Module – 05

Assessment Procedure and Income Tax Authorities

Income Tax Return

Every year, Indian citizens who earn taxable income have to file Income Tax Return (ITR), It
contains details about the annual income and the amount of tax paid.
Income Tax Return is the form, wherein the assessee files information about his income
and tax thereon to income tax department. Filing ITR will help assessee in getting a refund in
case the assessee pays more tax than what he is required to pay. If he fails to file ITR, he
might have to pay penalty or face legal consequences.
Return of Income
A return of income is a defined form which can list out the particulars of income and the
taxes paid on the same by an individual, firm or organization in a financial year. This in turn
can be presented to the Income Tax Department. There are differing forms for incomes of
different status and nature and they are readily available on the online portal of the Income
Tax Department of India.
There are currently nine different forms available for filing of income tax returns. They go
from ITR-1 to ITR-7 and also include the ITR-4S and ITR-V
Types of Income Tax Return Forms
Every Individual who is liable to pay taxes and having an income of more than 50 lakhs is
compulsory required to file their income tax return online.
The different forms of ITR are given in detail below, and based on the income level of the
Individual, one should decide, which is the appropriate form to file ITR in India

ITR Form-1: This form is also called SAHAJ.

It should be used by salaried individuals, whose final income for the assessment year includes:

 Income from salary and pensions.

 Income from single house ownership.
 Income from other sources excluding lotteries and race horses.
Not applicable to use this form

 If you are having assets outside the country.

 It there is income from equity market.
 Agricultural Income-more than 5000.
ITR 2
It should be used by an individual, whose final Income for the assessment year includes:

 Only Salary Incomes

 Income from House Properties
 Income from equity markets
 Income from other sources
Not applicable to use this form:

 If there is Income from business or profession

 If you receive any remuneration as a partner in partnership firm/LLP
The main difference between the two above mentioned forms Is ITR 1 is not applicable to
the Individual owning more than a single house, while ITR 2 is applicable.

ITR 3:
It should be used by individual or a HUF, who is Partner in a Partnership firm or LLP and includes:

 Income from business/profession

 Income from firms (bonuses, commission, remuneration, etc.)
Not applicable to use this form:
 If there is Income from business/profession from sole proprietorship.

ITR 4: It should be used by individuals or Hindu Undivided families, who are into proprietorship

ITR 4S: This is also called SUGAM.

It should be used by HUF and small business having:

 Presumptive Business Income

 Salary/Pension
 One house property
 Income from other sources.
Not applicable to use this form:
 If there is income from capital gains.
 Agricultural Income – more than 5000.
 If there are any speculative incomes.
 Winning from lotteries/ race horses.
 Equity gains

ITR 5:
It should be used by firms, LLP’s, Association of Persons and body of Individuals, Artificial Judicial
Persons, Cooperative Societies or any Local authorities.
ITR 6:
It should be used by companies other than the one who claim exemption under section 11

ITR 7:
It should be used by the individuals and companies, who want to file returns under Section-139
(4A) Section-139(48), and Section-139(4C), Section-139(40).

Consequences of not filing Income Tax Return

If a return is submitted after the due date, the following consequences will be applicable:
1. The assessee will be liable for penal interest under section 234A.
2. A penalty of 5,000 may be imposed under section 271 F, if belated return is
submitted after the end of the assessment year, but on or before 31st December or₹
10,000 current year the return is furnished after 31st December of the relevant AY.
3. If the return of loss is submitted after the due date, a few losses cannot be carried
forward.
4. If the return is submitted belated, deductions allowable under certain sections will
not be available.

Different Types of Income Tax Returns

1. Mandatory Return and Voluntary Return Section 139(1)

2. Return of Loss Section 139(3)
3. Belated or Late Return of Income Section 139(4)
4. Revised Return Section 139(5)
5. Return of Income of a Charity or Religious Institution Section 139(4A)
6. Return of Income of a Political Party Section 139(48)
7. Section 139(4C) and Section 139(4D)
8. Defective Returns Section 139(9)

Dute Date for Filing Returns

Different Situation Due Date

If the assessee requires to financial report Extended from 30th Nov.2023 to …………….

If the assessee is a company not having Extended from 31st Oct. 2023 to …………….
internal transition
If the account of the assessee is required to Extended from 31st Oct. 2023 to …………….
be audited
Any other Case Extended from 31st July 22 to 31st march 23
Procedures of Assessments
Assessment
Every taxpayer has to furnish the details of his income to the Income-tax Department.
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 Income Tax Department. The Income Tax Department examines the return of income for
its correctness. The process of examining the return of Income by the Income-Tax
department is called as "Assessment includes re-assessment and best judgment assessment
under section 144.

Types of Assessment
1. Self-Assessment
The person whose taxable income exceeds the exempted limit has to file his/her return of
income to the assessing officer on or before the specified period. Before filing the return of
income to the assessing officer, an assessee has to assess his income himself. This type of
assessment is known as self-assessment.
2. Summary Assessment
Under summary assessment, the Assessing Officer is not required to pass any
assessment order He is required only to act on the return filed by the assessee. For instance,
issue a refund which is due of the bases of return to avoid interest liability of the
government.
3. Regular Assessment

Regular assessment is of two types: (a) Scrutiny assessment (b) Best judgement assessment
(a). Scrutiny Assessment
For the purposes of obtaining full information in respect of income or loss from any
person, the Assessing Officer may make such enquiry as he may consider necessary. He is
vested with the following powers in this connection:
 For the purposes of making an assessment under this Act, the assessing officer may
serve a neve on any person who has made a return to furnish books of accounts or
documents as he requires. The assessee should produce such accounts or documents
within such time at may be prescribed in the notice.
 The Assessing Officer may require any person who has furnished a return, to submit
such Information as he may require. The information may relate to any point or
matter including statement of all assets and liabilities, whether included in the
accounts or not. Such information should be furnished in writing and verified in the
prescribed form.
 The Assessing Officer may direct the assessee to get the accounts audited by an
accountant nominated by the Chief Commissioner or Commissioner.
 For making an assessment or re-assessment, where it is required to estimate the
value of any Investment or the value of any bullion, jewellery or other valuable
article, the Assessing Officer may require the Valuation Officer to make an estimate
of such value and report the same to him Before acting on such report, the Assessing
Officer is required to provide an opportunity of being heard to the assessee.
If the Assessing Officer is satisfied with the evidence and Information produced by
the assessee in support of the return, he may make the assessment on the bases of
such evidence.

(b) Best Judgement Assessment [Sec. 144]

If the assessee does not cooperate in the assessment proceedings with the taxing
authorities and fails to discharge his statutory duty in the matter, the assessing
authority is left with no option but to assess him to the best of his judgement.
Best judgement assessment is of two types:
(i) Compulsory best judgement assessment; and
(ii) Discretionary best judgement assessment.
Compulsory best judgement assessment: The Assessing Officer is bound to make an
assessment to the best of his judgement in any of the following cases:
1. If any person falls to make a voluntary return within the prescribed time the
Assessing Officer is required to make best judgement assessment.
2. Where the assessee does not produce such accounts or documents as the
Assessing Officer may require or he does not furnish information on such points
including total wealth statements as the Assessing Officer may require, Assessing
Officer is required to make an assessment to the best of his judgement.
3. Where the assessee is directed by the Assessing Officer to get his accounts
audited by an accountant nominated by the Chief Commissioner or
Commissioner and to submit the report of such audit within the stipulated time,
a default therein entails an expert best judgement assessment.
4. Where the assessee is directed to produce any evidence in support of the return
or he is required to make personal attendance at the Assessing Officer's office, a
default therein results in an expert best judgement assessment. about the
correctness or the completeness of the accounts of the assessee or where no
method of
Discretionary Best judgement Assessment: where the assessing officer is not
satisfied accounting standard has been employed by the assessee, the A.O. may
make the assessment to the best of his judgement.

4. Re-assessment

The Assessing Officer has reason to believe that income has escaped assessment,
he may assess or re-assess such income. He may also assess or re-assess any
other income, chargeable to tax, which has escaped assessment and which
comes to his notice subsequently in the course of such proceedings.

5. Precautionary or Protective Assessment

 If it is not clear as to who has received the income, the A.O. can commence
proceedings against any or all of them to determine as to who is responsible to pay
tax.

Permanent Account Number (PAN)

Permanent Account Number (PAN) is a ten-digit alphanumeric number issued in the
form of laminated card by the Income Tax Department to any "person" who applies for it or
to whom the department allots the number without an application.
PAN helps the department to link all transactions of the "person" with the department.
These transactions include payments, TDS/TCS credits, returns of income/wealth/gift/EBT,
specified transactions, correspondence and so on. PAN, thus, acts as an identifier for the
"person" with the tax department.
Uses and Benefits of Having PAN Card
PAN Card is important for taxpayers as it is necessary for all financial transactions and is
used track the inflow and outflow of your money. It is important when paying Income tax,
receiving tar refunds, and receiving communication from the Income Tax Department.
That said, PAN continues to be necessary for a large number of monetary transactions.
PAN Ca also serves as a proof of identity. Given below are some of the uses and advantages
of having a PAN
General Uses/Advantages of Having PAN
a) Since PAN Card contains information such as Name, Age and photograph, it can be
used throughout the country as a valid identity proof.
b) PAN is the best possible way to keep track of your tax payment. Otherwise, you might
be required to pay it multiples times since your tax payment cannot be verified.
c) Since PAN is unique for every entity, its misuse is almost impossible for purposes of
tax evasion or other devious means.
d) PAN Card can be used to avail utility connections such as electricity, telephone, LPG,
and internet

Procedure for Obtaining PAN

The step-by-step procedure for obtaining a PAN:

1. Access the Official Website: Visit the official website of the Income Tax Department
of India. As of my last knowledge update in January 2022, the official website is
https:// www.incometaxindia.gov.in/.
2. Navigate to PAN Section: On the website, look for the PAN section or use the search
function to find the relevant page for PAN services.
3. Select the PAN Application Form: Choose the appropriate form for PAN application.
For Individuals, form 49A is generally used, while Form 49AA is used for entities
other than individuals.
4. Fill in the Application Form: Fill in the PAN application form with accurate details.
The form typically requires information such as your personal details, address,
contact information, and details of income.
 5. Submit Supporting Documents: Attach the required supporting documents. These
may include proof of identity, proof of address, and proof of date of birth. The exact
documents required may vary based on the applicant's status (individual, company,
etc.).
6. Select the Mode of Submission: Decide whether you want to submit the
application physically or electronically. Physical submission involves sending the
application form and documents to the PAN processing center, while electronic
submission can be done online.
7. Pay the Application Fee: Pay the prescribed application fee. The fee amount may
vary based on whether the communication address is within India or outside India.
Payment can be made online through various modes.
8. Submit the Application: If applying online, submit the application through the
online portal. !! applying offline, send the filled-in form along with supporting
documents and a demand draft for the application fee to the designated PAN
processing center.
9. Track the Application: After submission, you can track the status of your PAN
application using the acknowledgment number provided during the application
process. This information is usually available on the official website.
10. Receive PAN Card: Once the application is processed and approved, the PAN card
will be sent to the communication address provided in the application. The PAN card
typically includes the PAN number, cardholder's name, photograph, and other
details.

Transactions were Quoting of PAN is Compulsory

PAN (Permanent Account Number) is mandatory for various financial and non-
financial transactions in India. The government has implemented PAN requirements to track
and monitor high value transactions and prevent tax evasion. Here are some instances
where quoting PAN compulsory:
1. Bank Transactions: Opening a bank account, whether savings or fixed deposit,
usually requires providing PAN details. Cash deposits or withdrawals exceeding a
specified limit may also require PAN.
2. Purchase or Sale of Immovable Property: When buying or selling immovable
property, such as land or a house, quoting PAN is mandatory.
3. Purchase or Sale of Motor Vehicles: When purchasing or selling a motor vehicle,
quoting PAN is required.
4. Opening a Demat Account: PAN is necessary for opening a Demat account for trading
securities.
5. Investments in Securities: PAN is mandatory for transactions involving stocks,
mutual funds bonds, and other securities.
6. Credit Card Application: Applying for a credit card may require providing PAN
details.
7. Fixed Deposits and Investments: PAN is mandatory for making high-value fixed
deposits
8. Investments. Foreign Exchange Transactions: For foreign exchange transactions, PAN
details may be required.
 Income Tax Authorities

Introduction

In India, the income tax authorities are responsible for administering and
enforcing the country's wine tax laws. The primary body overseeing Income tax
matters in India is the Income Tax Department, which operates under the Central
Board of Direct Taxes (CBDT), a part of the Department of Reverse under the Ministry
of Finance. Income tax in India is governed by the Income Tax Act, and any changes
to tax laws are usually announced in the annual Union Budget. Taxpayers are
required to file their income tax returns, declare their Income, and pay taxes on time
to comply with the regulations set by the income tax authorities. The authorities aim
to promote voluntary compliance, deter tax evasion, and ensure the fair and effective
administration of the income tax system.

Income Tax Authorities

To discharge executive and administrative functions efficiently, the following
Income-tax authorities have been constituted under section 116 of the Income Tax Act,
1961:
1. The Central Board of Direct Taxes (CBDT)

2. Director General of Income Tax (DGIT) or Chief Commissioner of Income Tax (CCIT)

3. Directors of Income Tax (DIT) or Commissioners of income tax or commissioners of

income tax (appeals)

4. Additional Directors of Income Tax (ADIT) or Additional Commissioners of Income Tax

(ACIT) or Additional Commissioners of Income Tax (appeals)

5. Joint Directors of Income Tax (JDIT) or Joint Commissioners of Income Tax (JCIT)

6. Deputy Directors of Income Tax (DDIT) or Deputy Commissioners of Income Tax

(DCIT) or Deputy Commissioners of Income Tax (appeals)

7. Assistant Directors of Income Tax (ADIT) or Assistant Commissioners of Income Tax

(ACIT)

8. Income Tax Officer (ITO)

9. Tax Recovery Officers (TRO)

10. Income Tax Inspectors (ITI)

I. Powers and Functions of Central Board of Direct Taxes (CBDT)

 It is the top-most authority in the sphere of direct taxes. The CBDT is created
under the Central Boards of Revenue Act, 1963. CBDT works under the ministry of
finance.

Powers of CBDT

1. To make rules for carrying out the objectives of IT Act.

2. To issue orders and instructions to subordinate authorities for proper

administration of IT Act.

3. To authorize any IT authority to accept application of claims for any exemption,

deduction, refund or any other relief after the expiry of the prescribed period.

4. To declare any institution, association or body to be a company

5. To exercise control over IT authorities.

6. To decide jurisdiction of IT authorities.

7. To declare a company having no share capital, to be a widely held company.

8. To empower authorities with the power of search.

II. Commissioner of Income Tax (CIT)

He is vested with the following powers:

1. To review the order of the assessing officer.

2. To set-off refund against arrears of tax.

3. To appoint an IT authority below the rank of an assistant commissioner or Deputy

Commissioner

4. To authorize joint commissioner to exercise the powers of an assessing officer.

5. To transfer cases from one subordinate assessing officer to another.

6. To authorize any joint commissioner, assistant commissioner or deputy director

or IT officer to make search and seizure.
 7. To make any enquiry under this act.

8. To sanction the re-opening of an assessment after the expiry of 4 years.

III. Income Tax Officer (ITO)

ITO is the person with whom an assessee comes into direct contact. The
important powers and functions of ITO are narrated below:
1. To grant refunds.
2. To impose penalty for non-payment of tax.
3. To re-assess the escaped income.
4. To allot permanent account number.
5. To exercise power of search and seizure, if authorized by the designated
authority.
6. To inspect register of companies.
7. To make an enquiry under this act.
8. To determine appropriate proportion portion of expenses for business or
profession. of expenses for deduction in respect of premises partly used for
business or profession.