Under the Income-tax Law, there are four major assessments given below:

Intimation under section 143(1) is sent by the Income Tax Department to the taxpayer only in case any tax or interest is found payable or refundable or there is any increase / reduction in loss. In case, any person received such an intimation, he should first check the reason for receiving it. The intimation would contain the details of Income Tax Return filed by you and the computation as done by the Income Tax Department.

The Assessment U/s 143(3) is a detailed assessment and is referred to as scrutiny assessment. At this stage a detailed scrutiny assessment of the return of income will be carried out. At this stage a scrutiny assessment is carried out to confirm the correctness and genuineness of various claims, deductions, etc., files by the taxpayer in the return of income.

The main objective of scrutiny assessment is to confirm by the Income Tax Department that the taxpayer has not understated his income or has not computed excessive loss or has not under paid the tax in any manner. Hence, Assessing Officer carries out a detailed scrutiny assessment of the return of income and will satisfy himself regarding various claims, deductions, etc., made by the taxpayer in his return of income.

As per section 153, assessment under section 143(3) shall be made within a period of two years from the end of the relevant assessment year.

In a best judgment assessment the assessing officer should really base the assessment on his best judgment i.e. he must not act dishonestly or vindictively or capriciously. There are two types of judgment assessment:

• 1. Compulsory best judgment assessment made by the assessing officer in cases of non-co-operation on the part of the assessee or when the assessee is in default as regards supplying information’s.
  2. Discretionary best judgment assessment is done even in cases where the assessing officer is not satisfied about the correctness or the completeness of the accounts of the assessee or where no method of accounting has been regularly and consistently employed by the assessee.

The Best Judgment Assessment is a procedure under the IT Act to comply with the principles of natural justice. Vide Section 144 of the Income Tax Act, 1961 the Assessing Officer is under an obligation to make an assessment of the total income or less to the best of his judgment in the following cases.

1. 1. If the person fails to make a return or required under s. 139(1) and he has not made a return or a revised return under ss. (4) or (5) of that section.
   2. If any person fails to comply with all the terms and conditions stipulated under a notice u/ss. 142 or fails to comply with the directions requiring him to get his accounts audited in terms of section 142(2A).
   3. If any person, after having filed a return fails to comply with the with all the terms of a notice under section 143(2) requiring his presence or production of evidence and documents; or
   4. If the Assessing officer is not satisfied about the correctness and the completion of the accounts of the assessee if no method of accounting has been regularly employed by the assessee.

In case of best judgment assessment an assessee has a right to file an appeal under S. 246A or to make an application for revision under S.246 to the Income Tax Commissioner. The best judgment assessment can only be made after giving the assessee an opportunity of being heard.

Notice for assessment under section 147, the Assessing Officer has to issue notice under section 148 to the taxpayer and has to give him an opportunity of being heard. The time-limit for issuance of notice under section 148 is as follows.

Section 149(1) provides the time limit for issuance of notice u/s 148 of the income tax act as under:

Notice under section 148 shall be issued for the relevant assessment year,—

(a) up to four years from the end of the relevant assessment year, if the escaped income is up to Rs. 1 lakh;

(b) up to six years from the end of the relevant assessment year, if the escaped income amounts is Rs. 1 lakh or more for that year;

(c) up to sixteen years from the end of the relevant assessment year, if the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.

If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, then he may assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section. He is also empowered to re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned.

Items which are the subject matters of any appeal, reference or revision cannot be covered by the Assessing Officer under section 147.

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