Module II

Income tax authorities – Powers and functions – Provisions of advance payment of tax –
Tax payment – Deduction and payment of tax at source – Recovery of tax. Procedure of
assessment of income tax – Filing of returns of income – Voluntary return of income –
Statutory obligations in filing of returns – Return of loss – Belated returns – Revised
returns – Defective returns – PAN – Different types of assessment – Self assessment –
Assessment on the basis of return – Best judgment assessment – Regular assessment –
Reassessment – Protective assessment. (20 Hours 20 marks)

MODUE II
INCOME TAX AUTHORITIES

The government of India imposed the Income Tax Act in the year 1961. Two categories of
taxation were prescribed

1.​ Direct tax

2.​ Indirect tax
Income tax or the tax taken by the government on an individual on his earnings is income tax.
The government has set up various authorities for lawful execution of the income Tax Act and to
oversee the righteous functioning of the income tax department. The various income tax
authorities for the purposeful existence of the Act are

1.​ CBDT or the Central Board of Direct Taxes which has been constituted under the Central
Board of Revenue Act 1963
2.​ Director general of income tax
3.​ Chief commissioner of income tax
4.​ Directors and commissioner of income tax
5.​ Additional directors and additional commissioners of income tax
6.​ Joint directors and joint commissioners of income tax
7.​ Deputy directors and deputy commissioners of income tax
8.​ Assistant directors and assistant commissioners of income tax
9.​ Income tax officers
10.​Income tax inspectors

THE CENTRAL BOARD OF DIRECT TAXES (CBDT)

Consolidated under the Department of Revenue in the Ministry of Finance, the CBDT holds the
highest position on direct tax in the country. It lays down the policies and planning for all direct
tax related matters in India. With the help of the Income Tax Department it makes sure that direct
taxes are properly administered on the workforce of the country. The Chairperson along with the
6 members of the body of the CBDT are all ex officio Special Secretaries in the government and
function as a division of the ministry that deals with levy and collection of all direct taxes in
India.

Functions of CBDT

●​ It deals with matters related to levying and collecting Direct Taxes.

 ●​ Formulation of various policies.
●​ Supervision of the entire Income Tax Department
●​ Suggests legislative changes in Direct Tax Enactments
●​ Suggests changes in tax rates
●​ Proposes changes in the taxation structure in line with the Government policies.
Assessing Officer [ Sec. 2(7A)]

"Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant

Director or Deputy Director or the Income-tax Officer who is vested with the relevant
jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of
section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who
is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of
the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;

Importance of Assessing Officer :

In the organizational setup of the income tax department, the Assessing Officer plays a very vital
role. He is the primary authority who initiates the proceedings and is directly connected with the
public. From the time of filing of return till the assessment is completed he plays a vital role . He
can start proceedings for non-filing of return, imposition of penalties etc. Orders passed by him
can be challenged only on approval. The department can revise his orders only if it is proved that
they are prejudicial to the revenue and that too only by the Commissioner of Income Tax.

POWERS OF OTHER INCOME TAX AUTHORITIES:

Powers of the Income Tax Authorities vary with the nature of the position acquired. Given below
are the various tax authorities along with the powers they hold under that position.

Director General/ Director:

The Director General/ Director, appointed by the Central Government, are required to perform
such functions as may be assigned by the Central Government, are required to perform such
functions as may be assigned by the Central Board of Direct Taxes. This position enjoys the
following powers under different provisions of the Act:

a. To give instructions to the Income-Tax officers

b. To enquire or investigate into concealment
c. To search and seizure
d. To requisite books of account
e. To survey
f. To make any enquiry

Commissioners of Income Tax:

Commissioners are appointed by the Central Government. Generally, they are appointed to head
income-tax administration of a specified area. As the head of administration, a Commissioner of
income-tax enjoys certain administrative as well as judicial powers. A commissioner may
exercise powers of an assessing officer. It has the power to transfer any case from one or more
assessing officers to any other assessing officer. It can grant approval for an order issued by the
assessing officer. Prior approval is required for reopening of an assessment. It also has the power
to revise an order passed by an assessing officer in addition to many other powers as given in the
Income Tax Act, 1961.
Commissioner (Appeals):
Commissioners of Income-Tax (Appeals) are appointed by the Central Government. It is an
appellate authority vested with the following judicial powers:
a. Power regarding discovery, production of evidence etc.
b. Power to call information.
c. Power to inspect registers of companies.
d. Power to set off refunds against tax remaining payable.
e. Power to dispose of appeals.
f. Power to impose penalty.

Joint Commissioners:
Joint Commissioners are appointed by the Central Government. The main function of the
authority is to detect tax- evasion and supervise subordinate officers. Under the different
provisions of the Act, the Joint Commissioner enjoys the power to instruct income tax officers,
exercise powers of income tax officers, the power to call information, to inspect registers of
companies, to make any enquiry among other powers.

Income-Tax Officers:
While Income-Tax officers of Class I services are appointed by the Central Government,
Income-tax Officers of Class II services are appointed by the Commissioner of Income-Tax.
Powers, functions and duties of Income-Tax officers are provided in many sections, some of
which are Power of search and seizure, Power of assessment, Power to call for information,
Power of Survey etc.

Inspectors of Income-Tax:
They are appointed by the Commissioner of Income-Tax. Inspectors of Income-Tax have to
perform such functions as are assigned to them by the Commissioner or any other authority
under whom they are appointed to work.

FOLLOWING ARE THE POWERS GIVEN TO THE INCOME-TAX AUTHORITIES:

The Income Tax Act, 1961 specifies the scope of the powers handed to the income-tax
authorities. Given below are some of the important powers of the Income Tax Authorities and
their scope as given in the Sections provided under the Income Tax Act, 1961:

1. Discovery, Production of Evidence etc. [Section 131]:

The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, Commissioner

(Appeals), the Chief Commissioner and the Dispute Resolution Panel referred to in section 144C
have the powers vested in a Civil Court under the Code of Civil Procedure, 1908 while dealing
with the following matters:
(i) discovery and inspection;
(ii) enforcing the attendance of any person, including any officer of a banking company and
examining him on oath;
(iii) compelling the production of books of account and documents; and
(iv) issuing commissions

[Link] and Seizure [Section 132]:

Today it is not hidden from income tax authorities that people evade tax and keep unaccounted
assets. When the prosecution fails to prevent tax evasion, the department has to take actions like
search and seizure. Under this section, wide powers of search and seizure are conferred on the
income-tax authorities. The provisions of the Criminal Procedure Code relating to searches and
seizure would, as far as possible, apply to the searches and seizures under this Act. Contravention
of the orders issued under this section would be punishable with imprisonment and fine under
section 275A.

Causes or Circumstances under Search and Seizure

​ If any bullion, jewelry, money is in possession of a person or any other valuable article/
thing and that kind of property represents wholly/partly income or the property which has
not been disclosed or it would not be disclosed.

​ Who has books of account or the documents which have not been produced or are not
likely to be produced in response to the notices or / summons,

​ Persons who are in possession of any undisclosed property or income

The powers of Search and Seizure

1.​ To enter and search any place, vessel, vehicle, aircraft or building, where there is a
reasonable suspicion that such books of accounts, money, bullion, jewelry, documents, or
other valuable article or thing are kept.
2.​ To break open the lock of any of the door, box, locker, safe, almirah or another receptacle
for exercising the powers which are conferred by clause (i) above where the keys thereof
are not available.
3.​ Search any person who (a) has got out of, or (b) is about to get into, or (c) is in the
building, place, vessel, vehicle or aircraft, if the authorized officer thus has a reason to
suspect that such person has secreted about his person any such books of account, other
documents, money, bullion, jewelry or other valuable article or thing.
4.​ Require any person who is however found to be in possession or in control of any books
of account or any other document which is maintained in the form of electronic records,
to afford the necessary facility to the authorized officer in order to inspect all such books
of account or other documents.
5.​ Placemarks of identification on any of the books of account or any other documents or
make or cause to be made extracts or copies therefrom.
6.​ Make a note or an inventory of any such money, bullion, jewelry or any other valuable
article or a thing.

[Link] to Requisition Books of Account etc. [Section 132A]:

Where the Director or the Director-General or Commissioner or the Chief Commissioner in

consequence of information in his possession, has reason to believe that (a), (b), or (c) as
mentioned under section 132(1) and the book of accounts or other documents or the assets have
been taken under custody by any authority or officer under any other law, then the Chief
Commissioner or the Director General or Director or Commissioner can authorize any Joint
Director, Deputy Director, Joint Commissioner, Assistant Commissioner, Assistant Director, or
Income tax Officer to require the authority to provide sue books of account, assets or any
documents to the requisitioning officer, when such officer is of the opinion that it is no longer
necessary to retain the same in his custody.

[Link] to call for information [Sections 133]:

The Commissioner The Assessing Officer or the Joint

Commissioner may for the purpose of this Act:
(a) Can call any firm to provide him with a return of the addresses and names of partners of the
firm and their shares;
(b) Can ask any Hindu Undivided Family to provide him with return of the addresses and names
of members of the family and the manager;
(c) Can ask any person who is a trustee, guardian or an agent to deliver him with return of the
names of persons for or of whom he is an agent, trustee or guardian and their addresses;
(d) Can ask any person, dealer, agent or broker concerned in the management of stock or any
commodity exchange to provide a statement of the addresses and names of all the persons to
whom the Exchange or he has paid any sum related with the transfer of assets or the exchange
has received any such sum with the particulars of all such payments and receipts;

[Link] of Survey [Section 133A]:

The term 'survey' is not defined by the Income Tax Act. According to the dictionary 'survey'
means casting of eyes or mind over something, inspection of something, etc. An Income Tax
authority can have a survey for the purpose of this Act. The objectives of conducting Income Tax
surveys are:

(a)To discover new assessees;

(b)To collect useful information for the purpose of assessment;
(c)To verify that the assessee who claims not to maintain any books of accounts is in-fact
maintaining the books; (d)To check whether the books are maintained, reflect the correct state of
affairs.

[Link] to Collect Certain Information [Section 133B]:

For the purpose of collection of information which may be useful for any purpose, the Income
tax authority can enter any building or place within the limits of the area assigned to such
authority, or any place or building occupied by any person in respect of whom he exercises
jurisdiction.

[Link] to Inspect Registers of Companies [Section 134]:

The Assessing Officer, the Joint Commissioner or the Commissioner (Appeals), or any person
subordinate to him authorised in writing in this behalf by the Assessing Officer, the Joint
Commissioner or the Commissioner (Appeals), as the case may be, may inspect and if necessary,
take copies, or cause copies to be taken, of any register of the members, debenture holders or
mortgagees of any company or of any entry in such register.

[Link] Powers [Sections 135 and 136]:

The Director General or Director, the Chief Commissioner or Commissioner and the Joint
Commissioner are competent to make any enquiry under this act and for all purposes they shall
have the powers vested in an Assessing Officer in relation to the making of enquiries. If the
Investigating officer is denied entry into the premises, the Assessing Officer shall have all the
powers vested in him under sections 131(1) and (2).

TAX COLLECTION AND TAX PAYMENT

The Govt. collects tax from the assessee in the following ways

​ Deduction of tax at source

​ Collection of tax at source
​ Advance Payment of tax
​ Payment of tax on self-assessment
​ Notice on demand
I)​ Deduction of Tax at Source (Section 190)

TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of
making specified payments such as rent, commission, professional fees, salary, interest etc. by
the persons making such payments.
Usually, the person receiving income is liable to pay income tax. But the government with the
help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance
from the payments being made by assessee.
The recipient of income receives the net amount (after reducing TDS). The recipient will add the
gross amount to his income and the amount of TDS is adjusted against his final tax liability. The
recipient takes credit for the amount already deducted and paid on his behalf.
Following are the Rates for tax deduction at source for Assessment year 2025-26.

Nature of payment Limit Rate

- As per the
Section 192: Payment of salary Income Tax
Slab rate
Section 192A: Payment of the accumulated 50,000 or more
balance of provident fund which is taxable in
10%
the hands of an employee (with effect from
01.06.2015).
Section 193: Interest on securities 10%
Section 194: Income by way of dividend Exceeding 5,000 10%
10,000 in the case of Banks,
Section 194A Interest other than interest on
Co-operative society, Post office 10%
securities
5000 in other cases
Section 194B: Income by way of winnings Exceeding 10,000
from lotteries, crossword puzzles, card games 30%
and other games of any sort
Section 194BB: Income by way of winnings Exceeding 10,000
30%
from horse races
Section 194 C Payment to resident contractor Exceeding 30,000
 Individual & HUF 1%
Others 2%
Exceeding `15,000
Section 194D Insurance commission Company 10%
Others 5%
Section 194DA Payment under life insurance 1,00,000 or more
5%
policy
Section 194EE National Saving Certificate 2500 or more 10%
Section 194G Commission on sale of lottery Exceeding 15,000 5%

Incomes on which TDS is not collected

There are certain incomes on which TDS is not collected, at source, like the following:
●​ Interest which is paid to the central or the state financial organizations.
●​ Institutions which are notified under no-TDS.
●​ Interest earned on KVP, NSC or Indira Vikas Patra schemes.
●​ Interest earned on NRE accounts.
●​ Interest earned from Recurring Deposits or Savings Account opened in co-operative
societies.
Different forms prescribed for TDS Return?

Form Deduction type

Form 24 Q Deductions made in a salaried case

Form 26 Q Deductions made in the non-salaried case

Form 27 Q Deductions made in the case of NRIs

Illustration 11

Ascertain the amount of TDS

a)​ Interest on tax free govt. securities Rs.30,000

b)​ Interest on debentures of XY Ltd. Rs. 25,000
c)​ Lottery winning Rs.1,00,000
d)​ Winnings from horse race Rs.50,000

Solution

a)​ Interest on govt. securities ​ - No TDS

b)​ Interest on debentures of XY Ltd. - TDS@ 10% (25000 x 10/100) = 2500
c)​ Lottery winning ​ ​ - TDS @30% (100000 x 30/100) = 30,000
 d)​ Winnings from horse race ​ - TDS@30% (50000 x 30/100) = 15,000

II)​ Tax collected at source (TCS)

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at
the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to
collect tax from the purchasers.
The rate of TCS is different for goods specified under different categories :

Type of Goods Rate

Liquor of alcoholic nature, made for consumption by humans 1%

Timber wood under a forest leased 2.5%

Tendu leaves 5%

Timber wood by any other mode than forest leased 2.5%

A forest produce other than Tendu leaves and timber 2.5%

Scrap 1%

Minerals like coal and iron ore 1%

Classification of Sellers and Buyers for TCS

There are some specific people or organizations who have been classified as sellers for tax
collected at source. No other seller of goods can collect tax at source from the buyers apart from
the following list
1. Central Government
2. State Government
3. Local Authority
4. Statutory Corporation or Authority
5. Company registered under Companies Act
6. Partnership firms
7. Co-operative Society
8. Any person or HUF who is subjected to an audit of accounts under Income tax act for a
particular financial year.
III)​ Advance Tax
Advance tax means income tax should be paid in advance instead of lump sum payment at year
end. It is also known as Pay As You Earn (PAYE). These payments have to be made in
installments as per due dates provided by the income tax department.

Due Dates for payment of Advance Tax

Due Date Advance Tax Payable

On or before 15th June 15% of advance tax

On or before 15th September 45% of advance tax less advance tax already paid

On or before 15th December 75% of advance tax less advance tax already paid

On or before 15th March 100% of advance tax less advance tax already paid

Illustration

The following are the incomes of Sri. Das for the previous year.

Gross Salary​ ​ ​ ​ Rs.7,75,000

Income from house property (computed) Rs.1,36,000

Interest on fixed deposit in banks ​ Rs.48,500

Interest on saving bank deposit ​ Rs.11,000

Dividend from Indian company​ Rs.62,000

Life insurance premium paid during the year Rs.12,600 and donation to National Defence Fund
is Rs.10,000. Tax deducted at source by the employer on salary and interest is Rs.72,000.

Compute advance tax payable by Sri. Das during the PY.

Computation of total income of Sri. Das

 Particulars Amount Amount
Income from salary
Salary 7,75,000
Less : Standard deduction 50,000 7,25,,000

Income from House property 1,36,000

Income from Business or profession Nil
Income from Capital Gain Nil
Income from Other sources
Interest fixed deposit 48,500
Interest on SB deposit 11,000 59,500

Gross Total Income 9,20,500

Less Deduction u/s 80
80C Life insurance premium 12,600
80G Donation to NDF (100% no limit) 10,000
80 TTA Interest on SB deposit (maximum limit 10,000) 10,000
Total Income 8,87,900

Computation of Tax Payable (estimated)

Up to 2,50,000 = Nil
2,50,000 to 5,00,000 – 5% (2,50,000 x 5/100) = 12,500
5,00,000 to 8,87,900 – 20% (3,87,900 x 20/100) = 77,580
90,080
Add cess 4% (90,080x 4/100) = 3,603
93,683
Less TDS 72,000
21,683
Round off 21,680

Advance tax payable

 I Installment 15% payable by 15th June (21,680 x 15/100)
3,252
II Installment 30% payable by 15th Sept. (21,680 x 30/100) 6,504
III Installment 30% payable by 15th Dec. (21,680 x 30/100)
6,504
IV Installment 25% payable by 15th March (21,680 x 25/100) 5,420

IV)​ Payment of Tax on Self-Assessment

Self-Assessment tax means any balance tax paid by the assessee on the assessed income after
taking TDS and Advance tax into account before filing the Return of income. Self-assessment
tax is paid for a particular financial year end. Challan No/ ITNS 280 is required to be used for the
payment of Self- assessment tax.

V)​ Notice of Demand

Section 156 tax notice is the notice of demand issued by the Income Tax Department when any
tax, interest, penalty, fine or any other sum is payable in consequence of any order passed. The
section 156 tax notice of demand will specify the sum which is payable.

This demand notice is generally accompanied by an intimation notice under section 143(1) or
along with the assessment order that is issued on completion of the scrutiny proceedings. Notice
of Demand u/s 156 is issued in respect of every assessment order for addition to income. The
amount which is demanded in the Section 156 demand notice has to be paid by the Assessee
within a period of 30 days after the date of receipt of the notice.

Recovery of Tax
Section-122 provides that in case assessee fails to pay any sum imposed by way of interest, fine,
penalty, or any other sum payable under the provisions of this Act, the same shall be recoverable in
the manner specified in the Act for the recovery of arrears of tax.

Modes of Recovery of Tax

1.​ Certificate to Tax Recovery Officer (Section 222)

When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax
Recovery Officer may draw up under his signature a statement in the prescribed form specifying the
amount of arrears due from the assessee and shall proceed to recover from such assessee the amount
specified in the certificate by one or more of the modes mentioned below, in accordance with the
rules laid down in the Second Schedule :

a.​ attachment and sale of the assessee’s movable property ;

b.​ attachment and sale of the assessee’s immovable property ;
c.​ arrest of the assessee and his detention in prison ;
 d.​ appointing a receiver for the management of the assessee’s movable and immovable
properties.

2.​ Other Mode of Recovery of Tax [ Section 226 ]

Where no certificate has been drawn up, the Assessing Officer may recover the tax by any one or
more of the modes provided in this section.

(i) Deduction from Salary

If any assessee is in receipt of any “Salaries” income, the Assessing Officer or Tax Recovery Officer
may approach such person paying salary to deduct arrears of tax from the salary of the

(ii)Application to Court for payment of money in court’s custody

The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody there is
money belonging to the assessee for payment to him of the entire amount of such money, or, if it is
more than the tax due, an amount sufficient to discharge the tax.

iii) Sale of Movable Property

The Assessing Officer or Tax Recovery Officer may, if so authorised by the Chief Commissioner or
Commissioner by general or special order, recover any arrears of tax due from an assessee by
distraint and sale of his movable property in the manner laid down in the Third Schedule.

3.​ Recovery through State Government [ Section 227]

If the recovery of tax in any area has been entrusted to a State Government, the State Government
may direct, with respect to that area or any part thereof; that tax shall be recovered therein with, and
as an addition to, any municipal tax or local rate, by the same person and in the same manner as the
municipal tax or local rate is recovered.

4.​ Recovery by suit or under other law

5.​ Recovery as per agreement with foreign country

Tax Clearance Certificate

A tax clearance certificate is a document issued by the tax authorities stating that the taxpayer
has cleared all his tax dues or is not liable for payment of tax. This article is an account of the
need for a tax clearance certificate, for varying purposes.

A person who is not domiciled in India who has come to India for the purpose of business,
profession or employment, and who holds income derived from any source in India must obtain a
tax clearance certificate before leaving the country. For a person not domiciled in India, the
certificate can be obtained through the employer or through whom such person is in receipt of the
income.
Normally, the employer or person through whom the person is in receipt of income must state to
the tax authorities that the tax payable by such person who is not domiciled in India, will be met
by the employer or by the person from whom income was received. It should further state that
the concerned authority shall, on receipt of the undertaking, immediately issue a no-objection
certificate in Form No. 30B.

Procedure for Assessment

I VOLUNTARY RETURN OF INCOME

It is mandatory for every taxpayer to communicate the details of his income to the Income-tax
Department. These details are to be furnished in the prescribed form known as return of income.
The provisions relating to filing of return of income depend upon the status of the taxpayer. The
position in this regard is given below:

●​ In the case of companies:

●​ In the case of partnership firms:
●​ In the case of an Individual/HUF/AOP/BOI/Artificial Juridical Person:
●​ In the case of charitable or religious trusts:

Prescribed forms of Return (Rule 12)

ITR - 1

Also known as SAHAJ is applicable to a ordinarily Resident individual having salary or pension
income or income from one house property (not a case of brought forward loss or loss to be
carried forward) or income from other sources (not being lottery winnings and income from race
horses and in come chargeable to tax at special rates). However, an individual who is a director
in a company or has held equity shares of an unlisted company shall not be eligible to use ITR -1.

ITR - 2

It is applicable to an individual or an Hindu Undivided Family not having income chargeable to

income-tax under the head “Profits or gains of business or profession”.

ITR 3

It is applicable to an individual or a Hindu Undivided Family who has any income chargeable to
tax under the head business or profession

ITR – 4
Also known as SUGAM is applicable to individuals or Hindu Undivided Family or partnership
firm who have opted for the presumptive taxation scheme of section 44AD/44ADA/44AE.

II Return of Loss - Section 139(3)

●​ In case of an Individual Tax payer, if any loss was incurred in the previous financial year
then filing a tax return is not mandatory
●​ Tax return for loss is compulsory for companies and firms and the provisions are as
follows:
●​ If the loss arises under the head “Profits and Gains of Business and Profession” or under
the head ‘Capital Gains’. Tax return filing is mandatory in case the firm wants to carry
forward this loss and offset it with the future income. Availability of this option is only
possible if the tax return indicating the loss is filed within the due date.
●​ In case the loss arises under the head “House or residential Property”, the loss could be
carried forward even though the tax return is filed after the due date.
●​ In case the loss is to be offset against some income in other category for the same year, it
is permitted to offset even though return is filed after the due date.
●​ Loss of the earlier years could be carried forward if the return of losses for those years
were filed with due dates and those losses were assessed.

The advantage of filing the loss returns is that it allows one to carry the loss forward which
reduces the tax liability for the future years. Hence, it is highly advisable to file the return for
loss.
III Belated Return / Late Income Tax Return - Section 139(4)
The taxpayer (an individual or an entity) have to furnish the tax return before the due date as
specified under the Section 139(1), or within the allowable time by a notice that is issued under
the section 142(1). If they fail to do so, they may still file the belated return for any prior years
any time until the expiry of one year that started from the end of the applicable year of
assessment or before conclusion of the assessment, whichever happens earlier. However, the
taxpayer might be charged with a penalty of ₹5,000, under Section 271F of IT Act 1961, in case
the return is submitted after the pertinent assessment year.
IV Revised Return - Section 139(5)
In case the Income Tax Return was filed within due date but later the tax payer realises that there
was some mistake or omission in the filing of the return, to correct these mistakes there is
provision for revised return of Income Tax under Section 139(5). However, a late or belated
return is beyond the scope of this section and could not be revised.
Revised return could be filed any time within one year after the pertinent assessment year gets
over OR prior to the completion of assessment – whichever is sooner. There is no restriction on
the number of times that a tax return could be revised within the specified time frame.
The revision could be done either in the same and original Income Tax Return Form or in a
different return Form. Once the new return is filed under Section 139(5), the original return that
was done under Section 139(1) should be considered as withdrawn and the revised return will be
validated.
V Defective Returns - Section 139(9)

As per Section 139(9), a tax return is defective if certain documents are not attached while filed
the return. In case the return is considered defective by the tax officer, then tax payer will be
informed by him and will be allowed to rectify the defect within 15 days starting from the day of
intimation. Upon request from the tax payer through an application, the allowable period could
be extended also. The assessing officer intimates the tax payer about the defect through a simple
letter.​
The following documents are necessary to avoid your filing to be deemed as defective:

●​ A duly filled tax return in the recommended form

●​ A statement displaying the computation of payable taxes
●​ Proof of all claims of paid taxes – like proof of tax deduction and collection that was
done at source, payment of self-assessment tax and advance tax
●​ A report for the audit done u/s 44AB, where prior to filing the return, the report is
furnished

Permanent Account Number (Section 139 A)

PAN Card is a Permanent Account Number which consists of 10-digit alphanumeric characters
and is assigned to all taxpayers in India. It is issued under the Indian Income Tax Act, 1961 by
the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes
(CBDT). Basically, PAN card is an electronic system in which all the tax related information of a
person or company is recorded against a single PAN number.

Who has to apply for PAN​

In India, who earn taxable income which include foreign nationals and pay taxes. Also, persons
who have retail business, services or consultancy and total sales business and turnover or gross
receipt is exceeding Rs 5 lakhs in the previous financial year should apply for PAN card.

Form 49A​
Form 49A is filled for applying PAN card in case of Indian Citizen/Indian Companies/Entities
incorporated in India/Unincorporated entities formed in India.

Types of Assessment

Every assessee, who earns income beyond the basic exemption limit in a Financial Year (FY),
must file a statement containing details of his income, deductions, and other related information.
This is called the Income Tax Return (ITR). Once you as a taxpayer file the income returns, the
Income Tax Department will process it. There are occasions where, based on set parameters by
the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an
assessment.
The various forms of assessment are as follows:

1.​ Self- Assessment

2.​ Summary Assessment
3.​ Regular Assessment
4.​ Best Judgement Assessment
 5.​ Income Escaping Assessment

(1)​ Self-Assessment
The assessee himself determines the income tax payable. The tax department has made available
various forms for filing income tax return. The assessee consolidates his income from various
sources and adjusts the same against losses or deductions or various exemptions if any, available
to him during the year. The total income of the assessee is then arrived at. The assessee reduces
the TDS and Advance Tax from that amount to determine the tax payable on such income. Tax, if
still payable by him, is called self -assessment tax and must be paid by him before he files his
return of income. This process is known as Self- Assessment.
Self-assessment calculation Summary:

Particulars Amount

Compute total income XX

Calculate tax payable on total income XX

Add Edu. Cess +Surcharge if any XX

Less Relief under section 89, 90, 91 & 90A XX

Less MAT credit under 115JAA or 115JD XX

Less TDS/TCS XX

Less Advance tax Paid, if any XX

Add Interest u/s 234A, 234B, 234C XX

Amount Payable as Self-Assessment u/s 140A XX

(2)​Summary assessment OR Faceless Assessment

It is a type of assessment carried out without any human intervention. In this type of assessment,
the information submitted by the taxpayer in the income tax return is cross-checked against the
information that the income tax department has access to. In the process, the reasonableness and
correctness of the return are verified by the department. The return gets processed online, and
adjustments for arithmetical errors, incorrect claims, and disallowances are automatically done.

(3)​ Scrutiny assessment u/s 143(3)

A scrutiny assessment may be initiated under Section 143(3) in the following scenarios:
1. When a taxpayer has filed an income tax return or responded to an income tax notice.

2. When the Assessing Officer or Income Tax Authority deems it necessary to conduct an audit
to ensure the accurate reporting of income and taxes paid.

Types of Scrutiny Assessments

Under the Income Tax Act, there are two types of scrutiny assessments. These are:

●​ Manual Scrutiny Assessment

●​ Compulsory Scrutiny Assessments

(4)​Best judgment assessment u/s 144

In the following situation the A.O can make a best judgment assessment after considering all
relevant materials, which he has gathered.
(1) if the assessee has not filed a return or a belated return or a revised return,
(2) if he fails to comply with the terms of the notice or fails to comply with the direction to get
his account audited,
(3) if he fails to comply with the terms of the notice requiring the presence or production of
evidence and documents and
(4) if the A.O is not satisfied with the correctness or completeness of the accounts of the
assessee.
The best judgment assessment can be made only after giving the assessee a reasonable
opportunity of being heard. Assessee has a right to file an appeal or to make an application for
revision to the commissioner.

(5)​Income escaping assessment u/s 147

If the AO has reason to believe that any income chargeable to tax has escaped assessment for
any AY he may assess or re-assess such income. If an assessee has not furnished a return of
income although total income is above the taxable limit or where a return of income has been
made but assessee is found to have understated his income where an assessment is made but
income chargeable to tax has been under assessed, reassessment can be made.

(6) Protective or Precautionary Assessment

The main purpose of a protective assessment is to safeguard the Revenue when there’s doubt
about who should be taxed. If a substantive assessment (on the presumed owner of income) fails
later due to legal or procedural issues, the protective assessment allows the Department to still
recover tax.

Rectification of mistakes [Sec 154]

The AO may amend any order passed by it or amend nay intimation sent by it if he finds that
a mistake apparent from record is made. This is called rectification of mistake. Where a
rectification has the effect of enhancing tax liability or educing the refund, the AO is required
to issue a notice of its intention to do so the assessee and give the assessee a reasonable
opportunity of being heard. Rectification of mistakes may be made either on it’s own motion
 or on the application of the assessee. Rectification can be made only within 4 years from the
end of financial year in which the order sought to be rectified was passed.

Tax Holiday

If an assessee is permitted or given exemption for not to pay tax for a certain number of years/
years then that particular year or years will be termed as Tax holiday. The following are some of
the provisions mentioned by the income tax department regarding tax holidays.

1.​ 100% export oriented units - 10 year tax holiday is allowed for 100% of the income.
2.​ For newly established industrial undertaking in Free trade zones , electronic hardware
technology park, software technology park or special economic zone- 10 year tax holiday is
allowed for 100% of the profits(except for SEZ)

For SEZ the deduction is as follows

a) For the first 5 years 100% of export profit

b) For the next 2 years 50% of export profit

c) For the next 3 years 50% of export profit

Tax Planning

Tax planning refers to paying a minimum amount of tax after legally utilizing the available
deductions, exemptions, rebate and relief provided by the income tax department. Tax planning is
in the hands of the tax payer. Tax planning is legal in nature and is entirely different from tax
evasion and tax avoidance. Tax evasion is one where the assessee makes a false claim of his
income to reduce or escape tax liability. Tax avoidance is one where the assessee tries to reduce
his tax liability by taking advantage of some provisions or some of the loopholes in the tax law.
A person who has avoided tax is not liable for any penalty.