Income-tax Act,1961
Act No : 43
Section :
Assessment6
4[5 143. Assessment6 ----------------------------------------------------------------------- 1 Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 2 Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4- 1976. 3 Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 4 Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to the substitution, section 143, as substituted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971 and amended by the Finance Act, 1974, w.e.f. 1-4-1975; Finance Act, 1976, w.e.f. 1-4-1976; Finance (No. 2) Act, 1980, w.e.f. 1-4-1980 and the Finance Act, 1987, w.e.f. 1-4-1988, read as under: "143. Assessment.-(1)(a) Where a return has been made under section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an assessment of the total income or loss of the assessee after making such adjustments to the income or loss declared in the return as are required to be made under clause (b), with reference to the return and the accounts and documents, if any, accompanying it, and for the purposes of the adjustments referred to in sub-clause (iv) of clause (b), also with reference to the record of the assessments if any, of past years, and determine the sum payable by the assessee or refundable to him on the basis of such assessment. (b) In making an assessment of the total income or loss of the assessee under clause (a), the Assessing Officer shall make the following adjustments to the income or loss declared in the return, that is to say, he shall,- (i) rectify any arithmetical errors in the return, accounts and documents referred to in clause (a); [(ii) * * *] [(iii) * * *] (iv) give due effect to the allowance referred to in sub- section (2) of section 32, the deduction referred to in clause (ii) of sub-section (3) of section 32A or clause (ii) of sub-section (2) of section 33 or clause (ii) of sub- section (2) of section 33A or clause (i) of sub-section (2) of section 35 or sub-section (1) of -> -> ------------------------------------------------------------------------ 1.535 ------------------------------------------------------------------------- -> -> section 35A or sub-section (1) of section 35D or sub-section (1) of section 35E or the first proviso to clause (ix) of sub-section (1) of section 36, any loss carried forward under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A and the deficiency referred to in sub-section (3) of section 80J, is computed, in each case, in the regular assessment, if any, for the earlier assessment year or years. (2) Where a return has been made under section 139, and- (a) an assessment having been made under sub-section (1), the assessee makes within one month from the date of service of the notice of demand issued in consequence of such assessment, an application to the Assessing Officer objecting to the assessment, or (b) whether or not an assessment has been made under sub- section (1), the Assessing Officer considers it necessary or expedient to verify the correctness and completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf, the Assessing Officer shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Assessing Officer's office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return: Provided that, in a case where an assessment has been made under subsection (1), the notice under this sub-section [except where such notice is in pursuance of an application by the assessee under clause (a)] shall not be issued by the Assessing Officer unless the previous approval of the Deputy Commissioner has been obtained to the issue of such notice: Provided further that in a case where the assessment made under sub-section (1) is objected to by the assessee by an application under clause (a), the assessee shall not be deemed to be in default in respect of the whole or any part of the amount of the tax demanded in pursuance of the assessment under that sub-section, which is disputed by the assessee, in so far as such amount does not relate to any adjustment referred to in sub-clause (i) of clause (b) of sub-section (1), and further no interest shall be chargeable under sub-section (2) of section 220 in respect of such disputed amount. (3) On the day specified in the notice issued under sub-section (2) or as soon after-wards 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,- (a) in a case where no assessment has been made under sub- section (1), the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and deter-mine the sum payable by him or refundable to him on the basis of such assessment; (b) in a cast where an assessment has been made under sub- section (1), if either such assessment has been objected to by the assessee by an application under clause (a) of sub- section (2) or the Assessing Officer is of opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the Assessing Officer shall, by an order in writing, make a fresh assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment. Explanation.-For the purposes of the section,- (1) an assessment under sub-section (1) shall be deemed to be incorrect, inadequate or incomplete in a material respect, if- (a) the amount of the total income as determined under sub- section (1) is greater or smaller than the amount of the total income on which the assessee is properly chargeable under this Act to tax; or (b) the amount of the tax payable as determined under sub- section (1) is greater or smaller than the amount of the tax properly payable under this Act by the assessee; or -> -> ------------------------------------------------------------------------ 1.536 (1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee: Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:- ----------------------------------------------------------------------- -> -> (c) the amount of any loss as determined under sub-section (1) is greater or smaller than the amount of the loss, if any, determinable under this Act on a proper computation; or (d) the amount of any depreciation allowance, development rebate or any other allowance or deduction as determined under sub-section (1) is greater or smaller than the amount of the depreciation allowance, development rebate or, as the case may be, other allowance or deduction properly allowable under this Act; or (e) the amount of the refund as determined under sub- section (1) is greater or smaller than the amount of the refund, if any, due under this Act on a proper computation; or (f) the status in which the assessee has been assessed under sub-section (1) is different from the status in which the assessee is properly assessable under this Act. (2) "status", in relation to an assessee, means the classification of the assessee as an individual, a Hindu undivided family, or any other category of persons referred to in clause (31) of section 2, and where the assessee is a firm, its classification as a registered firm or an unregistered firm." 5 Para 2 of the Income-tax (Removal of Difficulties) Order, 1989 states as under: "2. Applicability of section 143 of the Income-tax Act, 1961, as it stood before the commencement of the Direct Tax Laws (Amendment) Act, 1987.-The provisions of section 143 of the Income-tax Act, 1961, as they stood before the commencement of the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1988, and any earlier assessment year., 1.537 (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed: 1[Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments:] 2[3[Provided also] that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable.] (b) Where as a result of an order made under 4[sub-section (3) of this section or section 144 or] section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-section (4) of section 245D relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there is any variation in the carry forward loss, deduction, allowance or relief claimed in the return, and as a result of which,- (i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to the assessee: Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such order was passed. 5[(c) Where the assessee is 6[* * *] or a member of an association of persons or body of individuals and as a result of the adjustments made under the first proviso to clause (a) of sub-section (1) in the income or loss declared in the return made by the 7[* * *] association or body, as the case may be, or as a result of an order made under sub-section (3) of this section or section 144 or section 147 or section 154 or section 155 or sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5) of section 185 or sub- section (1) or sub-section (2) of section 186 or section ----------------------------------------------------------------------- 1 Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 2 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 3 Substituted for "Provided further" by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 4 Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 5 Ibid. 6 The words "a partner of a firm" omitted by the Finance Act, 1992, w.e.f. 1-4-1993. 7 The word "firm," omitted, ibid. ----------------------------------------------------------------------- 1.538 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-section (4) of section 245D, passed subsequent to the filing of the return referred to in clause (a), there is any variation in his share in the income or loss of the 1[* * *] association or body, as the case may be, or in the manner of inclusion of his share in the returned income, then,- (i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to the assessee: Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such adjustments were made or any such order was passed.] 2[(1A)3[(a) Where as a result of the adjustments made under the first proviso to clause (a) of sub-section (1),- (i) the income declared by any person in the return is increased; or (ii) the loss declared by such person in the return is reduced or is converted into income, the Assessing Officer shall,- (A) in a case where the increase in income under sub-clause (i) of this clause has increased the total income of such person, further increase the amount of tax payable under sub- section (1) by an additional income-tax calculated at the rate of twenty per cent. on the difference between the tax on the total income so increased and the tax that would have been chargeable had such total income been reduced by the amount of adjustments and specify the additional income-tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); (B) in a case where the loss so declared is reduced under sub-clause (ii) of this clause or the aforesaid adjustments have the effect of converting that loss into income, calculate a sum (hereinafter referred to as additional income-tax) equal to twenty per cent of ----------------------------------------------------------------------- 1 The word "firm," omitted by the Finance Act, 1992, w.e.f. 1-4- 1993, 2 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 3 Substituted by the Finance Act, 1993, w.r.e.f. 1-4-1989. Prior to the substitution, clause (a) read as under: "(a) Where, in the case of any person, the total income, as a result of the adjustments made under the first proviso to clause (a) of sub-section (1), exceeds the total income declared in the return by any amount, the Assessing Officer shall,- (i) further increase the amount of tax payable under subsection (1) by an additional income-tax calculated at the rate of twenty per cent of the tax payable on such excess amount and specify the additional income-tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); (ii) where any refund is due under subsection (1). reduce the amount of such refund by an amount equivalent to the additional income-tax calculated under subclause (i)." The italicised word was inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. ----------------------------------------------------------------------- 1.539 the tax that would have been chargeable on the amount of the adjustments as if it had been the total income of such person and specify the additional income-tax so calculated in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); (C) where any refund is due under sub-section (1), reduce the amount of such refund by an amount equivalent to the additional income-tax calculated under sub-clause (A) or sub- clause (B), as the case may be.] (b) Where as a result of an order under 1[sub-section (3) of this section or] section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which additional income-tax is payable under clause (a) has been increased or reduced, as the case may be, the additional income-tax shall be increased or reduced accordingly, and,- (i) in a case where the additional income-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under section 156; (ii) in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. 2[Explanation.-Omitted by the Finance Act, 1993, w.r.e.f. 1-4-1989.]] 3[(1B) Where an assessee furnishes a revised return under sub- section (5) of section 139 after the issue of an intimation, or the grant of refund, if any, under sub-section (1) of this section, the provisions of sub-sections (1) and (1A) of this section shall apply in relation to such revised return and- (i) the intimation already sent for any income-tax, additional income-tax or interest shall be amended on the basis of the said revised return and where any amount payable by way of income-tax, additional income-tax or interest specified in the said intimation has already been paid by the assessee then, if any such amendment has the effect of- (a) enhancing the amount already paid, the intimation amended under this clause shall be sent to the assessee specifying the excess amount payable by him and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; ----------------------------------------------------------------------- 1 Inserted by the Finance Act, 1992, w.r.e.f. 1-4-1989. 2 Prior to the omission, the Explanation to sub-section (1A) read as under: "Explanation.-For the purposes of this sub-section, "tax payable on such excess amount" means,- (i) in any case where the amount of adjustments made under the first proviso to clause (a) of sub-section (1) exceed the total income, the tax that would have been chargeable had the amount of the adjustments been the total income; (ii) in any other case, the difference between the tax on the total income and the tax that would have been chargeable had such total income been reduced by the amount of adjustments." The italicised words was inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 3 Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1989. ------------------------------------------------------------------------ 1.540 (b) reducing the amount already paid, the excess amount paid shall be refunded to the assessee; (ii) the amount of the refund already granted shall be enhanced or reduced on the basis of the said revised return and where the amount of refund already granted is- (a) enhanced, only the excess amount of refund due to the assessee shall be paid to him; (b) reduced, the excess amount so refunded shall be deemed to be the tax payable by the assessee and an intimation shall be sent to the assessee specifying the amount so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly: Provided that an assessee, who has furnished a revised return under sub-section (5) of section 139 after the service upon him of the intimation under sub-section (1) of this section, shall be liable to pay additional income-tax in relation to the adjustments made under the first proviso to clause (a) of sub-section (1) and specified in the said intimation, whether or not he has made the said adjustments in the revised return.] (2) 1[Where a return has been made 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, 2[* * *] serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: 3[Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.] (3) On the day specified in the notice issued under sub-section (2), 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 on the basis of such assessment.] 4[(4) Where a regular assessment under sub-section (3) of this section or section 144 is made,- ----------------------------------------------------------------------- 1 Substituted for "In a case referred to in sub-section (1), if the Assessing Officer" by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 2 The words "he shall" omitted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. 3 Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. Prior to the substitution, the proviso read as under: " Provided that no notice under this sub-section shall be served on the assessee after the expiry of the financial year in which the return is furnished or the expiry of six months from the end of the month in which the return is furnished, whichever is later." 4 Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. ----------------------------------------------------------------------- 1.541 (a) any tax or interest paid by the assessee under sub- section (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (5) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.] 1[Explanation.-An intimation sent to the assessee under sub- section (1) or sub-section (1B) shall be deemed to be an order for the purposes of 2[sections 246 and 264].] 1 Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 2 Substituted for "section 264" by the Finance Act, 1994, w.e.f. 1-6-1994. ----------------------------------------------------------------------- 1.542 (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State Financial Corporation or a State industrial investment corporation. As far as payments referred to at (a) above the assessee can enclose the challan, etc. by way of evidence. If it is not possible in any case he should enclose a certificate from an accountant verifying that the payment of tax, etc. and claimed as deduction had been made by the due date for the filing of the return. As regards sums mentioned at (b) above the evidence required would be a certificate from an accountant. As regards payment of interest referred to at (d) the evidence required would be either a certificate from the institution concerned or a certificate from an accountant. 3. Furnishing of evidence of payment of any sum by way of tax, duty, etc. along with the return is a necessary requirement for allowance of deduction of that sum under section 43B. The sums disallowed as prima facie inadmissible under section, 143(1)(a) in the absence of requisite evidence of the payment cannot be subsequently allowed under section 154. But where the sums referred to in the first proviso under section 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefore had been omitted to be furnished along with the return, the Assessing Officers can entertain applications under section 154 for rectification of the intimation under section 143(1)(a) or orders under section 143(3), as the case may be, and decide the same on merits. 4. The Income-tax Officers should give each assessee a different timing for hearing. 5. In Punjab the letter of authorisation presented by the Income-tax Practitioners and chartered accountants before the Income- tax authorities may be governed by the Court Fee Act in view of the decision of the erstwhile Punjab Chief Court in Ganpaty Prem Singh (1 5 Indian Cases 122). 6. The Assessing Officers should make all efforts to see that the assessment orders are passed immediately after the hearing is over. In complicated cases or those involving the handling of voluminous materials, it may not be possible to pass an order immediately after the hearing. Even in such cases the order should be passed within fourteen working days after the date of last hearing. 7. In cases chosen for sample scrutiny, if the assessment has already been completed under section 143(1) by the computer, the proceedings should be reopened under section 143(2)(b) in scrutiny. 8. Assessments in the following types of cases will be completed under section 143(1) on the basis of the returns after linking them with the assessment reports: (i) all cases other than company and trust cases with returned income/loss upto Rs. 1 lakh; (ii) company cases with returned income/loss upto Rs. 25,000 and paid up capital not exceeding Rs. 5 lakhs; (however the first assessment in all new company cases will be a scrutiny assessment); (iii) all trust cases and and cases of charitable institutions having income below Rs. 1 lakh before applying the provisions of section 1 1 provided the corpus of the trust does not exceed Rs. 5 lakhs. (the first assessment in all trust cases will however be on scrutiny basis). ----------------------------------------------------------------------- 1.543
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