Income Tax Assessment and Appeal
Every person is required to file its income tax return with income tax department for every assessment year. While filing income tax return it is the duty of assessee that he reports its correct income, losses, deductions, assets and other particulars as required in the return of income. The income tax act is mainly based on self-assessment of income and tax thereon and substantial returns are processed on the basis of self-assessment.
Where a person do not file income tax return or not filed the return of income correctly or did not disclosed all sources of income or details of assets or other particulars as required to be reported under the Income tax act, the income tax department may select such cases for detailed enquiry and send income tax notices for filing the compliance or reasons for any discrepancy in the return of income. In various cases based on information received from various sources, automated system or discrepancy in the return of income a notice may be issued to an assessee for detailed enquiry of his sources of income or return of income filed. In those cases, the particulars of income of an assessee is scrutinized by the income tax officer through online or offline mode and after than an order is passed.
Moreover, there may be cases where an order passed by income tax officer is not accepted by the assessee and in such cases assessee prefers to file an appeal with higher income tax authority or courts. An appeal against the order of income tax officer is filed before the Commissioner of Income Tax or Commissioner of Income Tax (Appeals).
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Filing of Reply/appeal with department/Appellate Authority
Documents related to reply
Any other service included in package
Tax, Interest or any demand
Out of pocket expenses
Any other service not included in package
Documents required in the notice
Other information related to Notice/Order
Any other information required.
3-4 Days for compiling reply after completion of documentation.
Under the income tax act and various circulars issued by the Central Board of Direct Taxes there are various types of notices, out them few important notices are mentioned here:-
- Notice for Compliance of AIR, TDS- Reporting and Cash deposit information.
- NMS notices for non-filing of return where there is significant transaction done by assessee.
- Notice from investigation wing of income tax department related to undisclosed source of income, transaction in property or cash deposit etc.
- Notice from Department of International Taxation for non-filing of form 15CA and 15CB or other forms for foreign remittances.
- Notice/intimation for non-deduction/short deduction of tax at source.
- Notice/Intimation for correction in income tax return.
- Notice for seeking information u/s 133(6) of Income Tax Act.
- Notice u/s 142 for filing of income tax return or filing information related to proceedings u/s 143(3) or u/s 147/153A/153C of the Act.
- Notice for scrutiny assessment u/s 143(2), u/s 144, u/s 148, u/s 153A, u/s 153C, u/s 201 etc.
Under the income tax Act notices which are issued in relation to passing of an order are generally time barring i.e. are required to be issued within the prescribed time limit. The time limit for issue/ service of such notices is as under:-
- Time limit for issue of Notice/Intimation for processing of income tax return is before the end of relevant assessment year or completion of assessment proceeding u/s 143(2) of the Act.
- Time limit for issue of Notice u/s 143(2) is six months from the end of assessment year in which return of income is filed for such assessment year.
- Time limit for issue of notice us/ 148 of the Act is six years from the end of relevant assessment year where escapement of income is exceeding Rs.1,00,000 and four years where escapement of income is below Rs.1,00,000.
- In case of any other proceedings notice shall be issued by the income tax authority within such a reasonable time so as to enable the assessee to furnish the documents and detail before time limit of completion of proceedings.
Generally when a notice is received the required documents and information is mentioned on such notice. Further, most of the notices under the income tax are issued online which are accessible through online portal of assessee by login into www.incometaxindiaefiling.gov.in. The reply of such notices can also be filed online in the same tab where the notice is available. The notices related to income tax proceedings are available under the tab e-proceedings and reply of such notices can be filed from there only.
It is advisable to contact a professional and discuss the issue before filing any reply to the income tax notices, since once a reply is filing it cannot be withdrawn and it may lead to adverse proceeding against the assessee.
Generally non-filing of reply to notices are termed as non-compliance and non-compliance of notices issued u/s 142(1) or 142(2) of the Act may lead to imposition of penalty of Rs.10,000/- u/s 271(1)(b) of the Act and non-compliance to summon u/s 131 of the Act may lead to imposition of penalty of Rs.10,000/- u/s 272A of the Act.
Apart from imposition of penalty for non-compliance of notices under the income tax act, the income tax office may pass an order which may be adverse and thus raise a demand for tax, interest and penalty. Further, non-compliance of notice u/s 142(1) of the Act requiring to file information and books of accounts, a prosecution u/s 276D of the Act may also be launched.
When an order is received from any income tax authority it is advisable to consult a professional and discuss the issue. If the order received is adverse to interest of an assesse or which raises demand of interest, tax or penalty, there are provisions under the income tax act to file appeal against such order before an appellate authority. An appeal against the order of assessing officer/ income tax officer can be filed before Commissioner of income tax (appeal) within 30 days from date of service of such order.
Under the provisions of Income Tax Act, there is no condition of payment of demand for filing of appeal with any appellate authority, however before filing an appeal with Commissioner of Income Tax (Appeals) the amount self-assessment tax on the income declared in the income tax return filed for the relevant assessment year shall be paid before filing the appeal.
Further, for the purpose of granting stay of demand and preventing an assessee for becoming assessee in default u/s 221 of the Income Tax Act, 1961, the Central Board of Direct Taxes has issued instructions to deposit 20% of demand for granting stay of demand till the disposal of appeal with Commissioner of Income Tax (Appeals).