1. What is scrutiny assessment under section 143(3)?
Scrutiny assessment is a detailed assessment conducted by the Assessing Officer (AO) to verify the correctness of the return filed by the taxpayer. The AO examines the income, deductions, and other claims to ensure there is no understatement of income or overstatement of expenses.
2. What is a notice under section 143(2)?
A notice under section 143(2) is issued by the AO when a return is selected for scrutiny. It requires the taxpayer to appear before the AO and produce supporting evidence for the details filed in the income tax return.
3. Is every return filed selected for scrutiny assessment? What is the percentage of returns selected for scrutiny assessment?
No, not every return filed is selected for scrutiny assessment. Only a small percentage of returns are selected based on risk parameters under the Computer Assisted Scrutiny Selection (CASS) or through manual selection based on CBDT guidelines.
As per past data released by the Income Tax Department, less than 1% of total returns are generally selected for scrutiny in a given assessment year.
4. What is intimation under section 143(1)? Is it issued for every return that is filed?
Yes, an intimation under section 143(1) is issued for every return filed, after preliminary processing by the Centralized Processing Centre (CPC).
It involves:
- Arithmetical checks
- Verification of tax computation
- Adjustment of TDS, TCS, advance tax, and self-assessment tax
- Auto-adjustment of apparent mistakes (with intimation to the assessee)
Three types of outcomes are possible:
- No demand / No refund – return is accepted as filed.
- Refund determined – excess tax is refunded.
- Demand raised – additional tax liability is computed.
5. How is a case selected for scrutiny assessment under section 143(2)?
Cases are selected for scrutiny either:
- Automatically through Computer Assisted Scrutiny Selection (CASS) based on risk parameters, or
- Manually as per CBDT guidelines, based on specific triggers like high-value transactions, survey/search actions, etc.
6. What is faceless assessment under section 144B?
Faceless assessment is a digital procedure under section 144B, where the entire assessment is conducted online without physical interface. It involves centralized processing through National Faceless Assessment Centres (NaFAC), and uses automated allocation of cases and anonymized communication.
7. Is scrutiny assessment under section 143(3) conducted in faceless mode?
Yes, scrutiny assessments under section 143(3) are generally conducted in faceless mode through section 144B, except for certain categories like search cases, reassessments, and international taxation matters.
8. What is the time limit to issue a notice under section 143(2)?
The notice must be issued within 3 months from the end of the financial year in which the return is filed.
9. What is a notice under section 142(1) issued during the course of proceedings under section 143(3)?
Notice under section 142(1) is issued to seek further information or documents from the taxpayer during an ongoing assessment. It supplements the scrutiny proceedings and ensures proper inquiry before finalizing the assessment.
10. What is the time limit to pass an order under scrutiny assessment?
As per section 153(1), the scrutiny assessment order must be passed within 12 months from the end of the relevant assessment year.
11. What is the remedy against any issue in the scrutiny assessment order?
A taxpayer can:
- File an appeal to the Commissioner of Income Tax (Appeals) / Joint Commissioner of Income Tax (Appeals) u/s 246A
- Apply for rectification under section 154
- File a revision application under section 264 (if no appeal is filed)
12. What is the remedy against an adverse order passed by CIT(A) or JCIT(A)?
The taxpayer can file an appeal with the Income Tax Appellate Tribunal (ITAT) under section 253 against the order passed by CIT(A) / JCIT(A).
13. What is the time limit to file an appeal before the CIT(A) or JCIT(A)?
The appeal must be filed within 30 days from the date of receipt of the assessment order or demand notice, whichever is later.
14. What is the time limit to pass an order in appeal by CIT(A) or JCIT(A)?
There is no prescribed statutory time limit, but efforts are made to dispose of appeals expeditiously.
15. What is the time limit to file an appeal with the Income Tax Appellate Tribunal (ITAT)?
An appeal must be filed with ITAT within 60 days from the date of receipt of the order passed by CIT(A) or JCIT(A).
16. What is the remedy against an order passed by the ITAT?
If aggrieved by the ITAT order, the taxpayer can file an appeal before the High Court under section 260A, but only on a substantial question of law.
17. What is the timeline to pass an order by the ITAT?
There is no fixed statutory timeline under the Income Tax Act. However, ITAT strives to dispose of appeals in a timely manner.
18. What is the remedy against an order passed by the High Court?
The aggrieved party can file a Special Leave Petition (SLP) before the Supreme Court under Article 136 of the Constitution of India, preferably within 90 days from the date of the High Court’s judgment.
