Assessment Proceedings Process

Assessment Proceedings can be termed as seeds of litigation plant because it is the very seeds that germinate and forms the plant i.e Assessment Order that the assessee and department litigate about. We usually take little care of these seeds and which results in thorny plant for the assessee (high pitched assessment order) containing the thorns of appeals, huge demand, penalty, rectifications etc. As said “as you sow, so shall you reap “so if we take little extra care of these seeds then they can turn out to be a blossom plant, which will provide shelter in the coming assessment proceedings also.

If certain sunshine, manure, water, air in the form of following points are spread on the seeds then they can be grown up to the plant of our choice.
1) Writing The Date Of Receiving Of Notice:- Whenever a notice is received from the Income Tax Department, It is prudence to write the receiving date on the notice and the same should also be as far as possible be quoted in making the replies against the said notices. They help in demonstrating that whether the proper service of notice on time has been done or not, was sufficient time available to respond to the notice or not.
2) Power Of Attorney:- It is utmost necessary to take Proper Power Of Attorney and to get it signed by the person itself . If Possible then the stamp paper for Power Of Attorney should be purchased in the name of the assessee itself, as this can be a weapon to save the counsels in case any adverse comment or appearance is challenged by the assessee at the later stage.
3) Jurisdiction Should Be Challenged Within 30 Days Of Receiving The Notice:- After receiving the notice, if one feels that the jurisdiction is not correct then that has to be challenged/objected within 30 days of receiving of the notice. A formal letter to the effect should be given.
4) Notice U/S 143(2) Received Or Not:- If 143(2) notice is not properly served then that should also be challenged during assessment proceedings formally in writing. As it is statutory necessary for the A.O to properly serve notice u/s 143(2) within the stipulated time or else the proceedings becomes null and void.
5) Adjournments Should Be In Writing:- Many times adjournments are sought verbally by the counsels, accountants , assessee or any other person connected with the assessee . The same should be sought in writing , one copy should be kept for further records so that especially in case of 144 assessment or 271(1)(b) penalty the same acts as a savior.
6) Stick A Page Inside The Assessee’s File (Order Sheet Of The Counsel):- It is important to have one page sticked inside the cover of the file, so that as order sheets are maintained by the A.O, same can be maintained by the counsel. It helps in knowing the progress of the proceedings and are also very handy in litigation proceedings. Even adjournments taken should be mentioned in the sheet depicting the name of the person, who sought adjournment.
7) Writing Reply
i) Clearly give reference of the notice along with date of issuance and date of receiving
ii) Mention the date on the reply
iii) Always try to answer in sequence of the points as per the notice.
iv) Language used in the reply should be plain ,simple and humble. Ambiguity in language should not be there.
v) The photocopy of papers/documents furnished should be legible
vi) Enclosures should be Annexed properly and if voluminous in number then stick ons should be used on them. The Annexure number should be clearly mentioned along with the point of reply. The relevant amount or name or any other information as the case may be should also be highlighted.
vii) Though we have the habit of writing to the point replies but as the “E-assessments” are about to take place, it is prudent to write descriptive replies as per the requirement of the questioner. Example – While mentioning about the unsecured loans- the details of the documents and how the identity, creditworthiness and genuineness of the transaction is established should be clearly denoted.
viii) Always keep one copy of complete reply containing all its annexures for the office purpose also.
ix) In the office copy of the reply, it should be mentioned that the reply was submitted to whom and on which date.
8. Punctual And Full Compliance Should Be Done:- Unnecessary adjournments, delay in making compliances, not producing the requisite information should be avoided. It is necessary to have a cordial relationship with the A.O.
9. Reassessment Proceedings:- Return of income should always be filed in response to notice u/s 147. If return already filed is being relied upon then the acknowledgement copy of the same should also be placed on record with a proper covering.Always in writing seek reasons of reopening of assessments and do challenge the reasons by a separate reply.
10. Show Cause Notice:- As per the CBDT’S Scrutiny guidelines, It is incumbent upon the A.O to issue show cause notice on the proposed additions to be made in assessments. The show cause notice should be replied properly and it should be seen that it gives sufficient time for compliance or not.
11. Selected Reason For Scrutiny:- it is necessary to see the reason for scrutiny and do make its compliance fully. If possible then a separate reply about the main reason due to which scrutiny is taking place should be filed in detail. It also helps when the file is inspected by the department’s audit team. In case of selective scrutiny only i.e AIR etc the reason for which the scrutiny is selected can only be looked into by the A.O. In case the A.O makes further enquiry then in the reply it should be clearly brought in his knowledge that the case is only for selective scrutiny purpose.
12. Requests In Writing:- Many times the A.O possesses some information or have certain evidence or documents against the assessee. It is necessary that whenever any request is done to the A.O for getting any information/documents/ cross examination of people or asking for summoning of the people. The same should be done in writing.
13. Assessment Order – After the order is received the following points should be done
(i) The date of receiving the order should be noted.
(ii) 156 demand notice should be checked especially interest component u/s 234B.
(ii) If Appeal has to be filed, then the same should be done
(iii) If not filing any appeal and certain tax is payable the same should be deposited
(iv) If demand is huge then stay of demand application should be moved.
(v) Penalty notice u/s 271(1)(c ) are annexed with the order, the same should be responded.
(vi) if any rectification application u/s 154 is to be filed, the same should be done.
14. Order Sheet:- It is prudent to obtain the certified copy of order sheet after the assessment is over, especially in cases when appeals are preferred.
15. Arrangement Of File:- All the papers in the file should be properly tagged and unnecessary papers should be removed.
Though the aforesaid individually are just certain ways which are necessary during the assessment proceedings but collectively they can become a bright sunshine which can be helpful to show the light not only in assessment proceedings but also in the appellate proceedings as Assessment Proceedings are seeds of litigation plant