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Issues in Assessment Proceedings

Types of Assessment

• Summary Assessment – S.143(1)

• Scrutiny Assessment – S.143(3)

• Reassessment – S.147

• Assessment pursuant to search – 153A & 153C

• Assessment pursuant to revision – 143(3) r.w.s. 263

• Order giving effect to Appellate orders – S. 250 & S. 254 etc.

Cardinal Principle

• Duty of the AO is to assess correct income on the right person

• 56 ITR 198 (SC)

• 107 ITR 63 (Guj)

• 218 ITR 239 (SC)

Notices under Scrutiny Assessment

• 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.

• Reference – Mahi Valley [287 ITR 360 (Guj)]

• It is followed by a notice u/s 142(1) calling for various information by AO for carrying out the assessment.

• AO shall issue a Show Cause Notice (SCN) intimating the assessee about the additions which he proposes to make in the assessee’s case.

• Different permissible modes of service of Notice – S. 282

• Objections as to service, time and manner of Notice have to be taken during the course of the assessment proceedigns.

Other ancillary powers of AO while framing the Assessment

• Summons u/s 131(1) for discovery and inspection, enforcing attendance and for compelling production of books of accounts.

• S.131(3) empowers the AO to impound and retain books of accounts or any other document produced before him during the assessment proceedings.

• S.133(6) empowers the AO to call for information from third parties.

Golden Rules for Representation

• Everything must be given in writing.

• Know your facts.

• Don’t offer more than what is asked for.

Even shifting burden of Proof

• Generally, the initial burden of proof is on the Assessee. However, once basic evidences/materials are placed on record and primary onus is discharged, the burden shifts to AO.

• AO to examine and scrutinise the evidences to prove them incorrect, unsupported, false or unbelievable. Then the burden again shift to Assessee.

Evidences and Materials used in Assessment proceedings

• In the assessment proceedings both the evidences and materials can be used.

• Section 3 of the India Evidence Act defines Evidence to mean and include all statements oral or in writing and all documents.

• Therefore, all the evidences in the form of statements, affidavits and declarations can be adduced as evidence.

• Material on the other hand includes explanations, submissions, contentions, claims, details, information, statements, affidavits, books of account, documents, record etc.

Issues in Assessment Proceedings

Issues in Assessment Proceedings

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