ASSESSMENT OF INCOMES
Introduction
Income-tax assessment involves verifying and reviewing the information furnished by the assessee in the Income-tax return. The Income-tax Act prescribes various types of assessments, including Self-Assessment, Summary Assessment, Scrutiny Assessment, Best Judgment Assessment, and Income Escaping Assessment.
Types of Assessment
The term ‘assessment’ refers to the examination of a return of income to determine the exact income and tax liability of an assessee. The process, which was earlier manual, is now largely electronic. Section 144B of the Act governs faceless assessments.
- Self-Assessment– The taxpayer calculates total income and tax liability before furnishing the return.
- Summary Assessment– Conducted without calling the assessee, it involves automated processing of returns to correct errors and verify tax payments.
- Scrutiny Assessment– A detailed examination of selected returns to verify the correctness of income, deductions, and tax liability.
- Best Judgment Assessment– Conducted when an assessee fails to file a return, does not cooperate, or maintains inadequate books of accounts. It may be compulsory or discretionary.
- Income Escaping Assessment– If income chargeable to tax has escaped assessment, subject to certain conditions, the Assessing Officer can reassess such income.
Other Assessments and Directions
- Direction by Joint Commissioner– The Joint Commissioner may examine records and issue directions to the Assessing Officer.
- Reference to Dispute Resolution Panel (DRP)– Available for non-resident/foreign company or person with variation from TPO’s order u/s 92CA(3) if any variation in income is prejudicial to the assessee.
- Faceless Proceedings– Covers assessment, inquiries, valuation, appeals, and penalty proceedings under a digital framework.