scope of ITO u/s 143(1)
fulltrottlle
(Querist) 10 September 2009
This query is : Resolved
respected sir/madame,
my company has been served the notice for scrutiny u/s 143(1)for AY 07-08. in the proceedings, the ITO is asking us to furnish certains insurance claims related details for the year previous to this.upon our objections, he has demanded the same details saying this is required as the details are mentioned in P/L a/c. our p/l account always show previous years details in comparision with current years. also he is asking for opening in closing stock details for AY 06-07. his reasons being this is the only way he can assess the stocks !
q:does he have powers to ask details as mentioned ? how do i safe guard my company ?
riven
A V Vishal
(Expert) 10 September 2009
In First Place S.143(1) is the intimation of assessment to the assessee, I am reproducing what the Income Tax Act says about 143:
143. [(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:
(a) 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;
(b) the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a);
(c) 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;
(d) 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
(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:
Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax or interest is payable by, or no refund is due to, him:
Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made.
so if there is a scrutiny then a notice u/s.142(2) has to be served. S.142 says:
142. (1) For the purpose of making an assessment under this Act, the 52[Assessing] Officer may serve on any person who has made a return [under section 115WD or section 139 [or in whose case the time allowed under sub-section (1) of section 139] for furnishing the return has expired] a notice requiring him, on a date to be therein specified,
[(i) where such person has not made a return [within the time allowed under sub-section (1) of section 139] [or before the end of the relevant assessment year], to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner58 and setting forth such other particulars as may be prescribed, or :]
[Provided that where any notice has been served under this sub-section for the purposes of this clause after the end of the relevant assessment year commencing on or after the 1st day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section,]
[(ii)] to produce, or cause to be produced, 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 :
Provided that
(a) the previous approval of the [Joint Commissioner] shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts ;
(b) the [Assessing] Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.
(2) For the purpose of obtainingriven
Vineet
(Expert) 08 December 2009
From your query it appears that notice for scrutiny u/s 143(2) has been issued to your company.
The AO may ask any details which is reasonable and may help him determining the correct taxable income. How does providing insurance payment details of previous year and opening stock details harm interest of your company, if you have nothing to hide?
