§ This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered. This assessment is carried out in cases where the taxpayer fails to comply with the requirements specified in section 144.
§ As
per section 144, the Assessing Officer is under an obligation to make an assessment to the best of
his judgment in the following cases:-
o If
the taxpayer fails to file the return required within the due date prescribed under section 139(1) or a
belated return under section 139(4) or a revised
return under section 139(5).
o If the taxpayer fails
to comply with all the terms of a notice issued under
section 142(1).
The Assessing Officer
can issue notice
under section 142(1)
asking the taxpayer to file the return of income if he has not filed the return of income or to produce or cause to
be produced such accounts or documents
as he may require and 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 taxpayer,
whether included in the accounts
or not) as he may require.
o If
the taxpayer fails to comply with the directions issued under section 142(2A).
Section 142(2A) deals with special
audit. As per section 142(2A),
if the conditions justifying special audit as given in section 142(2A)
are satisfied, then the Assessing
Officer will direct the taxpayer to get his accounts
audited from a chartered accountant nominated by the principal chief commissioner or Chief Commissioner
or Principal Commissioner or Commissioner and to furnish
a report of such audit in the prescribed form.
o If
after filing the return of income the taxpayer fails to comply with all the terms of a notice issued under section
143(2), i.e., notice of scrutiny assessment.
o If
the assessing officer is not satisfied about the correctness or the completeness of the accounts
of the taxpayer or if no method of accounting has been regularly
employed by the taxpayer.
§ From
the above criteria, it can be observed that best judgment assessment is resorted
to in cases where the return of income is not filed
by the taxpayer or if there
is no cooperation by the taxpayer in terms of furnishing information / explanation related to his tax assessment or if books
of accounts of taxpayer are not reliable
or are incomplete.
§ If
the conditions given above calling for best judgment are satisfied, then the Assessing Officer will serve a notice on
the taxpayer to show cause why the assessment should not be completed
to the best of his judgment.
§ No notice
as given above is required
in a case where a notice under section 142(1)
has been issued
prior to the making
of an assessment under section 144.
§ If
the Assessing Officer is not satisfied by the arguments of the taxpayer and he has reason to believe that the case
demands a best judgment, then he will proceed to carry out the
assessment to the best of his knowledge.
§ If
the criteria of the best judgment assessment are satisfied, then after taking into account all relevant materials which the Assessing
Officer has gathered,
and after giving the taxpayer
an opportunity of being heard, the Assessing Officer shall make the assessment of the total income or loss to the best of his knowledge/judgment and determine the sum payable
by the taxpayer on the basis of such
assessment.
§ As per Section
153, the time limit for making assessment under section 144 is:-
o
Within 21 months from the end of the assessment year in which the income
was first [For assessment year 2017-18 or before]
o
18 months from the end of
the assessment year in which the income was first [for assessment year 2018-19]
o
Within 12 months from end of
the assessment year in which income was first [Applicable for assessment year 2019-20 and assessment year 2020- 21]
o
Within 9 months from end of
the assessment year in which income was first [Applicable for assessment year 2021-22
and onwards]
o
If reference is made to TPO,
the period available for assessment shall be
extended by 12 months.
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