Assessment under Sec 143(1)
This is an initial checking of the return and the total income or loss computed after adjusting for any errors in calculation or inconsistencies. The intimation specifies the amount payable by the taxpayer, or the amount of refund due. In the intimation, there are two columns giving a comparison of the information filed in the return and the details considered by I-T.
A taxpayer must verify the details mentioned in the intimation. If there is no variance between the tax department and your calculations, nothing needs to be done. If you have paid less tax than that computed by I-T, the intimation becomes a Notice of Demand under Section 156. If you are convinced that the tax departments computation is correct, you will have to pay the balance tax. But if you feel it is incorrect, the same can be rectified with an application.
Assessment under Sec 143(3)
Here, I-T does a detailed scrutiny of the taxpayers return to authenticate his claims and deductions. If the assessing officer is of the view that the taxpayer has understated income, he will serve the taxpayer a notice to attend his office and produce evidence. The provisions of such a notice are governed by Section 143(2). In other words, for an assessment under Section 143(3), the assessing officer will have to serve a notice under Section 143(2). Notice under Section 143(2) should be served within six months from the end of the financial year in which the return is filed. The taxpayer or his representative will have to appear before the assessing officer and show all the documents of income, deductions and losses.
Tax returns are randomly selected for scrutiny and the notice does not indicate any crime. It simply indicates an investigation to find out if any income has escaped assessment. A taxpayer need not panic if his case is up for scrutiny and he must reply to all queries raised either through a letter or by appearing in person. The tax official can demand salary certificate or Form 16 (which has details of the gross salary paid and taxes deducted), rent receipts and rent agreement (if any rent exemption is claimed) and bank statements. The TDS certificate in Form 16A must be preserved and produced before the income tax official.
The notice has a predefined format with the taxpayers name, address and permanent account number, the year for which it has been issued and the date and time when the taxpayer should appear before the tax officer. If one plans to send an authorised representative, one must issue a valid power of attorney in his favour. If the assessee or his representative cannot be present, an adjournment application should be filed before the date of hearing.
Assessment under sec 144
Under this Section, an assessment is carried out as per the best judgement of the assessing officer. This is done if the taxpayer has not filed the return within the due date prescribed under Section 139(1), a belated return under Section 139(4) or a revised return under Section 139(5). Assessment under Section 144 can be made within two years from the end of the relevant assessment year.