Scrutiny Assessment
Introduction
Scrutiny Assessment is a detailed examination of an Income-tax return to ensure that the assessee has correctly reported income and paid taxes. It may be Limited Scrutiny, focusing on specific issues, or Complete Scrutiny, covering the entire return. A notice must be served within 3 months from the end of the financial year in which the return is furnished.
Types of Scrutiny Assessments
- Limited Scrutiny– Examines only specified issues communicated to the assessee.
- Complete Scrutiny– Conducted in special cases where a thorough review of the return is necessary.
- Selection of Cases– Cases are selected through Computer-Aided Scrutiny Selection (CASS), using data analytics and 360-degree taxpayer profiling.
Faceless Scrutiny Assessment
- Section 144Bmandates that Scrutiny Assessments (Section 143), Best Judgment Assessments (Section 144), and Reassessments (Section 147) be conducted electronically.
- The National Faceless Assessment Centre (NFAC) issues notices and coordinates assessments digitally.
Initiation of Scrutiny Assessment
- A notice underSection 143(2)is issued by NFAC or the jurisdictional AO within 3 months from the end of the financial year in which the return is furnished.
- Non-compliance may lead to Best Judgment Assessment underSection 144.
Deemed Validity of Notices
Under Section 292BB, an assessee cannot challenge the validity of a notice if:
- He has participated in the assessment, and
- He has not objected to the validity of the notice before the completion of the assessment.
No later objection allowed on:
- Non-service,
- Late service, or
- Improper service of notice.
Conclusion of Scrutiny Assessment
- If conducted facelessly, the process followsSection 144Bguidelines.
- In the other case, the AO issues a written Assessment Order determining income, deductions, tax, and refunds.
- If additional income is assessed, the AO must issue a show-cause notice, giving the assessee an opportunity to respond before passing the final order.
Time Limit for Completion
|
Assessment Year |
Time Limit |
|
2022-23 onwards |
12 months from the end of the assessment year |
|
2021-22 |
9 months from the end of the assessment year |
|
2020-21 |
18 months from the end of the assessment year |
|
2019-20 |
12 months from the end of the assessment year |
|
2018-19 |
18 months from the end of the assessment year |
|
Up to 2017-18 |
21 months from the end of the assessment year |
- Updated returns can be assessed within 12 months from the end of the financial year in which they are filed.
- If a Transfer Pricing reference is made, the time limit is extended by 12 months.