Section 143 of the Income-tax Act, 1961 dealing with
"Assessment" provides for two types of Assessment:
a) Summary Assessment [S.143(1)]
b) Scrutiny Assessment [S.143(3)]
c) Best Judgement Assessment [S.144]
In "Summary Assessment", an "Intimation" u/s 143(1) is sent to an assessee determining the amount of tax payable or refund due on total income computed after making prima facie, mostly arithmetical, adjustments (if need be) to the total income declared in the return filed by an assessee. No such intimation shall be sent after expiry of one year from the end of the financial year in which such return is filed.
In case where no amount of tax stands payable or refundable and no adjustments have been made, acknowledgment of return shall be deemed to be an "Intimation" u/s 143(1).
In "Scrutiny Assessment", AO makes a detailed inquiry and finally passes an Asst. Order unlike "Summary Assessment" where there is no room for any inquiries.
The procedure begins with a Notice u/s 143(2) which needs to be
"Served" on an assessee prior to expiry of six months from the end of the financial year in which the return is furnished. Assessment framed u/s 143(3) without serving notice u/s 143(2) shall be void-ab-initio.
It is followed by a notice u/s 142(1) calling for various information by AO for carrying out the assessment. AO shall consider all the in formation furnished by an assessee at the assessment stage in response to his notices or queries raised vide order sheet entries.
AO shall issue a Show Cause Notice (SCN) intimating the assessee about the additions which he proposes to make in the assessee's case.
Assessee shall furnish a reply in response to such SCN which shall be considered by AO prior to making the additions.
AO must ensure that Principles of Natural Justice are not violated throughout the assessment proceedings.
Finally, an Asst Order shall be passed u/s 143(3). Such Asst. Order must be a "Speaking Order". S.144
Best Judgment Assessment means an assessment framed by AO on the basis of information available on records. It is an outcome of complete non co-operation at the assessee’s end.
Such an assessment is framed if an assessee –
a) fails to furnish a return u/s 139(1) or 139(4) or,
b) fails to comply with notices issued u/s 142(1) or 142(2A) or 143(2).
Principles of Natural Justice must be followed by AO.
Computation of income must be on rational & scientific basis and the same must be specified in the Order. AO must pass a “Speaking Order”