Notice & Appeal Under Income Tax

Notice & Appeal under Income Tax

Income Tax Notice

Notice u/s 143(1)

Intimation of Income Tax return. After processed electronically, department sends the information to Assessee in 3 instances:

Tax liability to be paid
Refund to be determined
No refund or demand determined

Notice u/s 143(1) from the department shall be received within one year from the end of the year in which the return has been filed

Notice u/s 139(9)

Defective of Income Tax Return notice.

If this notice response is not filed within 15 days the return shall be treated as invalid.

Notice u/s 142(1)

A notice under section 142(1) can be issued under two circumstances:

If Assessee has filed his return, but the assessing officer requires additional information and documents from him; or
If Assessee has not filed his return, but the assessing officer wants Assessee to file it.
The information is called for, to enable the officer to make a fair assessment. Being non-responsive to this notice has consequences,
A penalty of Rs 10,000 can be levied for each such failure
Prosecution which may extend up to 1 year
Both of the above

Notice u/s 143(2)

The purpose of this notice is to notify the assessee, that the return filed has been picked for a scrutiny. After receiving the document in pursuant to the notice u/s 142 (1), if the AO is still of the opinion that there is a need to do scrutiny, then the AO may issue the notice u/s 143(2).
Scrutiny notice can be issued upto 6 months after completion of relevant assessment year.
No scrutiny assessment can be done of the assesses who has not furnished his return of Income. In such a case, Best Judgment is to be done by the AO and can assess the tax liability under it.

If assesses do not comply with the provisions of this section:

It may result in Best Judgment Assessment u/s 144
Penalized under Sec 271(1) (b) i.e. Rs10, 000 for each failure
Prosecution under Sec 276D which may extend up to 1 year with or without fine.

Type of scrutiny notice which can be issue:

Limited Scrutiny– Under this notice the Income Tax Department has restricted the scope of the scrutiny to the particular area
Complete Scrutiny – In complete scrutiny, there is a complete scrutiny of all the relevant documents.
Manual Scrutiny – In some cases, scrutiny are done in detail as per criteria set by CBDT.

Notice u/s 148 Notice under Income Escaping Assessment

AO may have a reason to believe that Assessee has not disclosed his income correctly and therefore, Assessee has paid lower taxes. Alternatively, assessee may not has filed his return at all, even if assessee must has filed it as per law.

Notice u/s 156- Notice of Demand

When any interest, tax, penalty, fine or any other sum is to be payable in respect to any order passed, then the AO shall serve upon the assesses a notice of demand, specifying the sum do payable.

Notice u/s 245 under Set off of refunds against tax remaining payable

When an amount is payable by the assesses and refund has to be claim by the assesses, then such transactions are ‘inter-adjusted’. It is kind of an intimation to the assesses not the notice issued

Income Tax Appeal

First Appeal: CIT (Commissioner of Income Tax) (u\s 246A)

Appeal can be filed, when a tax payer is adversely affected by Orders as under passed by various Income tax authorities:

Intimation issued under Section 143(1)
Scrutiny assessment order u/s 143(3) (21 months from end of assessment year)
Re-assessment order passed after reopening the assessment u/s 147/150
Search assessment order u/s 153A or 158BC
Rectification Order u/s 154/155
Order determining refund u/s 237
Order imposing penalty u/s 221/271 271A/271AAA/271F/271FB/272A/272AA/272BB/275(1A)/ 158BFA(2)/271B/271BB/271C/271CA/271D/271E

Time Limit: within 30 Days

Fees: upto Rs.1000/-

Form: Form35

Second Appeal: ITAT (Income Tax Appellate Tribunal) (u\s 253)

Appeal can be filed, when a tax payer is adversely affected by Orders as under passed by various Income tax authorities:

Order by Commissioner (Appeals) u/s 250/154/271/271A/272A
Order by Commissioner u/s 12AA on registration application by a charitable or religious trust

Time Limit: within 60 Days

Fees: upto Rs.10000/-

Form: Form36

Third Appeal: High Court (u\s 260A)

Time Limit: within 120 Days

Forth & final Appeal: High Court (u\s 261)

Time Limit: within 90 Days

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Section 132 & 132A- Block assessment Provisions in cases of Search u/s. 132 and requisition u/s. 132A

The following provisions of Chapter XIV-B of the Act has been amended for assessment of search cases:

The ‘block period’ shall consist of previous years relevant to six assessment years preceding the previous year in which the search was initiated under section 132 or any requisition was made under section 132A and shall include the period starting from the 1st of April of the previous year in which search was initiated or requisition was made and ending on the date of the execution of the last of the authorisations for such search or date of such requisition.
Regular assessments for the block period shall abate. There will be one consolidated assessment for the block period. Till block assessment is complete, no further assessment/reassessment proceeding shall take place in respect of the period covered in the block
The assessment in respect of any other person shall be governed by the provisions of section 158BD and shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person.
The tax rate shall be 60% for the block period. The tax chargeable under this section shall be increased by a surcharge.
No interest under the provisions of section 234A, 234B or 234C or penalty under the provisions of section 270A shall be levied or imposed upon the assessee in respect of the undisclosed income assessed or reassessed for the block period.
Penalty on the undisclosed income of the block period as determined by the Assessing officer shall be levied at 50% of the tax payable on such income. No such penalty shall be levied if the assessee offers undisclosed income in the return furnished in pursuance of search and pays the tax along with the return.
The time-limit for completion of block assessment of the searched assessee shall be twelve months from the end of the month in which the last of the authorisations for search under section 132, or requisition under section 132A, was executed or made.
The notice under clause (a) of sub-section (1) of section 158BC requiring the searched assessee to furnish his return of income for the block period, as well as the order of assessment for the block period shall be issued or passed, as the case may be, with the previous approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director
The provisions of section 144C (Dispute Resolution panel) of the Act shall not apply to any proceeding under the said Chapter.
This amendment will take effect from the 1st day of September, 2024.

Section 148, 148A – Rationalisation of provisions relating to Assessment and Reassessment

The old provisions u/s. 148 & 148A have been substituted with the new provisions and its salient feature are as follows:

Before making the assessment, reassessment or recomputation under section 147 and subject to the provisions of section 148A, the Assessing Officer shall issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A determining it to be a fit case, requiring him to furnish a return of income within such period as may be specified, not exceeding a period of three months from the end of the month in which such notice is issued or the income of any other person in respect of whom he is assessable under this Act. No notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year.
Provided further that where the Assessing Officer has received information under the scheme notified under section 135A, no notice under this section shall be issued without prior approval of the specified authority.
Any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the said section, is added to the definition of ‘information’ with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment.

Procedure u/s. 148A before issuance of Notice u/s. 148

Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant assessment year, he shall, before issuing any notice under section 148, provide an opportunity of being heard to such assessee, by serving upon him a notice to show cause as to why a notice under section 148 should not be issued in his case, and such notice shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year.

The major amendment made in new provisions is that the assessing officer does not have to conduct an enquiry before issuing the notice and can rely on the information.

Thereafter, on receipt of notice under sub-section (1), the assessee may furnish his reply, within such time, as may be specified in such notice.
The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under subsection (2), if any, pass an order with the prior approval of the specified authority under sub-section (3) of section 148A, determining whether or not it is a fit case to issue notice under section 148.
The provisions of this section shall not apply in the case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in his case

• This amendment will take effect from the 1st day of September, 2024.

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