Types of Assessment in Income Tax Act 2025

Under the Income-tax Act, 2025, assessments are systematically categorized based on the procedure, circumstances, and nature of the taxpayer’s case. Here are the various types of assessments:

1. Processing of Return / Intimation (Section 270(1))

While technically a “processing” step rather than a formal scrutiny assessment, this is the first level of checking for any filed return. The total income or loss is computed after making adjustments for:

• Arithmetical errors.
• Incorrect claims apparent from the information in the return.
• Disallowance of set-off of losses or certain deductions if the return is filed beyond the due date. Once processed, an intimation specifying the sum payable or refund due is sent to the assessee.

2. Regular / Scrutiny Assessment (Section 270(10))

If the Assessing Officer (AO) or prescribed authority considers it necessary to ensure the assessee has not understated income, computed excessive loss, or under-paid tax, they will issue a notice requiring the assessee to attend the office or produce evidence. After hearing the evidence and taking into account all relevant material, the AO passes an order in writing assessing the total income or loss and determining the sum payable or refundable.

3. Best Judgment Assessment (Section 271)

The AO is empowered to make an assessment to the “best of his judgment” if the taxpayer fails to cooperate. This occurs when a person:

• Fails to furnish their tax return.
• Fails to comply with a notice to produce accounts/documents or a direction to get their accounts audited/inventory valued under section 268.
• Fails to comply with a scrutiny notice issued under section 270(8). (Note: An assessment can also be made in the manner of a best judgment assessment if the AO is not satisfied with the correctness/completeness of the accounts, or if the notified Income Computation and Disclosure Standards have not been followed).

4. Faceless Assessment (Section 273)

To impart greater efficiency and transparency, assessments, reassessments, or recomputations can be conducted in a “faceless” manner. This scheme:

• Eliminates the interface between the taxpayer and the income-tax authority.
• Is conducted electronically through the “e-Proceeding” facility via the National Faceless Assessment Centre.
• Involves specific units (assessment unit, verification unit, technical unit, and review unit) working concurrently.

5. Income Escaping Assessment / Reassessment (Section 279)

If the AO has information suggesting that any income chargeable to tax has “escaped assessment” for a relevant tax year, they can assess or reassess that income, or recompute the loss or depreciation allowance.

• This is initiated by a formal notice under Section 280, typically after following a mandatory show-cause procedure under Section 281.
• “Information” suggesting escaped assessment includes audit objections, directions from an Approving Panel, Tribunal orders, or data flagged by the Board’s risk management strategy.

6. Block Assessment (Section 294) This is a special type of assessment conducted exclusively in cases where a search is initiated (under Section 247) or assets/documents are requisitioned (under Section 248).

• Instead of assessing a single tax year, the AO assesses the total “undisclosed income” of a consolidated “block period”.
• The block period comprises the six tax years immediately preceding the year of the search, plus the broken period of the current year up to the date the search/requisition is executed.

Related Post

Section 270 Income Tax Act 2025 Assessment.

Section 271 Income Tax Act 2025 Best judgment assessment.

Section 273 Income Tax Act 2025 Faceless Assessment.

Section 279 Income Tax Act 2025 Income escaping assessment.

Section 294 Income Tax Act 2025 Procedure for block assessment.

Section 247 Income Tax Act 2025 Search and seizure.

Section 248 Income Tax Act 2025 Powers to requisition

Section 280 Income Tax Act 2025 Issue of notice where income has escaped assessment.

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