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
Assessment
Types of
Return of
Income
Due Dates for
Filing Return of
Income
Types of
Assessment
Summary
Assessment –
Sec 143 (1)
Computation
of Total
Income/Loss
Manner of
Adjustment
Procedure for
Summary
Assessment
Scrutiny
Assessment –
143 (3)
Scope of
Scrutiny
Assessment
Procedure for
Scrutiny
Assessment
Denial of
Exemptions to
Specified
Entities
Time Limit for
Completion of
Assessment
Notice of
Demand
E-Assessments
Appeals and
Rectification
Caveats and
Suggestions
Judicial
Precedents
Assessment
Procedures in
Other Countries

5. Assessment
Every taxpayer has to furnish the details of his income to the Income-tax
Department (ITD)
These details are to be furnished by filing up his return of income
Once the return of income is filed up by the taxpayer, the next step is the
processing of the return of income by the ITD
ITD examines the return of income for its genuineness and correctness
The process of examining the return of income by the ITD is called as
“Assessment”

6. Types of Return of Income
• Filing of Return of Income within specified due dateSec 139 (1)
• Filing of Return of Losses within specified due dateSec 139 (3)
• Belated Return – to be filed before end of AY or completion of
assessment whichever is earlier
Sec 139 (4)
• Return to be filed by specified institutions and agencies mentioned
under Sec 10 if their total income exceeds the Basic Exemption Limit
Sec 139 (4C)
• Revised Return – Above mentioned returns can be revised before end of
AY or completion of assessment whichever is earlier
Sec 139 (5)
• Notice can issued to assessee to file Return of income, on its failure to
furnish, as per Sec 139
Sec 142 (1)

7. Due Dates for Filing Return of Income
• 30th September of the relevant AYCompanies
• 30th September of the relevant AY
Person Liable for Audit under
Income Tax Act or any other Act
• 30th November of the relevant AYLiable for Transfer Pricing
• 31st July of the relevant AYOthers

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)
Preliminary
assessment without
calling the assessee
(i.e. taxpayer)
Summary
assessment is
preliminary checking
of the return of
income
Summary assessment
can be done for both
return filed under Sec
139 and return filed in
response to a notice
under Sec 142(1)
In Summary
assessment no
detailed scrutiny of
the return of income
is carried out
• One year from the end of the FY in which the return of income is
filed
Time Limit for Summary
Assessment
For e.g. Return is filed on 31st August 2019 for AY 2019-20
Time limit for summary assessment will be 31st 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
Any arithmetical error in the return (e.g. error in applying rate of tax, calculation of relief, etc.)
An incorrect claim, if such incorrect claim is apparent from any information in the return (explained later)
Disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was
furnished beyond the due date specified under Sec 139(1)
Disallowance of expenditure indicated in the audit report but not taken into account in computing the
total income in the return
Disallowance of deduction claimed under Sec 10AA(SEZ), Sec 80IA to 80-IE (Income based deductions),
if the return is furnished beyond the due date specified under Sec 139(1)
Addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in
computing the total income in the return. However, no such adjustment shall be made in relation to a
return furnished for AY 2018-19 and thereafter

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
In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed
as monetary amount or percentage or ratio or fraction
In respect of which the information required to be furnished under this Act to substantiate such entry has not been
so furnished or
Of an item, which is inconsistent with another entry of the same or some other item in such return

12. Manner of Adjustment
Aforesaid adjustments shall not be made unless an intimation is given to the assessee of such adjustments
either in writing or in electronic mode
Response received from the assessee shall be considered before making any adjustment
Where no response is received within 30 days from the date of issue of such intimation, such adjustments shall
be made

13. Procedure for Summary Assessment
The acknowledgement of the return of income shall be deemed to be the intimation in a case where no sum is
payable by or refundable to the assessee or where no adjustment is made to the returned income
An intimation shall also be sent to the taxpayer in a case where the loss declared in the return of income by
the taxpayer is adjusted but no tax or interest is payable or no refund is due to him/her
An intimation shall be prepared or generated and sent to the taxpayer specifying the sum to be paid or to be
refunded
Any sum payable by or refund due to the taxpayer, after adjusting for advance tax, self-assessment tax, TDS,
TCS, reliefs, rebates, etc. shall be intimated
The tax, interest and fee, if any, shall be computed on the basis of the adjusted income
After computing total income or loss by correcting arithmetical error or incorrect claim (if any), etc.

14. Scrutiny Assessment – Sec 143(3)
Scrutiny assessment
is a detailed
assessment
In scrutiny
assessment,
detailed scrutiny of
the return of
income will be
carried out
Scrutiny assessment is done to
confirm the correctness and
genuineness of various claims,
deductions, etc., made by the
taxpayer in the return of
income
To carry out Scrutiny
assessment return
must be filed under
Sec 139 or under
Sec 142(1)

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
If the AO considers it necessary or expedient to ensure that the taxpayer has not understated the income or has not
computed excessive loss or has not underpaid the tax in any manner
Then he/she will serve a notice requiring taxpayer to attend his office or to produce any evidence on which the taxpayer
may rely, in support of the return
To carry out Scrutiny assessment under Sec 143(3), the AO shall serve such notice in accordance with provisions of Sec
143(2) (Mandatory notice for the purpose of assessment)
Notice under Sec 143(2) should be served within a period of 6 months from the end of the FY in which the return is filed
The taxpayer or his representative will appear before the AO and will place his arguments, supporting evidences, etc., on
various matters/issues as required by the AO
After hearing/verifying such evidence, the AO shall, by an order in writing, make an assessment of the total income or
loss of the taxpayer and determine the sum payable by him/her or refund of any amount due to him/her on the basis of
such 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
The AO has intimated the CG about or the prescribed authority about the contravention of the relevant
provisions which grants exemptions to these entities and
the approval granted to such has been withdrawn or rescinded
unless
where the AO is satisfied that
activities are not being carried in
accordance with all or any of the
conditions,
based on which
approval was granted
he may, after giving
a reasonable
opportunity of
being heard
recommend to
the CG and CG
may by order,
withdraw the
approval
and forward a copy of
the order to the
concerned entity and the
AO
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
• Demand notice must be sent if any tax, interest or penalty is levied on assessee
• If no demand notice, no need to pay such demand
• However, demand notice is not required for summary assessment
• Intimation sent under Sec 143(1) to the assessee is deemed to be demand notice
under Sec 156
Demand Notice –
Sec 156
• Demand payable under Sec 143(1) or 143 (2) must be paid within a period of 30
days
• If not paid within 30 days, assessee will be deemed to be in default
• Penalty will be levied and recovery proceedings will be initiated
• If refund, then it shall be granted to the assessee
Payment of
demand / Refund

20. E-Assessments – Sec 143(3A)
• Eliminating the interface between the Assessing Officer and the
assessee in the course of proceeding to the extent technologically
feasible
• Optimising utilization of the resources through economies of scale and
functional specialization
• Introducing a team-based assessment with dynamic jurisdiction
Central Government may make a scheme
for the purpose of making assessment so
as to impart greater efficiency,
transparency and accountability by
Has to be laid before each House of
Parliament for approval
Honourable Finance Minister has confirmed faceless scrutiny assessment from Vijaya Dashmi, 2019
while addressing press conference on economic reforms on 22.08.2019
The CBDT had issued the instructions and notice formats for conducting scrutiny assessments
electronically
Under this initiative, CBDT has made it mandatory for the tax officers to take recourse of electronic
communications for all limited and complete scrutiny
As part of e-governance initiative to facilitate conduct of assessment proceedings electronically, ITD
has launched 'E-Proceeding' facility

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
• US tax system is based on a voluntary self-assessment of tax; however, many large and mid-
size businesses are under continuous audit by the IRS and state tax authorities
• The audits may include the entire list of taxes for which the business is liable
• Smaller businesses and persons with lower incomes are generally subject to audit on a
selective, random basis, and subject to more limited examinations
United States
• Assessment notice is to be sent within a reasonable time following the filing of a tax return
• These original assessments usually are based on a limited review, if any, of the
corporation's income tax return
• The notice of assessment will identify any changes made
• Revenue Authority targets its resources on high-risk taxpayers, with minimal resources
spent on lower-risk taxpayers
Canada
• IRAS adopts a risk-based approach to identifying compliance risk, with a focus on improving
the behaviour of taxpayers who pose a higher risk of non-compliance
Singapore

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
• The UK corporation tax process is one of self-assessment.
• HMRC has a period of 12 months for raising formal enquiries
• These can range from simple information requests to detailed technical challenges over
treatments adopted in the tax return
• HMRC has certain powers to demand information and, in some circumstances, to enter
premises to obtain documents, etc.
United Kingdom

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