In this blog, we will discuss the time limit for the completion of an assessment under the Income Tax Act. Read on to learn!
Every taxpayer is required to provide the Income-tax Department with information regarding their income. By submitting his income tax return, he must provide these details. The income-tax department processes the return of income when the taxpayer files their income tax return. The time limit for completion of assessment Under Income Tax Act?
The process through which the Income-tax Department reviews the income tax return is referred to as “assessment”. The evaluation also includes a re-evaluation or a best judgment evaluation under section 144. Legal experts at Vakilsearch can clear up any questions you may have about the ITR filing process.
In this blog, we will discuss in detail about the time limit for assessment under Income Tax Act.
Major Assessments Under the Income-Tax Law?
The following are the four major income tax assessments under income tax law:
- Summary assessment without calling the assessee i.e. taxpayer section 143(1)
- Scrutiny assessment Assessment under section 143(3),
- Best judgment Assessment under section 144,
- Income escaping assessment. under section 147,
The Time Limit for Completion of Assessment and Reassessments
- (1) No order of assessment under Sections 143 or 144 shall be made at any time following—
(a) the period that has passed after the assessment year in which the income was first taxable, which is four years; or
(b) eight years have passed since the end of the assessment year in which the income was the first taxable, in a case covered by clause(c) of sub-sec (1) of sec 271; or
(c) the passing of a year after the filing of a return or an amended return by section 139’s subsections (4) or (5), whichever is the latest.
(2) Under section 147, no order of assessment, reassessment, or recomputation shall be made—
(a) When an assessment, reassessment, or recomputation is required under clause (a) of that section, the process must be completed four years after the assessment year in which the section 148 notice was given.
(b) Whenever an assessment, reassessment, or recomputation is required under clause (b) of that section,
(i) four years have passed since the end of the assessment year in which the income was first taxable, or
(ii) when a year has passed since the notice under section 148 was served, whichever is later.
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(3) The assessments, reassessments, and recomputations listed below are exempt from the provisions of subsections (1) and (2) and may be completed at any time—
(i) if a fresh assessment is done by section 146;
(ii) When the assessment, reassessment, or recomputation is made against the assessee or another person in response to or to carry out any findings or directions contained in an order made under Sections 250, 254, 260, 262, or 264 [or in an order made by any court in a proceeding other than an appeal or reference under this Act];
(iii) Whenever, in the case of a firm, a partner is assessed as a result of a firm assessment made by section 147 for best judgement assessment in income tax
Explanation 1
The time required to reopen the entire proceeding or to allow the assessee to be heard again under the provision to section 129, as well as any time the assessment proceeding is stayed by a court order or injunction, shall not be included in calculating the period of limitation for purposes of this section.
Explanation 2
If any income is excluded from the assessee’s total income by an order [mentioned in clause (ii) of sub-section (3)], the assessment of that income for a subsequent assessment year shall, for Section 150 and this Section, be deemed to be one made in response to or to carry out any findings or directions contained in the said order.
Explanation 3
If any income is excluded from a person’s total income and determined to belong to another person by an order 2 [referred to in clause (ii) of sub-section (3)], then, for purposes of section 150 and this section, an assessment of that income made against that other person shall be deemed to be one made in response to or to give effect to any findings or directions contained in the said order, provided that the other person has a chance to be heard before the assessment was made.
What Options Does One Have If They Disagree With The Ruling Made By The Assessing Officer?
If one disagrees with the decision made by your assessing officer, one may appeal to a higher authority. The Commissioner serves as the initial appellate body (appeals). The issue can then be brought to the Income-tax Appellate Tribunal, the High Court, and finally the Supreme Court. The following fee must be paid for appeals to the Commissioner of Appeals, regardless of when the assessment action was started:
₹250 in cases when the assessed income is less than ₹ 1,00,000.
When assessed income exceeds ₹ 1,00,000 but falls short of ₹ 2,00,000, add ₹ 500.
In cases where the assessed income exceeds ₹2,00,000, add ₹1,000.
What is Limited Scrutiny?
Limited scrutiny and complete scrutiny are the two types of cases that have been chosen for scrutiny in the assessment context. Notices issued under section 143(2) of the Income-tax Act, 1961 (the “Act”) have been used to properly notify the affected assessees that their cases are either under “Limited Scrutiny” or “Complete Scrutiny.”
The process for dealing with “Limited Scrutiny” cases shall be as follows: In “Limited Scrutiny” situations, The impacted assessee must be immediately informed of the reasons or problems.
The “Limited Scrutiny” cases described in section 142(1) of the Act’s Questionnaire shall be limited to the particular factors or concerns for which the case has been chosen for scrutiny. Additionally, the “Limited Scrutiny” issues will be the only ones under investigation.
These cases must be resolved quickly and with a minimum of hearings. The case may be taken up for “Complete Scrutiny” with the approval of the Pr. CIT/CIT is concerned if the Assessing Officer becomes aware during assessment proceedings in “limited scrutiny” cases that there is a possibility of escapement of income exceeding ₹5,00,000 (for metro charges, the monetary limit shall be ₹10,000,00)
However, the Pr. CIT/CIT must first be satisfied with the merits of the issue(s) that call for “Complete Scrutiny” in that specific case before granting such approval in writing.
Conclusion
We hope that after reading this article, you have understood the time limit for Assessment under income tax act. If you are a working professional, submitting income tax returns can occasionally be a hassle. You can get rid of this problem by working with the legal professionals at Vakilsearch; their team is equipped with decades of knowledge and can help you with any legal issue.
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