STELLA MARIS COLLEGE

CHENNAI

INCOME TAX LAW AND

PRACTICE

ASSIGNMENT ON THE BASIC

CONCEPTS OF ASSESSMENT
PROCEDURE, TDS, ADVANCE
PAYMENT OF TAX, FILING OF
RETURNS-E-FILING,
REFILING,PAN,TAN.

DONE BY:
S.AROCKIA SHINY
15/UCMA/038
SYNOPSIS:
 TAX
 CHARACTERISTICS OF A
GOOD TAX SYSTEM
 TYPES OF TAXES IN INDIA
 ASSESSMENT
 ASSESSMENT PROCEDURES
 FILING OF RETURNS:
 E-FILING
 RE-FILING
 PAN
 TAN.
 DIFFERENCES BETWEEN
PAN, TAN AND TIN.
TAX:

Meaning:

A tax is a mandatory financial charge or some other type of levy imposed

upon a taxpayer (an individual or other legal entity) by a governmental
organization in order to fund various public expenditures. A failure to pay,
or evasion of or resistance to taxation, is punishable by law. Taxes consist of
direct or indirect taxes and may be paid in money or as its labour
equivalent. Most countries have a tax system in place to pay for
public/common/agreed national needs and government functions: some
levy a flat percentage rate of taxation on personal annual income, some on
a scale based on annual income amounts, and some countries impose
almost no taxation at all, or a very low tax rate for a certain area of
taxation. Some countries charge a tax both on corporate income and
dividends; this is often referred to as double taxation as the individual
shareholder(s) receiving this payment from the company will also be levied
some tax on that personal income.

Definition:

According to Hugh Dalton, "a tax is a compulsory contribution imposed by a

public authority, irrespective of the exact amount of service rendered to the
taxpayer in return, and not imposed as penalty for any legal offence."

Important Characteristics of a Good Tax System:

A good tax system is one which has predominantly good taxes and which
fulfills most of the canons of taxation: it must yield sufficient revenue, but
cause minimum aggregate sacrifice to the people and minimum obstruction
to incentives for production. A good tax system should possess the
following characteristics:

1. It should ensure maximum social advantage. Taxation should be used to

finance public services.

2. It should cause minimum aggregate sacrifice. In a good tax system, the

allocation of taxes among tax payers is made according to the ability to pay.
It falls more heavily on the rich and less on the poor. It should be
reasonably progressive so as to minimize the gap of inequality of income
and wealth in the community, thereby ensuring their better distribution.
3. In a good tax system, taxes are universally applicable in the sense that
persons with same ability to pay are treated in the same way without any
discrimination whatsoever. In the Indian tax system, however, this attribute
is lacking to some extent. For instance, income tax is not universal in India,
as no income tax is levied on agricultural incomes.

4. It should contain a predominance of good taxes satisfying most of the

canons of taxation. That is to say, the taxes imposed should be more or less
equitable, convenient to pay, economical, certain, productive, flexible and
simple as far as possible.

5. The entire structure of the tax system should have built-in flexibility, so
that changes are possible according to the changing conditions of a dynamic
economy. It should be possible to add or withdraw a tax without destroying
the entire system and its balancing effect. A rigid tax structure is very
unsatisfactory. Taxation must cope with the changing needs of the modern
government. The capacity to adjust itself to the dynamic conditions of an
economy is a virtue of a good tax system.

6. A good tax system should be a balanced one. It means there must exist
not one kind of taxes but all types in the right proportion. In other words, it
should not contain just progressive, regressive or proportional taxes only,
but a healthy combination of all such taxes. Similarly, it should have a
balance of direct and indirect taxes.

7. The tax system should be multiple, but then took a great multiplicity is
not desirable. Dalton, however, suggests that a good tax system has to be
also a reasonably efficient administrative system.

8. Further, in a good tax system there is simplicity, implying the absence of

any unnecessary and avoidable complexities.

9. A good tax system should not hamper the development of trade and
industry, but instead help the rapid economic development of the country.
Taxation is designed to mobilize the surplus resources in the economy and
not deprive the private sector of its resources.

More than everything the most fundamental characteristic of a good tax

system is the appreciation of the rights and problems of the tax payer.
Type of Taxes in India:-
 Direct Taxes:
 Income tax
 Capital gains tax
 Securities Transaction Tax
 Perquisite Tax
 Corporate Tax

 Indirect Taxes:
 Sales tax
 Service Tax
 Value Added Tax
 Custom duty & Octroi (On Goods)
 Excise Duty
 Anti Dumping Duty

 Other Taxes:
 Professional Tax
 Dividend distribution Tax
 Municipal Tax
 Entertainment Tax
 Stamp Duty, Registration Fees, Transfer Tax
 Education Cess , Surcharge
 Gift Tax
 Wealth Tax
 Toll Tax
 Swachh Bharat Cess
 Krishi Kalyan Cess
 Dividend Tax
 Infrastructure Cess
 Entry Tax

ASSESSMENT:
Assessment occurs when an asset's value must be determined for the
purpose of taxation. Assessments are made annually on certain types of
property, such as homes and cars; other assessments may be made only
once.
For example, homes are often valued every three or four years according to
their physical condition and comparable values of surrounding residences.

Income tax Assessment Procedure

Income tax assessment is estimation for an amount assessed while paying
Income Tax by assessee himself or by income tax officer. Following types of
assessment are carried out under Income tax act.

1. Self assessment u/s 140A.

2. Summary Assessment u/s 143(1)
3. Scrutiny assessment u/s 143(3).
4. Best judgment assessment u/s 144.
5. Protective Assessment.
6. Income escaping assessment u/s 147.
7. Assessment in case of search u/s 153A

For making assessment under these various provisions of the act, some
compliance is mandatory to assessing officer:

Particulars Mandatory Requirements

Self assessment u/s 140A. –
Scrutiny assessment u/s 143(3). Section 143(2) Notice
Best judgment assessment u/s 144. Show cause notice u/s 144
Protective Assessment –
Income escaping assessment u/s Section 148 Notice
147.
Assessment in case of search u/s Section 153A
153A

Self Assessment u/s 140A

Before submitting returns assessee is supposed to find whether he is liable
for any tax or interest. For this purpose this section has been introduced in
Income tax act. Where any tax is payable on the basis of any return
required to be furnished under section 139 or section 142 or section 148 or
section 153A, after deducting:
1.Advance tax Paid, if any
2.TDS/TCS
3.Relief under section 90, 91 & 90A
4.MAT credit under 115JAA or 115JD
Then assessee shall pay tax & interest before furnishing return and proof of
such payment will be accompanied with return of income.
Self assessment calculation Summary:
Particulars Amount
Income tax + Edu. Cess +Surcharge if any Xxx
Add Interest u/s 234A, 234B, 234C Xxx
Less TDS/TCS Xxx
Less Advance tax Paid, if any Xxx
Less Relief under section 90, 91 & 90A Xxx
Less MAT credit under 115JAA or 115JD Xxx
Amount Payable by way of Self Assessment u/s 140A xxx

If any amount is payable under section 140A then amount so paid shall be
adjusted against interest payable first and then balance amount to be
adjusted toward tax payable.
Summary Assessment u/s 143(1)
“Summary Assessment”, it is not an actual assessment. Under this section,
the Return of Income filed by assessee will not be scrutinized, however
whatever, is claimed by assessee in his ROI will be accepted by assessing
officer after only confirming arithmetical accuracy.
1. the total income or loss shall be computed after making the following
adjustments, namely:
(i) any arithmetical error in the return; or
(ii) an incorrect claim, if such incorrect claim is apparent from any
information in the return;
2 .the tax and interest, if any, shall be computed on the basis of the total
income computed under clause (a);
3. the sum payable by, or the amount of refund due to, the assessee shall
be determined after adjustment of the tax and interest, if any, computed
under clause (b) by any tax deducted at source, any tax collected at source,
any advance tax paid, any relief allowable under an agreement under
section 90 or section 90A, or any relief allowable under section 91, any
rebate allowable under Part A of Chapter VIII, any tax paid on self-
assessment and any amount paid otherwise by way of tax or interest;
4. an intimation shall be prepared or generated and sent to the assessee
specifying the sum determined to be payable by, or the amount of refund
due to, the assessee under clause (c); and
5. the amount of refund due to the assessee in pursuance of the
determination under clause (c) shall be granted to the assessee:

Scrutiny assessment u/s 143(3).

Scrutiny assessments are popularly known as regular assessment.
On the day specified in the notice of sub-section (2), or as soon afterwards
as may be, after hearing such evidence and after taking into account such
particulars as the assessee may produce, the Assessing Officer shall, by an
order in writing, allow or reject the claim or claims specified in such notice
and make an assessment determining the total income or loss accordingly,
and determine the sum payable by the assessee on the basis of such
assessment.

What if Analysis of Section 143(2) and 143(3)?

What if – Answer
What if assessee has not filed Return of Notice under section 143(2) can not issue
Income? therefore assessment under 143(3) not
possible.

What if notice under section 143(2) not Assessment is Void

issued?
Assessment carried out after 6 month of Assessment is Void
servicing notice

What if, Assessing officer reduce income Yes AO can reduced below returned income,
below returned income? as per CBDT clarification

What if assessee claims certain deduction No request will be entertain unless return has
through letter to Assessing officer during been revised
assessment?

Best judgment assessment u/s 144.

If any person—
(a)fails to make the return required under sub-section (1) of section 139
and has not made a return or a revised return under sub-section (4) or sub-
section (5) of that section, or
(b) fails to comply with all the terms of a notice issued under sub-section (1)
of section 142 or fails to comply with a direction issued under sub-section
(2A) of that section], or
(c) having made a return, fails to comply with all the terms of a notice
issued under sub-section (2) of section 143,

Then Assessing Officer, after taking into account all relevant material which
the Assessing Officer has gathered, shall, after giving the assessee an
opportunity of being heard, make the assessment of the total income or
loss to the best of his judgment and determine the sum payable by the
assessee on the basis of such assessment.
Provided that such opportunity shall be given by the Assessing Officer by
serving a notice calling upon the assessee to show cause, on a date and
time to be specified in the notice, why the assessment should not be
completed to the best of his judgment :
it shall not be necessary to give such opportunity in a case where a notice
under sub-section (1) of section 142 has been issued prior to the making of
an assessment under this section 144.
What if Analysis of Section 144 –
What if – Answer
What if Assessing Officer has not provided Assessment is Void
opportunity of being heard by servicing notice?
What if Assessing Officer has not provided Assessment is Valid
opportunity of being heard by servicing notice but
notice under 142(1) (i) is already issued?

What if, Assessing officer (AO) reduces income AO cannot reduce income.
below returned income?
What if, assessment is done in an arbitrary manner? Assessment is Void. Assessment
should be based on material which
AO collects.

What if, assessment carried out after 2 years of Assessment is Void

completion of assessment year

Protective Assessment.
There appears to be no provision in the Act providing for the manner in
which a protective assessment has to be done. But traditionally wherever
the department has been in doubt on ac-count of a pending litigation as to
how exactly an assessment had been framed against the assessee, the
Assessing Officer has been making an assessment in a manner in which he
thought the assess-ment should be done and apprehending that such
assessment may be set aside in the pending litigation, he would make
another as-sessment as per the stand of the assessee for the purpose of
protecting the interest of the revenue. There is no provision anywhere in
the Act stipulating that such protective assessment has also to be made
along with the original assessment – Bhatia Motor Stores v. CIT [2006] 152
Taxman 89 (MP). Certain case laws based on protective assessments are
Supreme Court in Lalji Haridas v. ITO, (43 ITR 387) also G. Topi Saheb vs
Commissioner of Income-Tax (170 ITR 181 AP).

Enquiry before assessment. [ Section 142]

Enquiry:
(1) The Assessing Officer has power to make inquiry from any person (a)
who has made a return under section 139 or (b) in whose case the time
allowed under section 139(1) for furnishing the return has expired. For the
purpose a notice can be issued for :
(i) where such person has not made a return within the time allowed under
section 139(1), to furnish a return of his income or
(ii) to produce such accounts or documents as the Assessing Officer may
require, or
(iii) to furnish in writing and verified in the prescribed manner information
in such form and on such points or matters including a statement of all
assets and liabilities of the assessee, whether included in the accounts or
not, as the Assessing Officer may require.
(2) For the purpose of obtaining full information in respect of the income or
loss of any person, the Assessing Officer may make such inquiry as he
considers necessary.
Audit : If the Assessing Officer, having regard to the nature and complexity
of the accounts of the assessee and the interests of the revenue, opines
that it is necessary so to do, he may, direct the assessee to get the accounts
audited by an accountant, as defined in the Explanation below section
288(2) and to furnish an audit report, within such period as may be
specified, in the prescribed form. The expenses of such audit shall be paid
by the assessee. These provisions of audit shall have effect notwithstanding
that the accounts of the assessee have been already audited.

Opportunity to Assessee :
The assessee shall be given an opportunity of being heard in respect of any
material gathered on the basis of any inquiry or any audit and proposed to
be utilised for the purposes of the assessment. Such opportunity need not
be given where the assessment is made under section 144.

Estimate by Valuation Officer in certain cases [Sec. 142A]

For the purposes of making an assessment under this Act, where an
estimate of the value of any investment referred to in section 69 or section
69B or the value of any bullion, jewellery or other valuable article referred
to in section 69A or section 69B is required to be made, the Assessing
Officer may require the Valuation Officer to make an estimate of such value
and report the same to him. On receipt of the report from the Valuation
Officer, the Assessing Officer may, after giving the assessee an opportunity
of being heard, take into account such report in making such assessment.
ASSESSMENT ON THE BASIS OF RETURN FILED/SUMMARY
ASSESSMENT [Section 143]
Intimation [Section 143(1)]
Where a return has been made under section 139, or in response to a
notice under sub-section (1) of section 142, on the basis of such a return —
(i) if any tax or interest is found due, after reducing TDS, TCS, advance tax,
any self-assessment tax or any other
amount paid, then an intimation shall be sent to the assessee specifying the
sum so payable, and
(ii) if any refund is due to the assessee, it shall be granted to him and an
intimation to this effect shall be sent to
Him.
In all other cases i.e. where tax paid is equal to tax payable,
acknowledgement of the return shall be deemed to be an intimation.
Intimation shall not be sent after the expiry of one year from the end of the
financial year in which the return is made.
Power under section 143(1B) extended by one year due to delay in
Centralized Processing of Returns. The Income-tax department is in the
process of setting up a Centralised Processing Centre (CPC) at Bengaluru for
centralised processing of Income tax and Fringe benefits tax returns. For
this purpose the Board had been empowered to relax, modify or adapt any
provision of law relating to processing of returns subject to the condition
that the notification for such relaxation, modification or adaptation is
issued on or before 31-3-2009 and the said notification is laid on the table
of the House. Since the centre has still not been operationalised, it is
necessary to allow the Board a further period of one year i.e. up to 31-3-
2010 to relax, modify or adapt any provision of law relating to processing of
returns.

Regular Assessment [Section 143(3)]

Where a return has been furnished under section 139, or in response to a
notice under sub-section (1) of section 142, the Assessing Officer shall, if he
considers it necessary or expedient to ensure that the assessee has not
understated the income or has not computed excessive loss or has not
under-paid the tax in any manner, serve on the assessee a notice requiring
him, either to attend his office or to produce, any evidence on which the
assessee may rely in support of the return. However, no notice shall be
served after the expiry of twelve months from the end of the month in
which the return is furnished. On the day specified in the notice issued or as
soon afterwards as may be, after hearing such evidence as the assessee
may produce and such other evidence as the Assessing Officer may require
on specified points, and after taking into account all relevant material which
he has gathered, the Assessing Officer shall, by an order in writing, make an
assessment of the total income or loss of the assessee, and determine the
sum payable by him or refund of any amount due to him on the basis of
such assessment.
Tax has to be determined and such determination is to be made in the
Assessment order or computation sheet to be annexed with the
Assessment order. [ Kalyan Kumar Ray vs. CIT] The assessed income may be
lower than the returned income. The boards circular no 549 para 5.12 dt.
31.10.1989 has been held to be ultra-vires Gujarat Gas Co Ltd v JCIT(A)

Best Judgement Assessment [Section 144]

Best judgement assessment that is popularly known as ex-parte assessment
can be made if the assessee fails to comply with the requirement of law as
following :-
(1) The assessee fails to file a return U/s 139 or
(2) He fails to comply with the terms of the notice issued U/s 142(1) or fails
to comply with a direction issued U/s 142(2A).
(3) After filing a return he fails to comply with all the terms of the notice
issued u/s 143(2).

The non-compliances are independent and not cumulative. A single non

compliance can lead to best judgement u/ s 144. In such a situation the A.O.
after taking into account all relevant materials which he has gathered and
after giving the assessee an opportunity of being heard shall make an
assessment of income or loss to the best of his judgement and determine
the sum payable by him. There is no provision for granting refund u/s 144.
Provision for granting refund has been withdrawn with effect from 1.4.88.
However, where a notice u/s 142(1) has already been issued to the assessee
it will not be necessary to give him such opportunity of being heard.

Power of Joint Commissioner to issue directions in certain cases

[Sec. 144A]
A Joint Commissioner may, on his own motion or on a reference being
made to him by the Assessing Officer or on the application of an assessee,
call for and examine the record of any proceeding in which an assessment is
pending and, if he considers that, having regard to the nature of the case or
the amount involved or for any other reason, it is necessary or expedient so
to do, he may issue such directions as he thinks fit for the guidance of the
Assessing Officer to enable him to complete the assessment and such
directions shall be binding on the Assessing Officer : Provided that no
directions which are prejudicial to the assessee shall be issued before an
opportunity is given to the assessee to be heard.

Provision for constitution of alternate dispute resolution

mechanism for order of the Transfer Pricing Officer, and foreign
company (Section 144C) (W.e.f. 1-10-2009]
The dispute resolution mechanism presently in place is time consuming and
finality in high demand cases is attained only after a long drawn litigation till
Supreme Court. Flow of foreign investment is extremely sensitive to
prolonged uncertainty in tax related matter. Therefore, the Act has
amended the Income-tax Act to provide for an alternate dispute resolution
mechanism, which will facilitate expeditious resolution of disputes in a fast
track basis.
The salient features of the alternate dispute resolution mechanism are as
under:—
1. The Assessing Officer shall, forward a draft of the proposed order of
assessment (hereinafter in this section
referred to as the draft order) to the eligible assessee if he proposes to
make, on or after 1-10-2009, any variation
in the income or loss returned which is prejudicial to the interest of such
assessee.
2. On receipt of the draft order, the eligible assessee shall, within thirty
days of the receipt by him of the draft order,
(a) File his acceptance of the variations to the Assessing Officer; or
(b) File his objections, if any, to such variation with,—
(i) The Dispute Resolution Panel; and
(ii) The Assessing Officer.
3. The Assessing Officer shall complete the assessment on the basis of the
draft order, if—
(a) The assessee intimates to the Assessing Officer the acceptance of the
variation; or
(b) No objections are received within the period specified in sub-section (2)
i.e. 30 days of the receipts of draft
order by the eligible assessee.
4. The Assessing Officer shall, notwithstanding anything contained in
section 153, pass the assessment order under
section 144C(3) within one month from the end of the month in which,—
(a) The acceptance is received; or
(b) The period of filing of objections under sub-section (2) expires.
5. The Dispute Resolution Panel shall, in a case where any objections are
received under sub-section (2), issue such directions, as it thinks fit, for the
guidance of the Assessing Officer to enable him to complete the
assessment.
6. The Dispute Resolution Panel shall issue the directions referred to in sub-
section (5), after considering the following, namely:
(a) Draft order;
(b) Objections filed by the assessee;
(c) Evidence furnished by the assessee;
(d) Report, if any, of the Assessing Officer, Valuation Officer or Transfer
Pricing Officer or any other authority;
(e) Records relating to the draft order;
(f) Evidence collected by, or caused to be collected by, it; and (g) Result of
any enquiry made by, or caused to
be made by it.
7. The Dispute Resolution Panel may, before issuing any directions referred
to in sub-section (5),—
(a) Make such further enquiry, as it thinks fit; or
(b) Cause any further enquiry to be made by any income tax authority and
report the result of the same to it.
8. The Dispute Resolution Panel may confirm, reduce or enhance the
variations proposed in the draft order so,
however, that it shall not set aside any proposed variation or issue any
direction under sub-section (5) for further
enquiry and passing of the assessment order.
9. If the members of the Dispute Resolution Panel differ in opinion on any
point, the point shall be decided according to the opinion of the majority of
the members.
10. Every direction issued by the Dispute Resolution Panel shall be binding
on the Assessing Officer.
11. No direction under sub-section (5) shall be issued unless an opportunity
of being heard is given to the assesses and the Assessing Officer on such
directions which are prejudicial to the interest of the assessce or the
interest of the revenue, respectively.
12. No direction under sub-section (5) shall be issued after nine months
from the end of the month in which the
draft order is forwarded to the eligible assessee.
13. Upon receipt of the directions issued under sub-section (5), the
Assessing Officer shall, in conformity with the
directions, complete, notwithstanding anything to the contrary contained in
section 153, the assessment without
providing any further opportunity of being heard to the assessee, within
one month from the end of the month
in which the direction is received.
14. The Board may make rules for the efficient functioning of the Dispute
Resolution Panel and expeditious disposal of the objections filed, under
subsection (2), by the eligible assessee.
15. For the purposes of this section,—
(a) “Dispute Resolution Panel” means a collegium comprising of 3
Commissioners of Income tax constituted
by the Board for this purpose;
(b) “eligible assessee” means,—
(i) Any person in whose case the variation referred to in sub-section (1)
arises as a consequence of the order of the Transfer Pricing Officer passed
under sub-section (3) of section 92CA; and
(ii) any foreign company. Further, the following consequential amendments
have been made-
a. Section 131(1) so as to provide that “Dispute Resolution Panel” shall
have the same powers as are vested in a Court under the Code of
Civil Procedure, 1908;
b. Section 246(1 )(a) has been amended so as to exclude the order of
assessment passed under sectio.i 143(3) or order of re-assessment
under section 147 in pursuance of directions of “Dispute Resolution
Panel” as an appealable order.
c. Section 253(1) has been amended to insert clause (d) so as to
include an order of assessment passed under section 143(3) or order
of re-assessment under section 147 in pursuance of directions of
“Dispute Resolution Panel” as an appealable order.
An order passed under section 154 rectifying such order shall also be
appealable to IT AT.

Income Escaping Assessment OR Reassessment [Sec. 147]

If the Assessing Officer has reason to believe that any income chargeable to
tax has escaped assessment for any assessment year, he may, following the
prescribed process, 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, or recompute the loss or the depreciation allowance or any other
allowance, as the case may be, for the assessment year concerned.
Where an assessment under section 143(3) or section 147 has been made
for the relevant assessment year, no action shall be taken under this section
after the expiry of four years from the end of the relevant assessment year,
unless any income chargeable to tax has escaped assessment for such
assessment year by reason of the failure on the part of the assessee to
make a return under section 139 or section 142 or section 148 or to disclose
fully and truly all material facts necessary for his assessment, for that
assessment year.

Sec. 148 : Issue of notice where income has escaped assessment.

(1) Before making the assessment, reassessment or recomputation under
section 147, the Assessing Officer shall serve on the assessee a notice
requiring him to furnish within specified period, a return of his income.
(2) The Assessing Officer shall, before issuing any notice under this section,
record his reasons for doing so.

Sec. 149 : Time limit for notice.

(1) No notice under section 148 shall be issued for the relevant assessment
year —
(a) if four years have elapsed from the end of the relevant assessment year,
unless he case falls under clause (b);
(b) if four years, but not more than six years, have elapsed from the end of
the relevant assessment year unless the income chargeable to tax which
has escaped assessment amounts to or is likely to amount to one lakh
rupees or more for that year.
• Time-limit applies for ‘Issue’ and not for service – R.K. Upadhyaya v.
Shanabhai P Patel [1987] 166 ITR 163 (SC).
• Amended law will apply only if limitation has not already expired –
Chandiram v. ITO [1996] 87 Taxman 418 (Raj.).
Section 153: Time limit for completion of assessment and
reassessment.
Regular assessment U/s 143 or 144 must be made within twenty-one
months of the relevant assessment year or one year end of the Financial
Year in which the return was filed whichever is later.
Assessment in case of search or requisition [Section 153A]
Notwithstanding anything contained in section 139, section 147, section
148, section 149, section 151 and section 153, in the case of a person where
a search is initiated under section 132 or books of account, other
documents or any assets are requisitioned under section 132A after the
31st day of May, 2003, the Assessing Officer shall:
(a) issue notice to such person requiring him to furnish within such period,
as may be specified in the notice, the return of income in respect of each
assessment year falling within six assessment years referred to in clause (b),
in the prescribed form and verified in the prescribed manner and setting
forth such other particulars as may be prescribed and the provisions of this
Act shall, so far as may be, apply accordingly as if such return were a return
required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately
preceding the assessment year relevant to the previous year in which such
search is conducted or requisition is made .
The Assessing Officer shall assess or reassess the total income in respect of
each assessment year falling within such six assessment years:
It is provided that assessment or reassessment, if any, relating to any
assessment year falling within the period of six assessment years referred
to in this section pending on the date of initiation of the search under
section 132 or making of requisition under section 132A, as the case may
be, shall abate.
Except as otherwise provided in this section, section 153B and section 153C,
all other provisions of this Act shall apply to the assessment made under
this section; In an assessment or reassessment made in respect of an
assessment year under this section, the tax shall be chargeable at the rate
or rates as applicable to such assessment year.
Prior approval necessary for assessment in cases of search or
requisition[Sec. 153D]
No order of assessment or reassessment shall be passed by an Assessing
Officer below the rank of Joint Commissioner in respect of each assessment
year referred to in clause (b) of section 153A or the assessment year
referred to in clause (b) of sub-section (1) of section 153B, except with the
prior approval of the Joint Commissioner.

FILING OF RETURNS:
E-FILING:

What is E Filing?
E-filing or electronic filing is submitting our income tax returns online. There
are two ways to file our income tax returns. The traditional way is the
offline way, where we go the Income Tax Department’s office to physically
file our returns. The other way is when we e-file through the internet. Over
the past few years, e filing has become popular because it is easier, doesn’t
require prints of documents, and can be done for free!
Am I Required to File Income Tax Returns?

It is mandatory to file income tax returns in India if any of the below

conditions are applicable to we (as per the Income Tax Act):

• Earn gross annual income more than-

Particulars Amount
For individuals below 60 years Rs 2.5 Lakhs
For individuals between 60 to 80 years Rs 3.0 Lakhs
For individuals above 80 years Rs 5.0 Lakhs

 Earn income other than salary like house property, etc.

 Want to claim income tax refund from the department
 Earn from or have invested in foreign assets
 Wish to apply for visa or loan applications
 Company or a firm, irrespective of profit or loss

Who should e-file income tax returns?

Online filing of tax returns is easy and can be done by most assessees.

 Assessee with a total income of Rs. 5 Lakhs and above.

 Individual/HUF resident with assets located outside India.
 An assessee required to furnish a report of audit specified under
sections 10(23C) (IV), 10(23C) (v), 10(23C) (VI), 10(23C) (via), 10A, 12A
(1) (b), 44AB, 80IA, 80IB, 80IC, 80ID, 80JJAA, 80LA, 92E or 115JB of
the Act.
 Assessee required to give a notice under Section 11(2) (a) to the
assessing officer.
 A firm (which does not come under the provisions of section 44AB),
AOP, BOI, Artificial Juridical Person, Cooperative Society and Local
Authority (ITR 5).
  An assessee required to furnish returns U/S 139 (4B) (ITR 7).
 A resident who has signing authority in any account located outside
India.
 A person who claims relief under sections 90 or 90A or deductions
under section 91.
 All companies.

Types of e-Filing:
•Use Digital Signature Certificate (DSC) to e-file. It is mandatory to file IT
forms using Digital Signature Certificate (DSC) by a chartered accountant.
•If we e-file without DSC, ITR V form is generated, which should then be
printed, signed and submitted to CPC, Bangalore by ordinary post or speed
post within 120 days from the date of e-filing.
•We can file e-file IT returns through an E-return Intermediary (ERI) with or
without DSC.
Checklist for e-Filing IT Returns

ITR 1 (SAHAJ) Individuals with income from salary and interest

ITR 2 Individuals and Hindu Undivided Families (HUF) not having income from business or
profession

ITR 3 Individuals/HUFs being partners in firms and not carrying out business or profession
under any proprietorship

ITR 4 Individuals and HUFs having income from a proprietary business or profession

ITR 4S Individuals/HUF having income from presumptive business

(SUGAM)

ITR 5 Firms, AOPs,BOIs and LLP

ITR 6 Companies other than companies claiming exemption under section 11

ITR 7 Persons including companies required to furnish return under section 139(4A) or section
139(4B) or section 139(4C) or section 139(4D)
There are a few prerequisites to filing our tax returns smoothly and
effectively. Major points have been highlighted below.
•How to choose the right form to file our taxes electronically
•It can be confusing deciding which form to submit when filing our tax
returns online. The different categories of Income Tax Return (ITR) forms
and who they are meant for are tabulated above.
Check our tax credit - Form 26AS vs. Form 16

We should check Form 26AS before filing our returns. It shows the amount
of tax deducted from our salary and deposited with the IT department by
our employer. We should ensure that the tax deducted from our income as
per our Form 16 matches with the figures in Form 26AS. If we file our
returns without clarity on errors, we will get a notice from the IT
department.

Claim 80G, savings certificates and other deductions

We can claim extra deductions if we forgot to claim them. Similarly, we can

also claim deductions under section 80G on donations made to charitable
institutions.

Interest statement - Interest on savings accounts and fixed deposits

A deduction for up to Rs.10,000 is allowed on interest earned on savings

accounts. However, interest earned on bank deposits, if any, forms a part of
our taxable income and is taxable at applicable slab rates.

In addition to the above, have the following at hand.

o Last year's tax returns

o Bank statements
o TDS (Tax Deducted at Source) certificates
o Profit and Loss (P&L) Account Statement, Balance Sheet and
Audit Reports, if applicable

List of Required Documents for e-filing of tax returns

It is always good to stay a step ahead, especially when it comes to tax filing.
The checklist provided below will help we to get started with the e-filing of
tax returns.
General details:
•Bank account details
•PAN Number
Reporting salary income:
•Rent receipts for claiming HRA
•Form 16
•Pay slips
Reporting House Property income:
•Address of the house property
•Details of the co-owners including their share in the mentioned property
and PAN details
•Certificate for home loan interest
•Date when the construction was completed, in case under construction
property was purchased
•Name of the tenant and the rental income, in case the property is rented
Reporting capital gains:
•Stock trading statement is required along with purchase details if there are
capital gains from selling the shares
•In case a house or property is sold, we must sought sale price, purchase
price, details of registration and capital gain details
•Details of mutual fund statement, sale and purchase of equity funds, debt
funds, ELSS and SIPs
Reporting other income:
•The income from interest is reported. In case of interest accumulated in
savings account, bank account statements are required
•Interest income from tax saving bonds and corporate bonds must be
reported
•The income details earned from post office deposit must be reported.
Steps to follow to file Income Tax Returns:
Filing our income tax returns online doesn't have to be a complicated
process. Simply follow the below steps.
First, log on to IncomeTaxIndiaeFiling.gov.in And register on the website.
•Our Permanent Account Number (PAN) is our user ID.
•View our tax credit statement or Form 26AS. The TDS as per our Form 16
must tally with the figures in Form 26AS.
•Click on the income tax return forms and choose the financial year.
•Download the ITR form applicable to we. If we're exempt income exceeds
Rs.5,000, the appropriate form will be ITR-2 (If the applicable form is ITR-1
or ITR 4S, we can complete the process on the portal itself, by using the
'Quick e-file ITR' link - this has been explained below).
•Open excel utility (the downloaded return preparation software) and fill
out the form by entering all details using our Form 16.
•Check the tax payable amount by clicking the 'calculate tax' tab.
•Pay tax (if applicable) and fill in the challan details.
•Confirm all the data provided in the worksheet by clicking the 'validate'
tab.
•Generate an XML file and save it on our desktop.
•Go to 'upload return' on the portal's panel and upload the saved XML file.
•A pop-up will be displayed asking we to digitally sign the file. In case we
have obtained a digital signature, select'˜Yes'. If we have not got digital
signature, choose 'No'.
•The acknowledgment form, ITR Verification (ITR-V) will be generated
which can be downloaded by we.
•Take a printout of the form ITR-V and sign it in blue ink
•Send the form by ordinary or speed post to the Income-Tax Department-
CPC , Post Bag No. 1 , Electronic City Post Office, Bangalore, 560 100,
Karnataka within 120 days of filing our returns online.
Steps to file ITR 1 & ITR 4S Online:
Prepare and Submit ITR1 / ITR 4S (Sugam) Online
We have the option to submit ITR 1/ITR 4S forms by uploading XML or by
online submission
•Login to e- Filing application
•Go to 'e File' 'Prepare and Submit ITR Online'
•Select the Income Tax Return Form ITR 1/ITR 4S and the assessment year.
•Fill in the details and then click the submit button and choose DSC (Digital
Signature Certificate)’ (if available) Click on ‘Submit’.
•After submission, acknowledgement detail is displayed.
•Click on the link to view or generate a printout of acknowledgement/ITR V
form.
To use DSC, we have to register it in the e-filing application. we can do so by
logging in on the e-filing website of the IT Department and updating the
Profile Settings section. Under Profile Settings, we have to select Register
Digital Signature Certificate and download the ITD e-Filing DSC
Management Utility. we can use this utility to generate the DSC file.
Things to watch out for while e-filing:
•If the same mobile number or email address is used for more than four
taxpayers, we cannot file returns on the website, unless the required
change is done. For instance, in some cases, more than five returns may be
filed ours, wife, mother, mother-in-law and the Hindu undivided family
(HUF) of which we are the karta, the executor of a will.
•If our name mentioned in our bank documents or official statements is
even slightly different from the one given in the PAN card, the portal will
consider we a different individual. In certain instances, some individuals
give their father's name as their 'middle' name in their PAN card, but do not
use it for their bank accounts.
•If a non-resident Indian has to file income tax returns, he will need both an
India number and a foreign number.
Why to Refile tax returns?
People make mistakes all the time while e-Filing their Income Tax Returns.
We can always revise our return on ClearTax for no extra charge. Also an
income tax return can be revised if the original return is filed within due
date of filing return.
If we have not filed original return using ClearTax i.e filed our return
through income tax department’s portal or any other website, wou can use
ClearTax to file a revised return
How to Revise our Income Tax Return
Step 1: Once we login, go to My Tax Return under My Account.

Step 2: Click on ‘View Details’ for the year we want to revise our income
tax return.
Step 3: we will see the acknowledgment number and date of filing of the
original return. Scroll down and click on ‘Click here to mark this Income
Tax Return as revised’.

Step 4: Once the return is marked as revised we can make corrections

and changes

Step 5: After making the necessary changes and paying tax due if any, go
to ‘Tax Filing’ Tab and click on ‘Proceed to e filing’.
Once the revised return is filed we need to e-verify our income tax
return.

PAN:
Permanent Account Number (PAN) is a code that acts as an identification
for individuals, families and corporates (Indian or Foreign), especially those
who pay Income Tax. It is a unique, 10-character alpha-numeric identifier,
issued to all judicial entities identifiable under the Indian Income Tax Act,
1961. An example number would be in the form of AAAAA0000A. It is
issued by the Indian Income Tax Department under the supervision of the
Central Board for Direct Taxes (CBDT) and it also serves as an important
proof of identification.
It is also issued to foreign nationals (such as investors) subject to a valid visa
and hence, it is not acceptable as a proof of Indian citizenship. The PAN is
mandatory for a majority of financial transactions such as opening a bank
account, receiving taxable salary or professional fees, sale or purchase of
assets above specified limits etc.; especially high-value transactions. The
primary purpose of the PAN is to bring a universal identification to all
financial transactions and to prevent tax evasion by keeping track of
monetary transactions, especially those of high-net-worth individuals who
can impact the economy. The PAN is unique to each individual and is valid
for the lifetime of the holder, throughout India. An important point to note
would be that once issued, the PAN is not affected by a change of address.

Structure and provisions

Income Tax PAN card is issued under Section 139A of the Income Tax Act.
The PAN structure is as follows: AAAPL1234C:
 First five characters are letters, next four numerals, last character
letter.
 The first three letters are sequence of alphabets from AAA to ZZZ
 The fourth character informs about the type of holder of the card.
Each holder is uniquely defined as below:
 A — Association of Persons (AOP)
 B — Body of Individuals (BOI)
 C — Company
 F — Firm
 G — Government
 H — HUF (Hindu Undivided Family)
 L — Local Authority
 J — Artificial Juridical Person
 P — Individual
 T — Trust (AOP)
 K — Krish (Trust Krish)
 The fifth character of the PAN is the first character
(a) of the surname or last name of the person, in the case of a "Personal"
PAN card, where the fourth character is "P" or
(b) of the name of the Entity, Trust, society, or organisation in the case of
Company/ HUF/ Firm/ AOP/ BOI/ Local Authority/ Artificial Judicial Person/
Govt, where the fourth character is "C","H","F","A","T","B","L","J","G".
 The last character is an alphabetic check digit.
In recent times, the DOI (date of issue) of the PAN card is mentioned at the
right (vertical) hand side of the photo on the PAN card if issued by NSDL and
will not be mentioned if issued by UTI-TSL. The central government has
introduced a new online service called "Know Your PAN" to verify or
validate new and existing PAN numbers. Failure to comply with the
provisions of Section 139A of Income Tax Act, penalty of ₹10,000/- for each
default is payable u/s.272B to the Assessing Officer.
How to apply?
Application for PAN card are available at PAN Facilitation centres, located in
cities and towns, wherever Income Tax offices are located. 'Form 49A' are
also available online in the websites of the Income Tax Department and
NSDL. PAN enables the IT department to monitor financial transactions and
to keep track of the tax paid or evaded by an individual.

TAN:
In India, a Tax Deduction and Collection Account Number (TAN) is a 10 digit
[9427583067] number issued to persons who are required to deduct or
collect tax on payments made by them under the Indian Income Tax Act,
1961. The Tax Deducted at Source on payments made by assessees is
deposited under the TAN to enable the assessees who have received the
payments to claim the tax deducted in their income tax return.

Application:

TAN is applied through "Form No. 49B" (prescribed under Indian Income
Tax Law). A completed form can be submitted online at the NSDL website
or at the "Tax Information Network Facilitation Center" (TIN-FC). These
centers are established by NSDL, an appointed intermediary by the Central
Government, across India. TAN is required to be quoted in all TDS/TCS
returns, all TDS/TCS payment challans and all TDS/TCS certificates to be
issued. TDS/TCS returns will not be accepted if TAN is not quoted and
challans for TDS/TCS payments will not be accepted by banks. Failure to
apply for TAN or not quoting the same in the specified documents attracts a
penalty of Rs. 10,000 No documents are required to be filed with the
application for allotment of TAN. However, where the application is made
online, the acknowledgment (a PDF file) which is generated after filling up
the form must be forwarded to NSDL. Detailed guidelines for the procedure
are available at NSDL website. A TAN application should accompany a 'proof
of identity' and a 'proof of address' (photocopies) of the deductor. In the
case of online applications, these documents need to be sent over mail
(post/courier) to NSDL - TAN Application division. When NSDL receives the
TAN application along with said documents (either through TIN FC / Online),
the details are verified and then sent to the Income Tax Department. Once
approved, the Department allocates a unique number, and notifies the
applicant through NSDL.

Structure and validation:

TAN structure is as follows: DELA99999B:

 First four characters are letters, next five are numerals, last character
is a letter. Each tax deductor is uniquely identified by a TAN.
 The first three characters represent the city or state where the TAN
was issued.
 The fourth character represents first character of name of the
deductor and
 The next 5 characters are numerics.w to apply for TAN?
We can apply for TAN in two ways, Offline and Online. Online application
for TAN can be made from the website of NSDL TIN website. In offline mode
an application for allotment of TAN is to be filed in Form 49B and submitted
at any of the TIN Facilitation Centres meant for receipt of e-TDS returns.
The application form can be downloaded from the website of the Income
Tax Department.
Know your TAN

There is a facility 'Know your TAN' provided by the Income Tax Department.
If you don't remember you the TAN number, you can know it online by
using this facility.

Procedure for knowing the TAN

•Visit www.incometaxindiaefiling.gov.in and click ‘Know Your TAN.'

•Select the category of Deductor i.e. Company/Branch of Individual

•Fill other requisite details such as Name or TAN (TAN Details can be known
either from TAN or Name of the Deductor)

•Click on Submit to view the TAN Details

Permanent Account Number – A Permanent Account Number or PAN is a
unique 10 digit alphanumeric code which is provided to every taxpayer or
assessee in the country. It is issued by the Income Tax Department and is a
mandatory requirement for every entity indulging in economic activity
beyond a certain financial limit in the country.

Tax Deduction and Collection Account Number – TAN is a unique 10 digit

alpha numeric code whose primary purpose is related to deduction or
collection of tax. All entities who deduct or collect tax must have a TAN,
quoting it in their TDS or TCS documents.
Taxpayer Identification Number – TIN or Taxpayer Identification Number is
an 11 digit numeric code which is mandatory for traders or dealers who
participate in transactions which attract VAT. All businesses which
participate in interstate trade are expected to have a TIN. A TIN is often
called the VAT Number or Sales Tax Number and individuals should not
confuse these terms.

Differences between PAN, TAN and TIN:

PARAMETER PAN TAN TIN

Commercial Tax
Issuing Agency Income Tax Department Income Tax Department Department of respective
state
11 digit numeric code
10 digit alphanumeric
Code type 10 digit alphanumeric code (first 2 digits are the state
code
code)
The first 5 digits are
A TAN is composed of 4
alphabets representing
alphabets, followed by 5 A TIN is composed of 11
Code content various information,
numbers, with an alphabet numbers
followed by 4 numbers and
as the last digit
an alphabet
PAN acts as a universal
Streamline deduction and Track VAT related
Purpose identification code for
collection of tax at source activities in the country
financial transactions
Every individual/entity
Who should own Any dealer or trader who
Every taxpayer/assessee who has to deduct or
it is liable to pay VAT
collect tax at source

Different states have

Laws which Section 139 A of the IT Section 203A of Income
different Acts under which
account for it Act of 1961 Tax Act of 1961
TIN is applicable
 A penalty of Rs 10,000 can A penalty of Rs 10,000
Penalties vary from state
Fines/Penalties be imposed for failure to can be imposed for failure
to state
comply with the rules to comply with the rules

Form to be used Form 49A (Indians), Form Forms vary from state to
Form 49B
for application 49AA (Foreigners) state

Proof of registration, PAN,

Valid ID proof, address None. In case of online ID proof of owner, etc.
Documents
proof, photographs (in case application the signed (documents required are
required to
of individuals) and proof of acknowledgement needs likely to vary depending
apply
age (date of birth) to be submitted on the state in which an
entity applies)

How many can

One One One
one own?
Rs.107 if the
communication address is
Cost of applying located inside India and Rs.55 plus service tax Varies from state to state
Rs.989 if the address is
outside India