N.A.D.T.

, Nagpur
APRIL, 2009

AS SESS MENT
PRO CED URE
SEC . 139 o nwar ds
by
Dr Vinay Kumar Singh

1
Additional Director (Faculty),
NATIONAL ACADEMY OF DIRECT
TAXES, NAGPUR
 Introduction to Income-

LAW tax .

Voluntary I.T.I.s
CITIZENS OF
compliance
INDIA I.T.O.s

Asstt/Dep. Cs
Elections C.s I.T. (Appeal) I.T.
ORDERS Addl./Jt.C.s I.T.
LEGISLATURE C.s I.T.
I.T.A.T.
OF INDIA C.C.s I.T.
S.C. / H.C. C.B.D.T.
Interpretation of
intention of legislature M.O.F.

CASE
Intension of legislature STATUTE LAWS

GOAL POLICY LAW ADMINISTRATION

-Collection of revenue for -EQUITY -Standard text -RULES

PUBLIC GOODS -NEUTRALITY -Conveys intention -PROCEDURE
-Redistribution of income -EFFICIENCY of legislature to -CONVENTIONS
-Behaviour modification -PREDICTABILITY Administrators &
-ADEQUACY compliers

2
 PRINCIPLES OF NATURAL Introduction to Income-
tax .
JUSTICE
• Law is made by the
LEGISLAT EXECUTIV
URE E representatives of the citizens
JUDICIA
RY • All public servants work for the
citizens of the country
• Executive has the responsibility
of ensuring compliance of the
Law
• Income tax authorities are
QUASI-JUDICIAL in nature
• While exercising this
responsibility, and while dealing
with citizens, they must follow
the basic principles of natural
justice:
– APPRECIATION OF EVIDENCE
– OPPORTUNITY OF BEING
HEARD
3
– SPEAKING ORDER
LIMITATIONS ON AUTHORITY OF
Introduction to Income-
tax .
EXECUTIVE
• LIMITATION OF POWER
– No action can be taken by an executive that
impinges upon any of the rights of the citizens,
EXECUTIV unless the Law authorizes such action
E
– Action can only be taken by the authority to
whom the power is delegated, ONLY within his
JURISDICTION
– There must be application of mind by that
authority
– Action must be BONA-FIDE & NON-
DISCRIMINATORY (NEUTRALITY)

• LIMITATION OF TIME
– Time limits often defined in the Act for certain
actions
– No action possible once BARRED BY TIME
LIMITATION

• LIMITATION OF INTERPRETATION
4
– Words (& phrases) defined in the statute
 Introduction to Income-
tax .
INCOME-TAX AUTHORITIES
Sec. 116. There shall be the following classes of income-tax
authorities for the purposes of this Act, namely :
(a) the Central Board of Direct Taxes constituted under the Central
Boards of Revenue Act, 1963 (54 of 1963),
(b) Directors-General of Income-tax or Chief Commissioners of
Income-tax,
(c) Directors of Income-tax or Commissioners of Income-tax or
Commissioners of Income-tax (Appeals),
(cc) Additional Directors of Income-tax or Additional Commissioners of
Income-tax or Additional Commissioners of Income-tax (Appeals),
(cca) Joint Directors of Income-tax or Joint Commissioners of Income-
tax,
(d) Deputy Directors of Income-tax or Deputy Commissioners of
Income-tax or Deputy Commissioners of Income-tax (Appeals),
(e) Assistant Directors of Income-tax or Assistant Commissioners of
Income-tax,
(f) Income-tax Officers,
(g) Tax Recovery Officers,
(h) Inspectors of Income-tax.
5
 Introduction to Income-
tax .
INCOME-TAX AUTHORITIES
EXECUTIVE
Sec. 2 (7A)
Sec. 2 (28)

Sec. 2 (25)
Sec. 2 (9A) / 2(9B) / 2(19A)/ 2(19C)
Sec. 2 (1C) / 2(1D) / 2(28C)/ 2(28D)

Sec. 2 (16)
Sec. 2 (15A)

Sec. 2 (12)

Sec. 117 (1)

6
 Introduction to Income-
tax .
ASSESSING OFFICER
Sec. 2 (7A) Assessing Officer means
the Assistant Commissioner or Deputy
Commissioner or Assistant Director or
Deputy Director or the Income-tax
Officer who is vested with the relevant
jurisdiction by virtue of directions or
orders issued under sub-section (1) or
sub-section (2) of section 120 or any
other provision of this Act,
and the Additional Commissioner or
Additional Director or Joint
Commissioner or Joint Director who is
directed under clause (b) of sub-section
(4) of that section to exercise or
perform all or any of the powers and 7
 Introduction to Income-
tax .
ASSESSING OFFICER
Sec. 2 (7A) Assessing Officer
Sec. 120 Jurisdiction of income-tax authorities
(1) Income-tax authorities shall exercise all or any of the
powers and perform all or any of the functions conferred
on, or, as the case may be, assigned to such authorities
by or under this Act in accordance with such directions as
the Board may issue for the exercise of the powers and
performance of the functions by all or any of those
authorities.
Explanation. For the removal of doubts, it is hereby
declared that any income-tax authority, being an
authority higher in rank, may, if so directed by the Board,
exercise the powers and perform the functions of the
income-tax authority lower in rank and any such direction
issued by the Board shall be deemed to be a direction
issued under sub-section (1).
(2) The directions of the Board under sub-section (1) may
8
authorise any other income-tax authority to issue orders
 Introduction to Income-
tax .
ASSESSING OFFICER
Sec. 2 (7A) Assessing Officer
Sec. 120 Jurisdiction of income-tax authorities
4) Without prejudice to the provisions of sub-sections (1) and (2), the
Board may, by general or special order, and subject to such
conditions, restrictions or limitations as may be specified therein,
(a) authorise any Director General or Director to perform such
functions of any other income-tax authority as may be assigned to
him by the Board;
(b) empower the Director General or Chief Commissioner or
Commissioner to issue orders in writing that the powers and
functions conferred on, or as the case may be, assigned to, the
Assessing Officer by or under this Act in respect of any specified
area or persons or classes of persons or incomes or classes of
income or cases or classes of cases, shall be exercised or
performed by an Additional Commissioner or an Additional
Director or a Joint Commissioner or a Joint Director, and, where
any order is made under this clause, references in any other
provision of this Act, or in any rule made thereunder to the
Assessing Officer shall be deemed to be references to such
9
Additional Commissioner or Additional Director or Joint
 Introduction to Income-
tax .
ASSESSMENT OF INCOME
Sec. 2 (24)
RETURN OF INCOME
for the
Sec. 2 (9) Sec. 2 (34)
ASSESSMENT YEAR / PREVIOUS YEAR

Sec. 2 (8)

ASSESSMENT
of ASSESSEE
INCOME

TAX Sec. 2 (7)

Sec. 2 (43)
10
 Introduction to Income-
tax .
ASSESSEE
Sec 2(7) assessee means a person by
whom any tax or any other sum of
money is payable under this Act, and
includes
(a) every person in respect of whom any
proceeding under this Act has been
taken for the assessment of his
income or assessment of fringe
benefits or of the income of any other
person in respect of which he is
assessable, or of the loss sustained
Not necessary to have by him or by such other person, or of
actual proceedings the amount of refund due to him or to
inititiated and pending such other person ;
for being considered a
assessee (b) every person who is deemed to be
ITO vs. DDA [200] 252 an assessee under any provision of
ITR 772 (SC) this Act ; 11
 Introduction to Income-
tax .
PERSON
Sec(31) person includes
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of
individuals, whether incorporated or
not,
(vi) a local authority, and
(vii) every artificial juridical person, not
falling within any of the preceding sub-
clauses.
Explanation. For the purposes of this clause, an
association of persons or a body of
individuals or a local authority or an
artificial juridical person shall be deemed to
be a person, whether or not such person 12 or
 Introduction to Income-
tax .
PREVIOUS YEAR / ASSESSMENT YEAR
Sec 2 (34) Sec 3

Sec 3 Previous year

defined.
3. For the purposes of this Act,
previous year means the
financial year immediately
preceding the assessment
year :
Provided that, in the case of a
business or profession
newly set up, or a source of
income newly coming into
Sec 2 (9) assessment year existence, in the said
means the period of twelve financial year, the previous
months commencing on the 1st year shall be the period
day of April every year ; beginning with the date of
setting up of the business
or profession or, as the 13
 Introduction to Income-
tax .
PREVIOUS YEAR / ASSESSMENT YEAR

Financial Act Part 1 , First

schedule of Finance
Act

Sec 4 Charge of income-tax.

(1) Where any Central Act enacts that income-tax shall be
charged for any assessment year at any rate or rates,
income-tax at that rate or those rates shall be charged
for that year in accordance with, and subject to the
provisions (including provisions for the levy of additional
income-tax) of, this Act in respect of the total income of
the previous year of every person :
e.g..
Sec 158B, Provided that where by virtue of any provision of this Act
Sec 174(1) income-tax is to be charged in respect of the income of
a period other than the previous year, income-tax shall
be charged accordingly.
(2) In respect of income chargeable under sub-section (1), 14
income-tax shall be deducted at the source or paid in
 Introduction to Income-
tax .
INCOME
Sec 2 (24)

SALARIES Sec 17
HOUSE Sec 22
PROPERTY Sec 28
HEADS OF BUSINESS OR
INCOME PROFESSION
CAPITAL GAINS Sec 45
Sec 14 OTHER Sec 56
SSOURCES
15
 Introduction to Income-
tax .
INCOME
Rs. Rs.
OPENING STOCK 100 SALE RECEIPTS 300
PURCHASES 200 CLOSING STOCK 200
ELECTRICITY 100
GROSS PROFIT 100
------ ------
500 500
------ ------

SALARIES GROSS PROFIT 100

30 INTEREST ON LATE PAYMENTS
RENT 20 10
TRAVELLING 10
OFFICE EXPENSES
10
NET PROFIT 40 -------
------ 110
110
Net profit as per accounting / books may be different from the ‘profit & gains’ referred
in IT Act as certain expenses clamed may not be allowable as deduction.
16
 Introduction to Income-
tax .
RETURN OF INCOME
Return of income

Section 139 (1) Every person, if his total income or the total income of
any other person in respect of which he is assessable under this Act
during the previous year exceeded the maximum amount which is not
chargeable to income-tax, shall, on or before the due date, furnish a
return of his income or the income of such other person during the
previous year, in the prescribed form and verified in the prescribed
manner and setting forth such other particulars as may be prescribed.

Rule 12 - Return of income

and Return of Fringe benefits

ITR - 1 TO 8

17
 Introduction to Income-
tax .
ASESSMENT
Sec 139 (1)

Sec 2 (8)
18
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (8) assessment includes reassessment
;
Sec (40) regular assessment means the assessment made
under subsection (3) of section 143 or section 144 ;

Sec 143 (3)

(3) On the day specified in the notice -

(i) issued under clause (i) of sub-section (2), or as soon

afterwards as may be, after hearing such evidence and after
taking into account such particulars as the assessee may
produce, the Assessing Officer shall, by an order in writing,
allow or reject the claim or claims specified in such notice and
make an assessment determining the total income or loss
accordingly, and determine the sum payable by the assessee
on the basis of such assessment. ................
19
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (8) assessment includes reassessment
;
144. Best judgment assessment

 Sec 144 (1) If any person-

(a) fails to make the return required under sub-section (1) of
section 139 and has not made a return or a revised return under
subsection (4) or sub-section (5) of that section, or
(b) fails to comply with all the terms of a notice issued under
subsection (1) of section 142 or fails to comply with a direction
issued under sub-section (2A) of that section, or
(c) having made a return, fails to comply with all the terms of a
notice issued under sub-section (2) of section 143,
The Assessing Officer, after taking into account all relevant
material which the Assessing Officer has gathered, shall, after
giving the assessee an opportunity of being heard, make the
assessment of the total income or loss to the best of his
judgment and determine the sum payable by the assessee on
the basis of such assessment: 20
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (8) assessment includes reassessment
;
Income escaping assessment

Sec 147. If the Assessing Officer has reason to believe that

any income chargeable to tax has escaped assessment for any
assessment year, he may, subject to the provisions of sections
148 to 153, assess or reassess such income and also any
other income chargeable to tax which has escaped
assessment and which comes to his notice subsequently in the
course of the proceedings under this section, or recompute the
loss or the depreciation allowance or any other allowance, as
the case may be, for the assessment year concerned
(hereafter in this section and in sections 148 to 153 referred to
as the relevant assessment year): …………..

21
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (8) assessment includes reassessment
;

Self-assessment
 
Sec 140A (1) Where any tax is payable on the basis of any
return required to be furnished under section 139 or section
142 or, as the case may be, section 148, after taking into
account the amount of tax, if any, already paid under any
provision of this Act, the assessee shall be liable to pay such
tax together with interest payable under any provision of this
Act for any delay in furnishing the return or any default or
delay in payment of advance tax, before furnishing the return
and the return shall be accompanied by proof of payment of
such tax and interest.

22
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (8) assessment includes reassessment
;
Processing of Return

Sec 143(1) Where a return has been made under section 139,
or in response to a notice under sub-section (1) of section 142,
such return shall be processed in the following manner
namely :-
•The total income or loss shall be computed after making the
following adjustments namely:-
(i) any arithmetical error in the return; or
(ii) an incorrect claim, if such incorrect claim is
apparent from any information in the return;
…………………

(d) An intimation shall be prepared or generated and sent to

the assessee…
(e) The amount of refund due to the assessee ….. shall be 23
 Introduction to Income-tax .

ASESSMENT
RETURN OF INCOME SELF
for the ASSESSM
ASSESSMENT YEAR / PREVIOUS YEAR
ENT
PROCESSING OF RETURN

Sec 2 (29)
LEGAL
Sec 2 (29)
BOOKS REPRESENTATI
OF VE
ACCOUNT
S
DOCUMEN ASSESSEE
TS AUTHORISED
Sec 2 (22AA) REPRESENTATI
VE
Sec 288 (2)
ASSESSMENT of INCOME

REASSESSMENT of INCOME

TAX
24
 Introduction to Income-
tax .
ASESSMENT
Sec 2 (29) legal representative has the meaning
assigned to it in clause (11) of section 2 of the Code of Civil
Procedure, 1908 (5 of 1908)
Code of Civil Procedure, 1908
Sec 2 (11) "legal representative" means a person who in law
represents the estate of a deceased person, and includes
any person who intermeddles with the estate of the deceased
and where a party sues or is sued in a representative
character the person on whom the estate devolves on the
Secdeath of the
2(12A) partyor
books sobooks
suing or
of sued;
account includes ledgers, day-
books, cash books, account-books and other books, whether kept
in the written form or as print-outs of data stored in a floppy,
disc, tape or any other form of electro-magnetic data storage
device;

Sec 2 (22AA) document includes an electronic record as

defined in clause (t)3 of sub-section (1) of section 2 of the
Information Technology Act, 2000 (21 of 2000); 25
 Introduction to Income-
tax .
AUTHORISED REPRESENTATIVE
Sec 288. (1) Any assessee who is entitled or required to attend
before any income-tax authority or the Appellate Tribunal in
connection with any proceeding under this Act otherwise than
when required under section 131 to attend personally for
examination on oath or affirmation, may, subject to the other
provisions of this section, attend by an authorised
representative.
 (2) For the purposes of this section, "authorised
representative" means a person authorised by the assessee in
writing to appear on his behalf, being-
(i) a person related to the assessee in any manner, or a person
regularly employed by the assessee; or
(ii) any officer of a scheduled bank with which the assessee
maintains a current account or has other regular dealings; or
Explanation.-In this section, "accountant" means a chartered accountant
(iii) any legal practitioner who is entitled to practise in any civil
within the meaning of the Chartered Accountants Act, 1949 (38 of 1949),
court in India; or
and includes, in relation to any State, any person who by virtue of the
(iv) an accountant; or
provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of
1956), is entitled to be appointed to act as an auditor of companies
registered in that State.
Chartered Accountants Act, 194926
Section 2(1)(b) "chartered accountant" means a person who is a member
 Introduction to Income-
tax .
AUTHORISED REPRESENTATIVE
Sec 288. (2) For the purposes of this section, "authorised
representative" means..

(v) any person who has passed any accountancy examination

recognised in this behalf by the Board-,' or
(vi) any person who has acquired such educational qualifications
as the Board may prescribe for this purpose; or
(via)any person who, before the coming into force of this Act in
the Union territory of Dadra and Nagar Haveli, Goa, Daman
and Diu, or Pondicherry, attended before an income-tax
authority in the said territory on behalf of any assessee
otherwise than in the capacity of an employee or relative of
that assessee; or]
(vii) any other person who, immediately before the
commencement of this Act, was an income-tax practitioner
within the meaning of clause (iv) of sub-section (2) of section
61 of the Indian Income-tax Act, 1922 (11 of 1922), and was
actually practising as such.
27
 
 Introduction to Income-
tax .
TAX

28
 Introduction to Income-
tax .
TAX

29
 Introduction to Income-
tax .
TAX

30
 Introduction to Income-
tax .
TAX
XYZ
T.D.S.

PAYMEN
TS

ASSESSEE
ADVANCE
TAX

SELF SELF
ASSESSME ASSESSMENT
TAX
NT [+
INTEREST
]
TAX DEMAND

ASSESSING
ASSESSME
OFFICER
NT 31
 Introduction to Income-
tax .
AGRICULTURAL INCOME
CONDITIONS : (i) Person to whom Para A of Part I applies : Individual, HUF, AOP,
BOI, AJP (ii) Total income > the max non-taxable income (iii) Agri income > Rs
5000
COMPUTE AGRI INCOME FROM EACH INCOME PARTIALLY AGRICULTURE,
SOURCE SEPERATELY PARTIALLY BUSINESS

+
+
+
DEEMED AGRI INCOME – SHARE IN
AOP [R-5]
+ +

ANY LOSS MAY BE ADJUSTED AGAINST

OTHER AGRI INCOME EXCEPT THE LOSS
- ARISING FROM SHARE OF AOP

SUM OF AGRICULTURAL INCOME FROM NET

IF IT IS A LOSS, DEEMED
- ALL SOURCES
UNABSORBED AGRI LOSS OF A PY OF
EARLIER (8) AY
AGRI
INCO Carried
TO BE NIL

ME forward 32
 Introduction to Income-
tax .
ASESSMENT

TOTAL INCOME
Sec 2 (45)

33
 Introduction to Income-
tax .
TOTAL INCOME
Sec 2(45) total income means the total amount of income
referred to in section 5, computed in the manner laid down in
this Act
Sec 5 (1) Subject to the provisions of this Act, the total income
of any previous year of a person who is a resident includes all
income from whatever source derived which
 (a) is received or is deemed to be received in India in such year
by or on behalf of such person ; or
 (b) accrues or arises or is deemed to accrue or arise to him in
India during such year ; or
 (c) accrues or arises to him outside India during such year :
Provided that, in the case of a person not ordinarily resident in
India within the meaning of sub-section (6) of section 6, the
income which accrues or arises to him outside India shall not be
so included unless it is derived from a business controlled in or a
profession set up in India.
34
 
 Introduction to Income-
tax .
TOTAL INCOME
Sec 2(45) total income means the total amount of income
referred to in section 5, computed in the manner laid down in
this Act
Sec 5 (2) Subject to the provisions of this Act, the total income
of any previous year of a person who is a non-resident includes all
income from whatever source derived which
 (a) is received or is deemed to be received in India in such year
by or on behalf of such person ; or
 (b) accrues or arises or is deemed to accrue or arise to him in
India during such year.
 Explanation 1. Income accruing or arising outside India shall not
be deemed to be received in India within the meaning of this
section by reason only of the fact that it is taken into account in a
balance sheet prepared in India.
 Explanation 2. For the removal of doubts, it is hereby declared
that income which has been included in the total income of a
person on the basis that it has accrued or arisen or is deemed to
have accrued or arisen to him shall not again be so included on35
 Introduction to Income-
tax .
GROSS TOTAL INCOME
CHAPTER VI A DEDUCTIONS IN RESPECT OF
CERTAIN INCOME
Sec 80B In this chapter -
(5) "gross total income" means the total income
computed in accordance with the provisions of this Act,
before making any deduction under this Chapter

-
GROSS TOTAL DEDUCTIONS
INCOME UNDER
CHAPTER VI A
= TOTAL INCOME

36
 Introduction to Income-
tax .
TOTAL INCOME
SALARY + INCOME OF OTHER
+ PERSONS
INCLUDED IN
HOUSE PROPERTY TOTAL INCOME
+ (CHAPTER V)
+ for
BUSINESS & PROF adjustment of
INCOME ON WHICH
+ NO INCOME-TAX IS losses,
OTHER SOURCES PAYABLE UNDER CHAPTER VI
+ +
CHAPTER VII

LTCG CASH CREDITS,

+ +
UNEXPLAINED
INVESTMENTS,
STCG EXPENDITURE ETC.
(Sec
68,69A,69B,69C,69D)

-
DEDUCTIONS
GROSS TOTAL
INCOME
UNDER
CHAPTER VI A
= TOTAL INCOME

37
 Introduction to Income-
tax .
RESIDENT

Sec 2 (42) resident means a person who is resident in

India within the meaning of section 6

Sec 2 (30) non-resident means a person who is not a

resident , and for the purposes of sections 92, 93 and
168, includes a person who is not ordinarily resident
within the meaning of clause (6) of section 6 ;

38
 Introduction to Income-
tax .
RESIDENT
10 9 8 7 6 5 4 3 2 1
1998-

2004-

2005-

2007-
2000-

2001-

2002-

2003-

2006-
1999-
00

01

03

05
99

02

04

06

07

08
2008-09

≥ 182
DAYS

≥ 60
≥ 365 DAYS DAYS

NON-RESIDENT IN ≥ 9 YEARS

≤ 729 DAYS

39
 Assessment Procedure
.
ASSESSMENT PROCEDURE

• CHAPTER XIV
of INCOME TAX ACT FORMS
NOTIFICATIONS
1961 CIRCULARS

• PART III
• ASSESSMENT of INCOME TAX RULES
PROCEDURE 1962

• ASSESSMENT
• Sec 139 to 158 PROCEDURE
CASE LAWS • Rule 12 to 15

40
 Assessment Procedure
.
RETURN OF INCOME
Sec 139 (1) Every person,
• being a company or a firm; or
(b) being a person other than a company or a firm, if his
total income or the total income of any other person
in respect of which he is assessable under this Act
during the previous year exceeded the maximum
amount which is not chargeable to income-tax, shall, on
or before the due date, furnish a return of his
income or the income of such other person during the
previous year, in the prescribed form and verified in
the prescribed manner and setting forth such
other particulars as may be prescribed :

Sec 2 (33) prescribed means prescribed by rules made under this Act ;

41
 Assessment Procedure
.
prescribed form
RETURN OF INCOME
Rule 12. (1) The return of income required to be furnished
under sub-section (1) or sub-section (3) or sub-section (4A) or
sub-section (4B) or sub-section (4C) or sub-section (4D) of
section 139 or clause (i) of sub-section (1) of section 142 or
sub-section (1) of section 148 or section 153A or the return of
fringe benefits required to be furnished under sub-section (1) or
sub-section (2) of section 115WD relating to the assessment
year commencing on the 1st day of April, 2008 shall,
(a) in the case of a person being an individual where the total
income includes income chargeable to income-tax under the
head Salaries or income in the nature of family pension as
defined in the Explanation to clause (iia) of section 57 but does
not include any other income except income by way of
interest chargeable to income-tax under the head Income from
other sources, be in Form No. ITR-1 and be verified in the
manner indicated therein;
(b) in the case of a person being an individual not being an
individual to whom clause (a) applies or a Hindu 42
undivided family where the total income does not include
 Assessment Procedure
.
prescribed form
RETURN OF INCOME
A snapshot from https://incometaxindiaefiling.gov.in/portal/individual_huf.do

43
 Assessment Procedure
.
prescribed form
RETURN OF INCOME
A snapshot from ITR-1

RULE 12 (1) (a) “...............................verified in the manner indicated therein”

44
 Assessment Procedure
.
RETURN OF INCOME
Sec 139 (1) Every person,
(b) being a company or a firm; or
or the
(b) being a person other than a company or a firm, if his total income
total income of any other person in respect of which he
is assessable under this Act during the previous year exceeded
the maximum amount which is not chargeable to income-tax, shall, on or before
the due date, furnish a return of his income or the income of such other
person during the previous year, in the prescribed form and verified in the
prescribed manner and setting forth such other particulars as may be
Sec 2(7) assessee
prescribed : means a person by whom any tax or any other sum of money is
payable under this Act, and includes
(b) every person who is deemed to be an assessee under any provision of this Act

CHAPTER XV LIABILITY IN SPECIAL CASES

Sec 159 – LEGAL REPRESENTATIVE (a)Agent of a non-resident

Sec 160 – REPRESENTATIVE ASSESSEE (b) Guardian / Manager of

minor/lunatic/idiot
Sec 163 – AGENT
(c) Court of wards/
Sec 168 – EXECUTOR Administrator General/
Sec 170 – SUCCESSOR Trustee appointed by court
(d) Trustee (trust with 45
 Assessment Procedure
.
RETURN OF INCOME
Sec 139 (1) Every person,
(b) being a company or a firm; or
(b) being a person other than a company or a firm, if his total income or the total
income of any other person in respect of which he is assessable under this Act
during the previous year exceeded the maximum amount which is not
chargeable to income-tax, shall, on or before the due date, furnish
a return of his income or the income of such other person during the
previous year, in the prescribed form and verified in the prescribed
manner and setting forth such other particulars as may be prescribed :
Explanation 2.In this sub-section, due date means,
• where the assessee is (i) a company; or (ii) a person (other than a company)
whose accounts are required to be audited under this Act or under any
other law for the time being in force; or (iii) a working partner of a firm whose
accounts are required to be audited under this Act or under any other law for the
time being in force, the 30th day of September of the assessment year;
(substituted by Finance Act 2008, w.e.f. 1.4.2008)
(b) …….
(c) in the case of any other assessee, the 31st day of July of the assessment year
46
 Assessment Procedure
.
RETURN OF INCOME
PROVIS
Sec 139 O-1
One by six scheme …
(1)
Who should file; when; PROVIS
……...up to AY 2005-06
how O-2
PROVIS Every co. / firm to file return
O-3
PROVIS Filing of return reqd, if TOTAL INCOME without
Sec 139 O-4 giving effect to Exemptions u/s 10A, 10B, 10BA
or deduction u/ Chap VI A exceeds amount
not chargeable to tax

Provided also that every person, being an individual or a Hindu undivided family or
an association of persons or a body of individuals, whether incorporated or not, or
an artificial juridical person, if his total income or the total income of any other
person in respect of which he is assessable under this Act during the previous year,
without giving effect to the provisions of section 10A or section 10B or
section 10BA or Chapter VI-A exceeded the maximum amount which is not
chargeable to income-tax, shall, on or before the due date, furnish a return of
his income or the income of such other person during the previous year, in the
prescribed form and verified in the prescribed manner and setting forth such other
particulars as may be prescribed.
47
 Assessment Procedure
.
RETURN OF INCOME
Scheme of filing of
returns by
salaried
employees
through
Schemeemployer,
for bulk
2004
filing of returns by
(1 Filing of return by salaried employees through employer
salaried
A) employees,2002
(1 E – filing of return Electronic furnishing of returns of
B) income scheme 2007
Return to be filed for carrying forward a LOSS under ‘Profits
(3) & gains from business & profession’ or ‘capital gains’

Sec 80. Notwithstanding anything contained in this Chapter, no loss which has
not been determined in pursuance of a return filed in accordance with the
provisions of sub-section (3) of section 139, shall be carried forward and set
off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-
section (1) or sub-section (3)] of section 74 or sub-section (3) of section 74A.

Loss under ‘House property’ ?? u/s 71B ??

48
 Assessment Procedure
.
RETURN OF INCOME
Scheme of filing of
returns by
salaried
employees
through
Schemeemployer,
for bulk
2004
filing of returns by
(1 Filing of return by salaried employees through employer
salaried
A) employees,2002
(1 E – filing of return Electronic furnishing of returns of
B) income scheme 2007
Return to be filed for carrying forward a LOSS under ‘Profits
(3) C / F LOSS RETURN & gains from business & profession’ or ‘capital gains’

(4) BELATED RETURN Up to one year from the end of relevant AY or assessment

Filing of return reqd, if TOTAL INCOME without giving

(4 CHARITABLE TRUST
effect to Sec 11 & 12 exceeds max amount not taxable
A)
Filing of return reqd, if TOTAL INCOME without giving
(4 POLITICAL PARTY
effect to Sec 13A exceeds max amount not taxable
B)
49
 Assessment Procedure
.
RETURN OF INCOME

For certain institutions / associations/trade unions - Filing of

return reqd, if TOTAL INCOME without giving effect to
clause 21 / 22B/ 23A / 23B / 23C of Sec 10 exceeds max
(4 INSTITUTIONS U/S 10 amount not taxable
C)
UNIVERSITY Every University, college or educational institute referred in clause
(4 COLLEGE (ii) or (iii) of Sec 35 (1) not otherwise required to file return – REQD.
D)
On discovery of omission / wrong statement – up to one
(5) REVISED RETURN year from the end of relevant AY or assessment
Information to income exempt, assets, bank account, credit card,
(6) be furnished expenditure, other outgoings s may be PRESCRIBED

(6 Audit report etc Audit return, principal place, branches, partners, members etc
A) If AO considers return defective – opportunity for rectify
(9) DEFECTIVE RETURN
within 15 days / time allowed by AO 50
 Assessment Procedure
.
RETURN OF INCOME
Sec 139 (9) Where the Assessing Officer considers that the
return of income furnished by the assessee is defective, he
may intimate the defect to the assessee and give him an
opportunity to rectify the defect within a period of fifteen
days from the date of such intimation or within such
further period which, on an application made in this behalf,
the Assessing Officer may, in his discretion, allow;
and if the defect is not rectified within the said period of
fifteen days or, as the case may be, the further period so
allowed, then, notwithstanding anything contained in any
other provision of this Act, the return shall be treated as
an invalid return and the provisions of this Act shall apply
as if the assessee had failed to furnish the return :
Provided that where the assessee rectifies the defect after the
expiry of the said period of fifteen days or the further period
allowed, but before the assessment is made, the Assessing
Officer may condone the delay and treat the return as a valid 51
return.
 Assessment Procedure
.
RETURN OF INCOME
Sec139(9) Explanation. For the purposes of this sub-section,
a return of income shall be regarded as defective
unless all the following conditions are fulfilled, namely :
(a) the annexures, statements and columns in the return
of income relating to computation of income chargeable
under each head of income, computation of gross total
income and total income have been duly filled in;
(b) the return is accompanied by a statement showing the
computation of the tax payable on the basis of the
return;
(bb) the return is accompanied by the report of the audit
referred to in section 44AB, or, where the report has been
furnished prior to the furnishing of the return, by a copy of
such report together with proof of furnishing the report;

52
 Assessment Procedure
.
RETURN OF INCOME
Sec139(9) Explanation. For the purposes of this sub-section,
a return of income shall be regarded as defective
unless all the following conditions are fulfilled, namely :
(c) the return is accompanied by proof of
(i) the tax, if any, claimed to have been deducted or collected
at source and the advance tax and tax on self-
assessment, if any, claimed to have been paid
Provided that where the return is not accompanied by proof
of the tax, if any, claimed to have been deducted or collected
at source, the return of income shall not be regarded as
defective if
(a) a certificate for tax deducted or collected was not
furnished under section 203 or section 206C to the person
furnishing his return of income;
(b) such certificate is produced within a period of two years
specified under sub-section (14) of section 155;
(ii) the amount of compulsory deposit, if any, claimed to have 53
 Assessment Procedure
.
RETURN OF INCOME
Sec139(9) Explanation. For the purposes of this sub-section,
a return of income shall be regarded as defective
unless all the following conditions are fulfilled, namely
:
(d) where regular books of account are maintained by the
assessee, the return is accompanied by copies of
• manufacturing account, trading account, profit and
loss account or, as the case may be, income and
expenditure account or any other similar account and
balance sheet;
(ii) in the case of a proprietary business or profession, the
personal account of the proprietor; in the case of a firm,
association of persons or body of individuals, personal
accounts of the partners or members; and in the case of a
partner or member of a firm, association of persons or
body of individuals, also his personal account in the firm,
association of persons or body of individuals;
54
 Assessment Procedure
.
RETURN OF INCOME
Sec139(9) Explanation. For the purposes of this sub-section,
a return of income shall be regarded as defective
unless all the following conditions are fulfilled, namely
:
(e) where the accounts of the assessee have been
audited, the return is accompanied by copies of the
audited profit and loss account and balance sheet and
the auditors report and, where an audit of cost
accounts of the assessee has been conducted, under
section 233B of the Companies Act, 1956 (1 of 1956), also
the report under that section;
(f) where regular books of account are not maintained by
the assessee, the return is accompanied by a statement
indicating the amounts of turnover or, as the case
may be, gross receipts, gross profit, expenses and net
profit of the business or profession and the basis on
which such amounts have been computed, and also 55
disclosing the amounts of total sundry debtors, sundry
 Assessment Procedure
.
RETURN OF INCOME

Who
should
file a
return ?

56
 Assessment Procedure
.
prescribed form
RETURN OF INCOME
A snapshot from ITR-1

WHO SHOULD SIGN ??

Sec 140

57
 Introduction to Income-
tax .
WHO SHOULD SIGN ?
Absent from India  by PERSON DULY AUTHORISED
Can NOT sign  by PERSON DULY AUTHORISED
INDIVUD INDIVIDUAL himself
UAL Mentally incapacitated  GUARDIAN
H.U.F KARTA if absent from India / mentally incapacitated  ANY
ADULT MEMBER
Co being wound up  by LIQUIDATOR [ sec 178 (1) ]
Co. NOT RESIDENT by PERSON HAVING P.O.A.
COMPAN (enclosed
MANAGING with return)
DIRECTOR  if no MD / MD can’t sign 
Y DIRECTOR
Management taken over by Governmant  PRINCIPAL
OFFICER
FIRM MANAGING PARTNER can’t sign / no Managing partner 
ANY PARTNER (major)
AOP / BOI Any MEMBER / PRINCIPAL OFFICER
POLITICAL CHIEF EXECUTIVE OFFICER
PARTY
LOCAL PRINCIPAL
AUTHORITY OFFICER
ANY OTHER THAT PERSON / PERSON COMPETENT TO ACT
PERSON ON ITS BEHALF
Art. Juridical
PERSON 58
 Assessment Procedure
.
RETURN OF INCOME
RULE 12
ITR 1 TO 8

What if the return

could not be filed by
the DUE DATE
What if the return
filed is found by
assessee to be
How to file
defective

a return ?
What if the return
filed is found by A O
to be defective
59
 Assessment Procedure
.
RETURN OF INCOME
WHAT HAPPENS IF

Up to one year from the end

of relevant AY or assessment Return not Return not
filed by verified as
AFTER one year from the endDUE DATE prescribed
of relevant AY or assessment Return not
filed in SIGNE
prescribed D BY
form WRON
G
PERSO
N

Return invalid

RULE 12 Return
ITR 1 TO 8 not NO RETURN 60

rectifie
 Assessment Procedure
.
RETURN OF INCOME
WHAT HAPPENS IF

NO RETURN

Notice u/s 142 (1)

Penalty u/s 271 F
c/f losses u/s 80 not allowed
Prosecution u/s 276CC

Sec 271F. If a person who is required to furnish a return of

his income, as required under sub-section (1) of section 139
or by the provisos to that sub-section, fails to furnish such
return before the end of the relevant assessment year,
the Assessing Officer may direct that such person shall pay,
by way of penalty, a sum of five thousand rupees.
RULE
61
12
ITR 1
 Assessment Procedure
.
RETURN OF INCOME
WHAT HAPPENS IF

.
NO RETURN
Penalty u/s 272A(2) Notice u/s 142 (1)
Rs.100/-for every day Penalty u/s 271 F
during which the failure c/f losses u/s 80 not allowed
continues Prosecution u/s 276CC

RULE
62
12
ITR 1
 Assessment Procedure
.
RETURN OF INCOME
Sec 276CC. If a person wilfully fails to furnish in due time the
return of fringe benefits which he is required to furnish under sub-
section (1) of section 115WD or by notice given under sub-section (2)
of the said section or section 115WH or the return of income which
he is required to furnish under sub-section (1) of section 139 or by
notice given under 37clause (i) of sub-section (1) of section 142 or
section 148 38or section 153A, he shall be punishable,
(i) in a case where the amount of tax, which would have been evaded if
the failure had not been discovered, exceeds one hundred
thousand rupees, with rigorous imprisonment for a term which
shall not be less than six months but which may extend to
seven years and with fine;
(ii) in any other case, with imprisonment for a term which shall not be
less than three months but which may extend to three years
and with fine:
Provided that a person shall not be proceeded against under this
section for failure to furnish in due time the return of fringe benefits
under sub-section (1) of section 115WD or return of income under sub-
section (1) of section 139
(i) for any assessment year commencing prior to the 1st day of April, 1975; or
(ii) for any assessment year commencing on or after the 1st day of 63
April 1975, if
 Assessment Procedure
.
RETURN OF INCOME

4. Annexure-less Form
No document (including TDS certificate) should be attached to this
form. Official receiving the return has been instructed to detach all
documents enclosed with this form and return the same to the
assessee.

TDS certificates, Audit reports

etc not attached with the return

RULE WHAT HAPPENS IF

64
12
ITR 1
 Assessment Procedure
.
RETURN OF INCOME
Sec 139C Power of Board to dispense with furnishing
documents, etc., with the return.
(1) The Board may make rules providing for a class or classes
of persons who may not be required to furnish
documents, statements, receipts, certificates, reports of
audit or any other documents, which are otherwise under
any other provisions of this Act, except section 139D, required
to be furnished, along with the return but on demand to be
produced before the Assessing Officer.
Officer
(2) Any rule made under the proviso to sub-section (9) of section
Proviso
139 asto Sec 139
it stood (9) [Omitted
immediately before byits
theomission
Finance Act, 2007,
by the
w.r.e.f.
Finance 1-6-2006] Provided
Act, 2007 that
shall be the Board
deemed may,been
to have by rules
mademade
by it,— the
under   (a) provisions
dispense, of
forthis
a class or classes of persons, with
section.
any of the conditions specified in clauses (a) to (f); or  
(b)  include any of the conditions specified in clauses (a) to (f) of
this Explanation in the form of return prescribed under sub-
section (1) or sub-section (6) of this section.”
65
 Assessment Procedure
.
RETURN OF INCOME
 Can two total incomes (e.g... of an individual & karta of HUF) be
clubbed in a single return ?
 No ........................... 164 ITR 134 (SC)
 Can an illegally constituted entity file a return of income (e.g.. A firm
constituted in contravention of the provisions of law) ?
 Madanmohan Pal vs CIT, (1994) 209 ITR 374, 379 (Allahabad)
 Is it mandatory to file a return in case of loss ?
 No
 Can unabsorbed depreciation be carried forward ?
 Yes ……………………………………….. Madanmohan Pal vs CIT, (1994)
209 ITR 374, 379 (Allahabad)
 Which assessment is referred to in Sec 139 (4) ?
Best judgement assessment u/s 144
 Whether a return submitted after assessment completed but before the
notice of demand is served would be valid ?
 No ………………..Balechand vs ITO (1969) 72 ITR 197 (SC)
 Whether a return filed after cancellation of Best judgement assessment
(within one year from the end of the relevant AY) is a valid return ?
 Yes ……………………………… Ram Bilas Kedarnath vs ITO (1963) 47 66
ITR 586 (All)
 Assessment Procedure
.
RETURN OF INCOME
 Can assessee revise his return whenever he wishes to do so ?
 No ; He can only revise if there was an omission or error in the
original return and the same was due to a bonafide inadvertence or
mistake on the part of the assessee ……………………………………
Sunanda Ram Deka vs CIT (1994) 210 ITR 988, 990 (Gauh)
 Can assessee file a revised return in case where his original return was
based on his own books of accounts which he claims are correct ?
 No …………………… CIT vs India’s Hobby Centre (P) Ltd [(1995) 78
Taxman 377, 384 (Cal)
 The circular no. 653 dated 15-6-1993 issued in connection with section
80D say: when the Act permits the filing of revised return, it is
expected to be considered by the assessing authority, if the same is
filed before the assessment order is made by it; otherwise, the very
purpose of giving such a right would be frustrated.
 Is it mandatory to file a return in case of loss ?
 No
 Can a revised return be filed in a case of return filed u/s 139(4) ?
 No ……………………………………….. Kumar Jagdish Chandra Sinha
v. CIT [(1996) 220 ITR 67, 75, 74(SC) ?
 Can a revised return be revised again ? 67
 YES ………………….. Niranjan Lal Ram Chandra v. CIT, (1982) 134 ITR
 Assessment Procedure
.
RETURN OF INCOME
 Can assessee file a return of income after assessment is completed ?
 No ; …………………………………… Balchand vs. ITO(1969) 72 ITR
197 (SC)
 Can assessee file a return after a notice for reassessment of income
has been issued to him ?
 Yes …………………… CIT vs B v R Glucose Products Ltd (2001) 250
ITR 512 (AP)
 Can an assessee file a revised return u/s 139(5) to revise a return in
which income was willfully evaded or concealed ?
 No ……………………..Sunanda Ram Deka vs. CIT (1994) 210 ITR 988
(Gau)
 Will an application to the AO disclosing some additional income amount
to a revised return ?
 No ……………………..Gopaldas Parshottamdas vs. CIT (1941) 9 ITR
130 (All)
 Can a revised return be filed to change the status ?
Can a revised return be filed to change the accounting method ?
 No ……………………………………….. Deep Narain Nagu & Co. v.
CIT [(1986) 157 ITR 37 (MP)
68
 Can a return filed u/s 139(3) be revised ?
 YES ………………….. CIT v. Periyar Dist Coop Milk Producers Union Ltd
 Assessment Procedure
.
RETURN OF INCOME
 A return showing u/s 139 (1) filed by an individual with total income
below taxable limit – is it a valid return?
 Yes ; …………………………………… CIT vs. Ranchhoddas Karsandas
(1959) 36 ITR 569 (SC)
 Return filed in a wrong form – will it be invalid?
 No …………………… Dhampur Sugar Mills Ltd vs. CIT (1973) 90 ITR
236 (All)
 Will a return (prior to AY 2007-08) submitted without necessary
annexures be invalid ?
 No …………………….. Dhampur Sugar Mills Ltd vs. CIT (1973) 90 ITR
236 (All)
 Can an unsigned return be treated as defective u/s 139 (9) ?
 No . It is an INVALID return……………………..Khialdas & sons vs. CIT
(1997) 227 ITR 960 (MP)
 What will happen where on a return , in place of the signature of the
assessee (an illetrate individual), his name was written on his behalf
and on his request, by his son?
 INVALID return, since the statute requires a physical contact
between the person verifying the return (whether a return of hos own
income, or of another person in a representative capacity) and the 69
signature or the mark put on the return ………………………………………..
 Assessment Procedure
.
Sec 139 (8)
Sec 139(8) (a) Where the return under sub-section (1) or sub-section (2)
or sub-section (4) for an assessment year is furnished after the
specified date, or is not furnished, then whether or not the Assessing
Officer has extended the date for furnishing the return under sub-
section (1) or sub-section (2), the assessee shall be liable to pay
simple interest at fifteen per cent per annum, reckoned from the day
immediately following the specified date to the date of the furnishing
of the return or, where no return has been furnished, the date of
completion of the assessment under section 144, on the amount of the
tax payable on the total income as determined on regular assessment,
as reduced by the advance tax, if any, paid, and any tax deducted at
source : Provided that the Assessing Officer may, in such cases and
under such circumstances as may be prescribed, reduce or waive the
interest payable by any assessee under this sub-section.
…………………………………………………
*(c) The provisions of this sub-section shall apply in respect of the
assessment for the assessment year commencing on the 1st day
of April, 1988, or any earlier assessment year, and references
therein to the other provisions of this Act shall be construed as
references to the said provisions as they were applicable to the
relevant assessment year.
 Assessment Procedure
.
P.A.N.
Sec 139A. (1) Every person,
 (i) if his total income or the total income of
any other person in respect of which he is
31stMay
assessable under this Act during any
previous year exceeded the maximum
amount which is not chargeable to income- Before the end of
tax; or the accounting year
 (ii) carrying on any business or profession
whose total sales, turnover or gross receipts Before the end of
are or is likely to exceed five lakh rupees in the accounting year

any previous year; or

 (iii) who is required to furnish a return of
income under sub-section (4A) of section
139; or
Rule 114
 (iv) being an employer, who is required to
furnish a return of fringe benefits under
section 115WD,
 Assessment Procedure
.
P.A.N.
Sec 139A. (1A) Notwithstanding anything contained in sub-
section (1), the Central Government may, by notification in
the Official Gazette, specify, any class or classes of persons by
whom tax is payable under this Act or any tax or duty is
payable under any other law for the time being in force
including importers and exporters whether any tax is payable
by them or not and such persons shall, within such time as
mentioned in that notification, apply to the Assessing Officer
for the allotment of a permanent account number.
 
 Assessment Procedure
.
P.A.N.
The Central Govt. by notification no. 11468, dated 29.8.2000 has
notified the following class or classes of persons who shall apply to
the A.O. for allotment of PAN
• Exporters and Importers as defined in section 2(20) and section
2(26) of the Customs Act, 1961, who are required to obtain an
importer-exporter code under section 7 of the Foreign Trade
(Development and Regulation)Act, 1992.
• Assessees as defined in rule 2(3) of Central Excise Rules, 1944.
• Persons who issue invoices under rule 57AE i.e. traders, etc,
requiring registration under Central Excise Rules, 1944.
• Persons who are assessees under service tax.

The above persons shall apply for allotment of PAN within 15 days of
the date of publication of the notification in the Official Gazette.
However, persons who may fall in the above category, after the date
of the above notification, shall apply for allotment of PAN:
• (a) in case of (I) above, before making an import or export;
• (b) in case of (ii) and (iii) above, before making am application for
registration under central excise;
 Assessment Procedure
.
P.A.N.
• The Central Govt. by notification no. 355/2001, dated 11-12-
2001 has further notified the following class or classes of persons:

• Persons registered under the Central Sales Tax Act, 1956 or

the general sales tax law of the appropriate State or Union
Territory, as the case may be.
• As on the date of this notification, a person falling within a class or
classes of persons referred to in paragraph I, shall apply for the
allotment of PAN within thirty days of the date of publication
of this notification in the Official Gazette.
• A person who may fall within such class or classes of persons after
the date of this notification, as is referred to in paragraph (I), shall
apply for the allotment of (PAN) before making any application
for registration under the Central Sales Tax Act, 1956 or
the general sales tax law of the appropriate State or Union
Territory, as the case may be.
 Assessment Procedure
.
P.A.N.
Sec 139A. (1A) Notwithstanding anything contained in sub-
section (1), the Central Government may, by notification in
the Official Gazette, specify, any class or classes of persons by
whom tax is payable under this Act or any tax or duty is
payable under any other law for the time being in force
including importers and exporters whether any tax is payable
by them or not and such persons shall, within such time as
mentioned in that notification, apply to the Assessing Officer
for the allotment of a permanent account number.
 (1B) Notwithstanding anything contained in sub-section (1), the
Central Government may, for the purpose of collecting any
information which may be useful for or relevant to the
purposes of this Act, by notification in the Official Gazette,
specify, any class or classes of persons who shall apply to the
Assessing Officer for the allotment of the permanent account
number and such persons shall, within such time as mentioned
in that notification, apply to the Assessing Officer for the
allotment of a permanent account number.
 (2) The Assessing Officer, having regard to the nature of
 Assessment Procedure
.
P.A.N.

Sec 139A.   (3) Any person, not falling under sub-section (1)
or sub-section (2), may apply to the Assessing Officer for the
allotment of a permanent account number and, thereupon,
the Assessing Officer shall allot a permanent account number
to such person forthwith.
 (4) For the purpose of allotment of permanent account
numbers under the new series, the Board may, by
notification in the Official Gazette, specify the date
from which the persons referred to in sub-sections (1) and (2)
and other persons who have been allotted permanent
account numbers and residing in a place to be
specified in such notification, shall, within such time as
may be specified, apply to the Assessing Officer for the
allotment of a permanent account number under the new
series and upon allotment of such permanent account
number to a person, the permanent account number, if any,
allotted to him earlier shall cease to have effect :
 Provided that the persons to whom permanent account number
 PAN
139A.   (5) Every person shall
 (a) quote such number in all his returns to, or
correspondence with, any income-tax authority;
 (b) quote such number in all challans for the payment of any
sum due under this Act;
 (c) quote such number in all documents pertaining to such
transactions as may be prescribed by the Board in the
interests of the revenue, and entered into by him:
Rule 114 B

 Provided that the Board may prescribe different dates for

different transactions or class of transactions or for different
class of persons:
 Provided further that a person shall quote General Index
Register Number till such time Permanent Account
Number is allotted to such person;
 (d) intimate the Assessing Officer any change in his
address or in the name and nature of his business on
 PAN Rule 114 B
Rule-114B Categories of transactions and/or document where
quoting of PAN made compulsory
• sale/purchase of any immovable property value at Rs.5 lakhs or more;
• sale/purchase of motor vehicle (other than two wheeled vehicles) which
requires registration under Motor vehicles Act, 1988;
• Time deposit exceeding Rs.50,000/- with a bank/banking
company/banking institution;
• Deposits exceeding Rs.50,000/- in Post Office Savings Bank.
• Contract for sale/purchase of securities exceeding Rs.1,00,000/-
• Opening an account with a bank/banking company/banking institution.
Where the person opening a bank account is a minor and does not
have any income chargeable to income-tax, he shall quote the PAN/GIR
number of his father or mother or guardian as the case may be.
• Application for installation of a telephone connection including cellular
connection.
• Payment to hotels/restaurants of bills exceeding Rs.25,000/- at any
time.
• Payment in cash for purchase of bank draft or pay orders or banker's
cheques from a banking company to which the Banking Regulation Act,
 PAN Rule 114 B
Rule-114B Categories of transactions and/or document where
quoting of PAN made compulsory -----------contd.
• deposit in cash aggregating to Rs.50,000/- or more, with a banking
company to which the Banking Regulation Act, 1949, applies (including
any bank or banking institution referred to in sec. 51 of that Act) during
any one day;
• payment in cash in connection with travel to any foreign country of an
amount exceeding Rs.25,000/- at any one time. Such payment shall
include payment in cash towards fare, or to a travel agent or a tour
operator, or for the purchase of foreign currency. However, travel to
any foreign country does not include travel to the neighbouring
countries or to such places of pilgrimage as may be specified by the
Board under Explanation 3 of section 139(1).
• Making an application to any banking company to which the Banking
Regulation Act, 1949, applies (including any bank or banking institution
referred to in section 51 of that Act) or to any other company or
institution, for issue of a credit card;
• payment of an amount of Rs.50,000/- or more to a Mutual Fund for
purchase of its units
• payment of an amount of Rs.50,000/- or more to a company for
acquiring shares issued by it;
 Assessment Procedure
.
P.A.N.
Sec 139A.    (5A) Every person receiving any sum or income or
amount from which tax has been deducted under the
provisions of Chapter XVIIB, shall intimate his permanent
account number to the person responsible for deducting such
tax under that Chapter :
 Provided further that a person referred to in this sub-section
shall intimate the General Index Register Number till such
time permanent account number is allotted to such person.
 (5B) Where any sum or income or amount has been paid after
deducting tax under Chapter XVIIB, every person deducting tax
under that Chapter shall quote the permanent account number
of the person to whom such sum or income or amount has
been paid by him
 (i) in the statement furnished in accordance with the provisions
of sub-section (2C) of section 192;
 (ii) in all certificates furnished in accordance with the provisions
of section 203;
 (iii) in all returns prepared and delivered or caused to be
delivered in accordance with the provisions of section 206 to
 Assessment Procedure
.
P.A.N.
Sec 139A.  (5B) Where any sum or income ...................

Provided that the Central Government may, by notification in

the Official Gazette, specify different dates from which the
provisions of this sub-section shall apply in respect of any
class or classes of persons:
 Provided further that nothing contained in sub-sections
(5A) and (5B) shall apply in case of a person whose
total income is not chargeable to income-tax or who is
not required to obtain permanent account number
under any provision of this Act if such person furnishes to
the person responsible for deducting tax, a declaration
referred to in section 197A in the form and manner
prescribed thereunder to the effect that the tax on his
estimated total income of the previous year in which such
income is to be included in computing his total income will be
nil.
 Assessment Procedure
.
P.A.N.
Sec 139A. (5D) Every person collecting tax in accordance with
the provisions of section 206C shall quote the permanent
account number of every buyer or licensee or lessee referred
to in that section
 (i) in all certificates furnished in accordance with the provisions
of sub-section (5) of section 206C;
 (ii) in all returns prepared and delivered or caused to be
delivered in accordance with the provisions of sub-section (5A)
or sub-section (5B) of section 206C to an income-tax
authority;]
 (iii) in all quarterly statements prepared and delivered or
caused to be delivered in accordance with the provisions of
sub-section (3) of section 206C.
 (6) Every person receiving any document relating to a
transaction prescribed under clause (c) of sub-section
(5) shall ensure that the Permanent Account Number or
the General Index Register Number has been duly
quoted in the document.
 Assessment Procedure
.
P.A.N.
Sec 139A.  (7) No person who has already been allotted a
permanent account number under the new series shall apply,
obtain or possess another permanent account number.
 Explanation. For the removal of doubts, it is hereby declared
that any person, who has been allotted a permanent account
number under any clause other than clause (iv) of sub-section
(1), shall not be required to obtain another permanent account
number and the permanent account number already allotted to
him shall be deemed to be the permanent account number in
relation to fringe benefit tax.
 (8) The Board may make rules providing for
 (a) the form and the manner in which an application may
be made for the allotment of a permanent account number and
the particulars which such application shall contain;
 (b) the categories of transactions in relation to which
Permanent Account Numbers or the General Index
Register Number shall be quoted by every person in the
documents pertaining to such transactions;
 (c) the categories of documents pertaining to business or
 Assessment Procedure
.
P.A.N.
Sec 139A.  (8) The Board may make rules providing for
 (d) class or classes of persons to whom the provisions of
this section shall not apply;
(e) the form and the manner in which the person who has
not been allotted a Permanent Account Number or who
does not have General Index Register Number shall make his
declaration;
(f) the manner in which the Permanent Account Number or the
General Index Register Number shall be quoted in respect of
the categories of transactions referred to in clause (c);
(g) the time and the manner in which the transactions
referred to in clause (c) shall be intimated to the
prescribed authority.
Explanation. For the purposes of this section,
(g)Assessing Officer includes an income-tax authority who
is assigned the duty of allotting permanent account
numbers;
(b) permanent account number means a number which the
 Assessment Procedure
.
P.A.N.
Sec 139A.  Explanation. For the purposes of this section,

(c)Assessing Officer includes an income-tax authority who

is assigned the duty of allotting permanent account
numbers;
(b) permanent account number means a number which the
Assessing Officer may allot to any person for the purpose of
identification and includes a permanent account number
allotted under the new series;
(c) permanent account number under the new series
means a permanent account number having ten
alphanumeric characters and issued in the form of a
laminated card;
(d) General Index Register Number means a number given by
an Assessing Officer to an assessee in the General Index
Register maintained by him and containing the designation
and particulars of the ward or circle or range of the Assessing
Officer.
 Assessment Procedure
.
P.A.N.
CONSEQUENCES OF FAILURE TO COMPLY WITH SEC 139 A
Penalty
Sec 272B. (1) If a person fails to comply with the
provisions of section 139A, the Assessing Officer may
direct that such person shall pay, by way of penalty, a sum of
ten thousand rupees.
(2) If a person who is required to quote his permanent
account number in any document referred to in clause (c) of
sub-section (5) of section 139A, or to intimate such number
as required by sub-section (5A) or sub-section (5C) of that
section, quotes or intimates a number which is false, and
which he either knows or believes to be false or does not
believe to be true, the Assessing Officer may direct that
such person shall pay, by way of penalty, a sum of ten
thousand rupees.
(3) No order under sub-section (1) or sub-section (2) shall be
passed unless the person, on whom the penalty is proposed to
be imposed, is given an opportunity of being heard in the
 Assessment Procedure
.
TAX RETURN PREPARER SCHEME
139B.(1) For the purpose of enabling any specified class or
classes of persons in preparing and furnishing returns of income,
the Board may, without prejudice to the provisions of section 139,
frame a Scheme, by notification in the Official Gazette,
providing that such persons may furnish their returns of
income through a Tax Return Preparer authorised to act as
such under the Scheme.
(2) Every Tax Return Preparer shall assist the persons furnishing
the return of income in such manner as may be specified in the
Scheme framed under this section and affix his signature on
such return.
(3) For the purposes of this section,
(a) Tax Return Preparer means any individual, not being a
person referred to in clause (ii) or clause (iii) or clause (iv)
of sub-section (2) of section 288 or an employee of the
specified class or classes of persons, who has been authorised to
act as a Tax Return Preparer under the Scheme framed
under this section;
• specified class or classes of persons means any person,
 Assessment Procedure
.
TAX RETURN PREPARER SCHEME
Sec 139B. (4) The Scheme framed by the Board under this section
may provide for the following, namely:
(a) the manner in which and the period for which the Tax Return
Preparers shall be authorised under sub-section (3);
(b)the educational and other qualifications to be possessed, and the
training and other conditions required to be fulfilled, by a person to
act as a Tax Return Preparer;
(c) the code of conduct for the Tax Return Preparers;
(d)the duties and obligations of the Tax Return Preparers;
(e) the circumstances under which the authorisation given to a Tax
Return Preparer may be withdrawn;
(f) any other matter which is required to be, or may be, specified by the
Scheme for the purposes of this section.
(5) The Scheme framed by the Board under this section shall be laid, as
soon as may be after it is framed, before each House of
Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the Scheme or both
Houses agree that the Scheme should not be framed, the Scheme shall
thereafter have effect only in such modified form or be of no effect, as
 Assessment Procedure
.
Sec 139 D
Filing of return in electronic form.

Sec 139D. The Board may make rules providing for

(a) the class or classes of persons who shall be required to
furnish the return in electronic form;
(b) the form and the manner in which the return in
electronic form may be furnished;
(c)the documents, statements, receipts, certificates or
audited reports which may not be furnished along with the
return in electronic form but shall be produced before the
Assessing Officer on demand;
(d) the computer resource or the electronic record to which
the return in electronic form may be transmitted.
 Assessment Procedure
.
SELF ASSESSMENT
Sec 140A. (1) Where any tax is payable on the basis of any
return required to be furnished under section 115WD or
section 115WH or section 139 or section 142 or section 148 or
section 153A or, as the case may be, section 158BC, after
taking into account,
(i) the amount of tax, if any, already paid under any provision
of this Act;
(ii)any tax deducted or collected at source;
(iii) any relief of tax or deduction of tax claimed under
section 90 or section 91 on account of tax paid in a country
outside India;
(iv) any relief of tax claimed under section 90A on
account of tax paid in any specified territory outside India
referred to in that section; and
(v) any tax credit claimed to be set off in accordance with the
provisions of section 115JAA,
the assessee shall be liable to pay such tax together
with interest payable under any provision of this Act for any
 Assessment Procedure
.
SELF ASSESSMENT
Explanation. Where the amount paid by the assessee under
this sub-section falls short of the aggregate of the tax and
interest as aforesaid, the amount so paid shall first be
adjusted towards the interest payable as aforesaid and
the balance, if any, shall be adjusted towards the tax
payable.
(1A) For the purposes of sub-section (1), interest payable,
(i) under section 234A shall be computed on the amount of
the tax on the total income as declared in the return as
reduced by the amount of,
(a) advance tax, if any, paid;
(b) any tax deducted or collected at source;
(c) any relief of tax or deduction of tax claimed under section
90 or section 91 on account of tax paid in a country outside
India;
(d) any relief of tax claimed under section 90A on account of
tax paid in any specified territory outside India referred to in
that section; and
(e) any tax credit claimed to be set off in accordance with the
 Assessment Procedure
.
SELF ASSESSMENT
Sec 140A (1B) For the purposes of sub-section (1), interest
payable under section 234B shall be computed on an
amount equal to the assessed tax or, as the case may be, on
the amount by which the advance tax paid falls short of
the assessed tax.
Explanation. For the purposes of this sub-section, assessed tax
means the tax on the total income as declared in the return as
reduced by the amount of,
(i) tax deducted or collected at source, in accordance with the
provisions of Chapter XVII, on any income which is subject to such
deduction or collection and which is taken into account in computing
such total income;
(ii) any relief of tax or deduction of tax claimed under section 90 or
section 91 on account of tax paid in a country outside India;
(iii) any relief of tax claimed under section 90A on account of tax
paid in any specified territory outside India referred to in that section;
and
(iv) any tax credit claimed to be set off in accordance with the
provisions of section 115JAA.
(2) After a regular assessment under section 115WE or
 Assessment Procedure
.
SELF ASSESSMENT
Sec 140A (3) If any assessee fails to pay the whole or any
part of such tax or interest or both in accordance with the
provisions of sub-section (1), he shall, without prejudice to any
other consequences which he may incur, be deemed to be an
assessee in default in respect of the tax or interest or both
remaining unpaid, and all the provisions of this Act shall apply
accordingly.
(4) The provisions of this section as they stood immediately
before their amend-ment by the Direct Tax Laws (Amendment)
Act, 1987 (4 of 1988), shall apply to and in relation to any
assessment for the assessment year commencing on the 1st
day of April, 1988, or any earlier assessment year and
references
Even though theinstatute
this section to
uses the wordthe other
‘shall’, provisions
since of this
this is a taxing and Act
shallprovision,
penal be construed
and so a as references
reasonable to those provisions
opportunity of being heard shouldas for
be the
timetobeing
given in force
assessee and applicable
before application of 140A to (3) the
and ifrelevant
the AO is assessment
satisfied
year.
with the explanation of he assessee, it may not be applied. In other words,
AO has the discretion of applying or not applying the subsection.
………….Ramchandra Pesticieds P Ltd v. CIT (2006) 155 Taxman 111
(Kar)
 Assessment Procedure
.
Sec 142
Inquiry before assessment.
Sec 142. (1) For the purpose of making an assessment under
this Act, the Assessing Officer may serve on any person
who has made a return under section 115WD or section
139 or in whose case the time allowed under sub-section
(1) of section 139 for furnishing the return has expired a
notice requiring him, on a date to be therein specified,
(i)where such person has not made a return within the time
allowed under sub-section (1) of section 139 or before the end
of the relevant assessment year, to furnish a return of his
income or the income of any other person in respect of which
he is assessable under this Act, in the prescribed form and
verified in the prescribed manner and setting forth such other
particulars as may be prescribed, or :
Provided that where any notice has been served under this sub-section
for the purposes of this clause after the end of the relevant
assessment year commencing on or after the 1st day of April, 1990 to
a person who has not made a return within the time allowed under
sub-section (1) of section 139 or before the end of the relevant
 Assessment Procedure
.
Sec 142
Sec 142. (1) For the purpose of making an assessment under this
Act, the Assessing Officer may serve on any person who has made a
return under section 115WD or section 139 or in whose case the time
allowed under sub-section (1) of section 139 for furnishing the return
has expired a notice requiring him, on a date to be therein specified,
(i) …………..
(ii) to produce, or cause to be produced, such accounts
or documents as the Assessing Officer may require, or
(iii) 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 assessee, whether included in the accounts or not) as the
Assessing Officer may require :
Provided that
(a) the previous approval of the Joint Commissioner
shall be obtained before requiring the assessee to
furnish a statement of all assets and liabilities not
included in the accounts ;
(b) the Assessing Officer shall not require the production
 Assessment Procedure
.
Sec 142
Sec 142.(2) For the purpose of obtaining full information in respect
of the income or loss of any person, the Assessing Officer may
make such inquiry as he considers necessary.
(2A) If, at any stage of the proceedings before him, the Assessing
Officer, having regard to the nature and complexity of the accounts
of the assessee and the interests of the revenue, is of the opinion
that it is necessary so to do, he may, with the previous approval
of the Chief Commissioner or Commissioner, direct the
assessee to get the accounts audited by an accountant, as
defined in the Explanation below sub-section (2) of section 288,
nominated by the Chief Commissioner or Commissioner in
this behalf and to furnish a report of such audit in the prescribed
form duly signed and verified by such accountant and setting forth
such particulars as may be prescribed and such other particulars as
the Assessing Officer may require :
Provided that the Assessing Officer shall not direct the assessee to get
the accounts so audited unless the assessee has been given a
reasonable opportunity of being heard.
(2B) The provisions of sub-section (2A) shall have effect
notwithstanding that the accounts of the assessee have
been audited under any other law for the time being in force or
 Assessment Procedure
.
Sec 142
Sec 142. (2C) Every report under sub-section (2A) shall be
furnished by the assessee to the Assessing Officer within such period
as may be specified by the Assessing Officer :
Provided that the Assessing Officer may, suo motu, or on an
application made in this behalf by the assessee and for any good and
sufficient reason, extend the said period by such further period or
periods as he thinks fit ; so, however, that the aggregate of the
period originally fixed and the period or periods so extended
shall not, in any case, exceed one hundred and eighty days
from the date on which the direction under sub-section (2A) is
received by the assessee.
(2D) The expenses of, and incidental to, any audit under sub-
section (2A) (including the remuneration of the accountant) shall be
determined by the Chief Commissioner or Commissioner (which
determination shall be final) and paid by the assessee and in
default of such payment, shall be recoverable from the
assessee in the manner provided in Chapter XVII-D for the recovery
of arrears of tax :
Provided that where
Rule 14any
B direction for audit under sub-section (2A) is
issued by the Assessing Officer on or after the 1st day of June,
2007, the expenses of, and incidental to, such audit (including the
 Assessment Procedure
.
Sec 142  Rule 14B
Guidelines for the purposes of determining expenses for
audit.
Rule 14B. (1) Every Chief Commissioner shall maintain a panel of
accountants, out of the persons referred to in the Explanation to sub-
section (2) of section 288, for the purposes of sub-section (2A) of
section 142.
(2) Where the Assessing Officer directs for audit under sub-section (2A)
of section 142 on or after the 1st day of June, 2007, the expenses of,
and incidental to, audit (including the remuneration of the
Accountant, qualified Assistants, semi-qualified and other
Assistants who may be engaged by such Accountant) shall not
be less than rupees three thousand seven hundred and fifty
and not more than rupees seven thousand and five hundred
for every hour of the period as specified by the Assessing Officer
under sub-section (2C) of section 142.
(3) The period referred to in sub-rule (2) shall be specified in
terms of the number of hours required for completing the
report.
(4) The Accountant referred to in sub-section (2A) of section 142
shall maintain a time-sheet and shall submit it to the Chief
 Assessment Procedure
.
Sec 142
Sec 142. (3) The assessee shall, except where the
assessment is made under section 144, be given an
opportunity of being heard in respect of any material
gathered on the basis of any inquiry under sub-section
(2) or any audit under sub-section (2A) and proposed to
be utilised for the purposes of the assessment.
(4) The provisions of this section as they stood immediately
before their amendment by the Direct Tax Laws (Amendment)
Act, 1987 (4 of 1988), shall apply to and in relation to any
assessment for the assessment year commencing on the 1st
day of April, 1988, or any earlier assessment year and
references in this section to the other provisions of this Act
shall be construed as references to those provisions as for the
time being in force and applicable to the relevant assessment
year.
 Assessment Procedure
.
RETURN OF INCOME
TO FILE If a person required to file a return had failed to
(i file it before the end of relevant AY
) RETURN
To produce
( Accounts ONLY upto 3 years before
NOTI ACCOUNTS /
(1 CE
ii)
DOCUMENTS
relevant PY
) To furnish
(iii Statement of ASSETS & LIABILITIES only
INFORMAT with prior permission of JCIT
)
ION
Se
c (2 ENQUIRIES in respect of income or loss
of any person
14 )(
2 2A)
( prior permission of CIT/CCIT  auditor nominated by CCIT
(
GET Only after giving an opportunity to be heard to assessee
2B)
ACCOUNTS Expense borne by assessee
( AUDITED After 1.6.07  Rule 14B  Rs 3750 to 7500 /hour
2C) Period given/extended by AO  upto 180 days
(
2D) OPPORTUNITY OF BEING
(3 HEARD
))
(4 Applicable to prior to 1987 100
)
 Assessment Procedure
.
RETURN OF INCOME
 Can inquiry u/s 142 done after assessment?
 No . It pre-assessment enquiry.............. Amal Kr Ghatak v. ITO
(1971) 79 ITR 452 (Cal)
 Can a reference tot eh valuation cell u/s 55A be made u/s 142) ?
 No …………………………………………..Smt Amiya Bala Paul v. CIT
(2003) 262 ITR 407 (SC)
 Where AO gathers material from records pertaining to an earlier year,
is he bound to give an opportunity to be heard ?
 Yes, as such material is covered u/s 142 (3)………….Ponkummam
Traders v. Additional ITO (1972) 83 ITR 508 (Ker)
 If the notice u/s 142 (1) is accompanied by a letter asking for
information, whethere non compliance of that letter amount to non-
compliance u/s 142 (1) ?
 No …………………………………. Calcutta Chromotype P Ltd. V. ITO ,
(1971) 79 ITR 442 (All)
 If the notice u/s 142 (1) called for information part of which was prior to
three years from the relevant PY then will the whole notice become
illegal ?
No. only the part pertaining to information prior to 3 years will be
101
illegal – if it is severable from the other parts ………Murlidhar Madanlal
v. CIT (1954) 26 ITR 231 (Pat)