Assessment of Persons Leaving India
Introduction
If the Assessing Officer believes that an individual is likely to leave India during the current assessment year or shortly thereafter without intending to return, the officer can tax the individual’s total income before departure. This ensures tax collection before the person becomes untraceable.
Income Taxable in the Previous Year Itself
Normally, the income of a previous year is chargeable in the next following assessment year. However, this general principle is subject to some exceptions in which income is charged to tax in the previous year itself.
One exception arises when it appears to the Assessing Officer that any individual may leave India during the current assessment year or shortly after its expiry and that he has no present intention of returning to India. In this situation, his total income for the relevant financial year (from the 1st day of the previous year and up to the probable date of his departure from India) shall be charged to tax in that year itself.
Separate Assessments and Tax Rates
- Income is taxed at the rates in force for that assessment year.
- Separate assessments are made for each completed financial year or part thereof.
Issue of Notice
- The Assessing Officer issues a notice underSection 142(1)(i), requiring the individual to furnish returns for:
o Each completed previous year.
o Estimated income from the start of the financial year to the likely departure date.
Filing of Return and Consequences of Non-Compliance
- The individual must file the return within at least seven days of receiving the notice.
- If no return is filed:
o Best judgment assessment under Section 144 applies.
o Penalty under Section 271 may be levied.
o Prosecution under Section 276CC may be initiated