30 days of intimation of summary assessment, if not deciding for appeal Adjournment of hearings is possible only for genuine reasons and contingencies Assessee must respond to the intimation given by the AO within 30 days for summary assessment Return of loss, in the year in which it is incurred, needs to be filed within the due date; however, delay in subsequent year shall still be valid to further carry forward In case of online rectifications request (after 2 requests) for summary assessment, it is advisable to additionally raise grievance and file rectification if the mistake is repeatedly been done by ITD Avoid filing return of income with tax payable even though it is allowed - to circumvent issues subsequently at the time of assessment Ensure that the income and TDS reflecting in Form 26AS are reported in return of income – if doesn’t belongs to you, seek revision of TDS returns

23. Judicial Precedents Where notice under section 143(2) was issued to assessee prior to filing of return of income, said notice being invalid, assessment order passed in pursuance of same deserved to be set aside - Principal Commissioner of Income Tax vs. Marck Biosciences Ltd . [2019] 106 taxmann.com 399 (Gujarat) Where claim for a deduction is made under a wrong provision but necessary facts for said claim to be set up are available in return, in such a case, Assessing Officer can consider such a claim without revised return being filed by assessee - Commissioner of Income Tax, Kottayam vs. Malayala Manorama Co. Ltd . [2018] 96 taxmann.com 498 (Kerala) Service of scrutiny notice on authorized representative of assessee on the ground of non-availability of assessee is deemed service of notice on assessee and sufficient compliance of requirement of section 143(2 ) - Income Tax officer, Etawah vs. Dharam Narain [2018] 90 taxmann.com 325 (SC) Where loss returned by assessee was reduced on account of disallowance of depreciation and said shifting of depreciation to a later year had no impact on its tax liability, additional tax could not have been imposed by invoking provisions of sub-section (1A) of section 143 - Principal Commissioner of Income-tax - Vadodara-1 vs. Gujarat Electricity Board [2017] 87 taxmann.com 110 (Gujarat )

24. Assessment Procedures in Other Countries

25. Contd. The Australian tax system for companies is based on self-assessment Tax Officer undertakes ongoing compliance activity to ensure corporations are meeting their tax obligations He/she takes a risk-based approach to compliance and audit activities, with efforts generally focused on taxpayers with a higher likelihood of non-compliance and/or higher consequences (generally in dollar terms) of non-compliance Compliance activities take various forms, including general risk reviews, questionnaires, reviews of specific issues, and audits. Australia

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