PAPER-III

OFFICE PROCEDURE- INCOME TAX

SEC. 2(7) – ASSESSEE

• Assessee is a person who has to pay any tax or any other sum of money is
payable under Income tax Act and includes-

(a) every person of whom any proceeding under the IT Act has been taken
for the assessment of his income/loss or income/loss of any other person for which
he is assessable,

(b) any amount of refund due to him or to such other person for which he is
assessable;

(b) every person who is deemed to be an assessee under any provision of

this Act;

(c) every person who is deemed to be an assessee in default under any

provision of this Act

• There are three categories of assessees and they are:

1. Normal assessee

2. Representative Assessee or Deemed Assessee

3. Assessee-in-default

Normal Assessee

• any person against whom proceedings under Income Tax Act are going on or
pending

• any person who has sustained loss and filed return of loss u/s 139(3)

• any person by whom some amount of interest, tax or penalty is payable

under this Act;

• any person who is entitled to refund of tax under this Act.

Representative Assessee or Deemed Assessee

• A person may not be liable only for his own income or loss but he may also
be liable for the income or loss of other persons for e.g.

1. agent of a non-resident,

2. guardian of minor or lunatic, etc.

 • In such cases, the person responsible for the assessment of income of such
person is called representative assessee.

• And he is deemed to be an assessee

Assessee-in-default

• A person is deemed to be an assessee-in-default if he fails to fulfill his

statutory obligations.

• When any sum is payable as a result of any order passed under IT Act and if
the amount is not paid within the date specified in the notice, then he shall
be deemed to be an asseessee in default for the amount remaining unpaid

• If the deductor/collector fails to deduct /collect the tax at source or

deducts/collects tax but does not deposit it in the Govt. account, he is
known as assessee-in-default.

• Failure to pay installment of advance tax

Sec. 2(7A) – Assessing Officer

• An assessing Officer is a person who has jurisdiction to make assessment of

an assessee or tax payer who is liable to tax under IT Act

• He may be an Income-tax Officer, Assistant Commissioner, Deputy

Commissioner, Joint Commissioner or an Additional Commissioner

• AO is authorized by the Board to exercise or perform all or any of the

powers and functions conferred or assigned to an AO under the IT Act

SEC. 2(9) - ASSESSMENT YEAR

• In India the accounting period starts from 1st April and ends in next 31st
March

• “Assessment year” means the period of 12 months commencing on the 1 st

April immediately following the FY

• The period in which income earned is known as Financial year or Previous

year

• The Assessment Year is the year during which income of a person relating to
the relevant financial year is assessed to tax

Sec. 2(31) - PERSONS LIABLE UNDER INCOME TAX LAW

For the purpose of charging Income tax, the term person includes:

• An individual
 • A Hindu Undivided Family

• A company

• A firm

• An association of person or body of individuals

• A local authority and

• Every artificial judicial person not falling within above categories

SEC.2(24) - INCOME

As per IT act, income includes:

• profits and gains of business or profession

• dividend

• voluntary contribution received by a charitable or religious trust/education

institution or hospital

• value of perquisite

• special allowance

• interest, salary, bonus, commission or remuneration earned

• Capital Gains

• Compensations

• the profits and gains of any business of insurance carried on by mutual

insurance company or by a cooperative society.

• the profits and gains of any business of banking carried on by a co-operative

society with its members

• winning from lotteries, horse races, etc

• amount received under Keyman insurance policy including bonus

• W.e.f. 01.04.2017, Any gift without consideration, where the aggregate

value exceeds Rs. 50,000

RESIDENTIAL STATUS

Section 6(1) -Resident Status of Individual

An individual who fulfils any one of the following two condition is called
Resident
 a) if he stayed in India for a period of 182 days or more during the relevant PY

b) if he stayed in India for a period of 60 days or more during the relevant PY

and 365 days or more during the four preceding years

Note: Condition (b) does not apply to Indian citizen leaving India for
employment or being a crew member of an Indian ship and person of Indian origin
visiting India during relevant PY

Sec. 6(6)(a) – Ordinarily resident

• An Individual is said to be “ordinarily resident" in India in any PY if he

fulfills the following two additional conditions:

i. He should be a resident in India u/s 6(1) for atleast 2 out of 10 preceding

PYs or

ii. should be in India for a period of 730 days or more in the 7 preceding PYs.

• if both the above conditions are not fulfilled, then the resident individual
will be treated as “not ordinarily resident”

SEC. 139A-PERMANENT ACCOUNT NUMBER(PAN)

• PAN is a ten digit alphanumerical number issued by the Department

• 4th digit refers the status of the assessee

• 5th digit refers the first letter of the assessee’s name

• It is mandatory for every person to quote PAN in all correspondence,

returns, statement, etc sent to IT authorities

• PAN enables to link all transactions of the "person" with the department

• Every person should apply for allotment of PAN in Form 49A(Form 49AA in
case of non residents) if:

1) Total income exceeds the taxable limit

2) Any person carrying business or profession, if total sales, turnover or gross

receipts exceeds Rs. 5 lakhs

3) Charitable or religious trust

4) Exporters and importers

5) Central Excise and Sales tax assessees

6) Persons registered under the Central Sales Tax Act or State Sales Tax Laws
Sec. 139A(5) - Where PAN to be quoted

• In all returns/challans/correspondence with IT authority

• Sale or purchase of a motor vehicle other than two wheeler

• Opening an account with a bank or cooperative bank

• Making an application to a bank or cooperative bank for issue of credit or

debit card

• Opening an demat account

• Payment to a hotel or restaurant exceeding Rs. 50,000 at any one time

• Purchase of foreign currency exceeding Rs. 50,000 at any one time

• Payment to Mutual fund for purchase of its units exceeding Rs. 50,000

• Payment to a company or any institution for acquiring debendures/bonds

exceeding Rs. 50,000

• Payment to the RBI for acquiring its bonds exceeding Rs. 50,000

• Cash deposit with a bank or cooperative bank exceeding Rs. 50,000 during
any one day

• Purchase of bank drafts, Pay orders, banker’s cheque from a bank or

cooperative bank in cash exceeding Rs. 50,000 during any one day

• Time deposit with bank, cooperative bank, post office or any non banking
financial company exceeding Rs. 50,000 or aggregating more than Rs. 5
lakhs during a FY

• Payment to life insurance premium aggregating more than Rs. 50,000 during
a FY

• Payment for prepaid instruments to a bank, cooperative bank or any other

company or institutions aggregating more than Rs. 50,000 during a FY

• Sale or purchase of securities or shares exceeding Rs. 1 lakh per transaction

• Sale or purchase of immovable property exceeding Rs. 10 lakhs

• Sale or purchase of goods or services exceeding Rs. 2 lakhs per transaction

Sec. 139AA – Quoting of Aadhaar number

• Every person who is eligible to obtain Aadhaar number on or after

01.07.2017 shall quote it:
 i. In the application for the allotment of PAN

ii. In the Income tax return

• However if the person does not possess the Aadhaar number, the Enrolment
ID shall be quoted

• Every person having PAN and Aadhaar number should link both the numbers

• In case of failure to link the Aadhaar number with PAN, the PAN shall be
deemed to be invalid

SEC. 272B – PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SEC.
139A

• if a person fails to quote his PAN in any document referred in sec 139A(5)

• quotes/intimates a number which is false

• the AO may direct such person to pay a sum of Rs. 10,000/- by way of
penalty after giving him the opportunity of being heard in this regard

Sec. 14 - HEADS OF INCOME

There are 5 different Income heads viz.,

• Salaries including Allowances, value of Perquisites and Pensions.

• Income from House Property whether residential, commercial or let out.

• Profits & Gains of Business / Profession.

• Capital Gains - Short & Long Term.

• Income from other Sources including Bank Interest, Interest on Securities,

Lotteries, Cross word Puzzles, Races, Games, Gift(money or immovable
property) received by any person from any person on or after 1-4-2017 in
excess of Rs. 50,000

Sec. 139 – Return of Income

The following persons are required to file return of income as per Sec. 139:

• Every individual/HUF/AOP/BOI/artificial juridical person, if their total

income without claiming deductions u/s 80 exceeds taxable limit

• Every company or Firm regardless of quantum of income or loss

• Every charitable or religious trusts in receipt of income being voluntary

contributions, if its total income without giving exemption u/s 11 or 12
exceeds taxable limit
 • Chief Executive Officer of every Political party, if income of party without
claiming deductions exceeds taxable limit

• Any university, college or other institutions whether it has income or loss

• Resident individual who have an asset or financial interest in an entity

located outside of India

• Resident individual who is a signing authority in any account located outside

India

SEC. 140 – RETURN BY WHOM VERIFIED

• w.e.f 01.10.2014, the word ‘signed’ is substituted by verified

ASSESSEE Person who can verify the return(SIGNATORY)

Individual • by himself if he is in India

• by himself or person authorized by him if he is outside India
• by legal guardian or person competent to act on his behalf for
mentally incapacitated
• By authorized person in case the individual not possible to verify the
return
local principal officer
authority

political chief executive officer

party

AOP any member or principal officer

HUF by Karta, in his absence in India or is mentally incapacitated any other

member of HUF

Company • MD, if there is no MD then Director

• POA when company non resident in India
• liquidator when company in liquidation
• principal officer when management taken over Govt
Partnership Managing partner. Any other partner in the case of managing partner not able
Firm to sign
Prescribed Return forms

ITR FORMS DESCRIBTION

ITR 1 (SAHAJ) For an Individual having Income from Salaries, one house property,
other sources (Interest etc.) and having total income upto Rs.50 lakh

ITR 2 For Individuals and HUFs not carrying out business or profession but
having income from capital gains, lottery horse racing, multiple house
properties, etc
ITR 3 For an Individual/ HUF having income from a business or profession

ITR 4 (SUGAM) For Individuals, HUF, Firm who have opted for presumptive taxation
scheme u/s 44AD, ADA & AE. The old ITR-4S has been renamed ITR-4
ITR 5 For Firms, AOPs and BOIs, AJP, Cooperative Societies & Local authorities

ITR 6 For Companies other than companies, claiming exemption u/s

11(income from property held for charitable or religious trust)
ITR 7 Persons who are required to furnish return u/s 139(4A)/(4B)/4(C)/4(D)
Political party, Trust, University, College or other Institutions, Scientific
Research association, etc
ITR V It is the acknowledgement of filing the return of income.

Sec. 139(1) – Time limit for filing return of income

Different situations Due date

Assessee Who Is Required To Furnish Audit Report u/s 92E in November 30

Relation To International Transactions/Specified Domestic
Transactions

Company September 30

Other than a company where the accounts are required to be September 30

audited
Assessee is a working partner in a Firm and whose accounts are September 30
required to be audited

Any other case July 31

SEC. 139(3)- LOSS RETURN

• For Individuals not doing business or profession, it is not mandatory to file a

return if he has sustained any loss during the PY

• However for Firms, companies and Individuals/HUF involved in business or

profession have to file return even if they have suffered losses in any PY

• An assessee cannot carry forward or set off his loss u/s 80 against income
in the same or subsequent year unless he has filed a return of loss u/s
139(3)

• A loss under the head “profits and gains of business or profession” or

“speculation business” or “owning and maintaining of horse races” or
“capital gains” can be carried forward only if the return of loss is furnished
within the time allowed u/s 139(1)

Sec. 139(4) – Belated return

• Any return filed after the due date specified u/s 139(1) is a belated return.

• If ROI is not furnished within the time allowed u/s 139(1) or notice u/s
142(1), the person may furnish the ROI of any PY at any time before:

i. the expiry of 1 year from the end of the relevant AY or the completion of
assessment which ever is earlier(applicable for AY upto 2016-17)

ii. The end of relevant AY or the completion of assessment which ever is

earlier(applicable from AY 2017-18)

Consequences of late submission

• The assessee is liable for penal interest u/s 234A

• A penalty of Rs. 5,000 may be imposed u/s 271F if belated return is

submitted after the end of the AY(upto AY 2017-18)

• From AY 2018-19, the assessee shall be liable for late filing fee u/s 234F

a. Rs. 5,000, if the ROI is furnished after the due date but on or before 31 st
December of the AY

b. Rs. 10,000, if ROI is furnished after 31st December of the AY

• In case where the total income does not exceed Rs. 5 lakhs, the late filing
fee shall not exceed Rs. 1,000

• If return of loss is submitted after due date, the benefit of carry forward of
losses cannot be done
• If return is submitted belated, the exemption/deduction u/s 10A, 10B, 80IA,
80IAB, 80IB, 80IC, 80ID and 80IE will not be available

Sec. 139(5) – Revised return

• If there are any omission or wrong statement in the original return filed, a
revised return can be filed u/s 139(5)

• The conditions for filing revised return are:

Upto AY 2016-17 ❖ Only if original Return is furnished within due date

❖ A belated return filed u/s 139(4) cannot be revised

From AY 2017-18 ❖ Any person having furnished a return u/s 139(1)/(4) may
furnish a revised return.
❖ From AY 2017-18 even a belated return can be revised

• Time limit for filing revised return u/s 139(5):

Upto AY 2017-18 ➢ At any time before the expiry of one year from the end
of the relevant AY or before the completion of
assessment whichever is earlier

From AY 2018-19 ➢ At any time before the end of the relevant AY or before
the completion of assessment whichever is earlier

• An assessee can file revised return as may number of times upto the time
limit given u/s 139(5)

• There is no need for the assessee to seek permission to revise a return. It is

a right of the assessee to submit such return u/s 139(5)

Sec. 139(9) – Defective or incomplete return

• A return may be declared defective u/s 139(9) on account of incomplete or

inconsistent information in the return or in the schedules

• If AO considers the ROI filed by assessee is defective, then he may intimate

the defect to the assessee

• The time limit for the assessee to rectify the defect is within 15 days from
date of intimation.

• If the defect is not rectified within the given time the AO shall treat the
return as invalid return
Sec. 2(1) – Advance Tax

What is advance tax and when to pay?

• Advance tax refers to paying a part of your taxes before the end of the FY in
which income is earned

• Advance tax is payable if your tax liability is more than Rs. 10,000 in a FY. It
should be paid in the year in which the income is received.

• Payment to be made in Challan No. ITNS 280 under head 100

• Any amount paid by way of advance tax on or before 31st March shall also
be treated as advance tax paid during FY ending on that day

Person not liable to pay advance tax

• A resident senior citizen (i.e., an individual of the age of 60 years or above

during the relevant PY) not having any income from business or profession is
not liable to pay advance tax

• An assessee who has opted for presumptive taxation scheme under

section 44AD & 44ADA

Sec-218 : Assessee in default

• If assessee does not pay adv. tax on the basis of his current income or fails
to pay any installments of AT then he shall be deemed to be an assessee in
default in respect of such advance tax/installments of AT

Sec. 211 - Due date for payment of Advance Tax Instalment

Up to AY 2017-18

For non corporate

Due Date For corporate taxpayers taxpayers

On or before 15th 15% of advance tax –

June

On or before 15th 45% of advance tax 30% of advance tax

September

On or before 15th 75% of advance tax 60% of advance tax

December

On or before 15th 100% of advance tax 100% of advance tax

March
 Sec. 211 - Due date for payment of Advance Tax Instalment
From AY 2018-19

For taxpayers other than Person who have opted

person who have opted presumptive taxation
presumptive taxation scheme scheme u/s 44AD &
Due Date u/s 44AD & 44ADA 44ADA

On or before 15th June 15% of advance tax Nil

On or before 15th 45% of advance tax Nil

September

On or before 15th 75% of advance tax Nil

December

On or before 15th March 100% of advance tax 100% of advance tax

SEC. 140A-SELF ASSESSMENT TAX

➢ Self Assessment tax means any balance tax paid by the assessee on the
computed income before filing the Return of income.

➢ it shall be computed after taking into account:

• REBATE U/S 87A

• TAX RELIEF( U/S 89)

• TDS/TCS/ADVANCE TAX

• INTEREST U/S 234A/234B/234C

➢ If 140A tax paid falls short of the aggregate tax and interest, then the
amount so paid shall first be adjusted towards interest payable and the
balance towards tax payable

➢ Payment to be made in Challan No. ITNS 280 under head 300

Interest Payable By Assessee

• Under the Income-tax Act, different types of interests are levied for various
kinds of delays/defaults.

• Interest u/s 234A is levied for delay in filing the return of income

• Interest u/s 234B is levied for non-payment or short payment of advance tax
 • Interest u/s 234C is levied for non-payment or short payment of installments
of advance tax (i.e., deferment of advance tax).

Interest u/s 234A

• If a return of income is furnished after the due date or is not furnished, the
assessee is liable to pay interest u/s 234A

Rate of interest and period of levy of interest

• rate of interest @ 1% per month or part of month

• the period for which interest payable is

1. from the due date of filing of ROI to the date of filing of ROI

2. From the due date to the date of completion of assessment u/s 144 where
no return has been furnished

Amount liable to interest under section 234A

• it is charged on any balance tax payable which is determined on total

income u/s 143(1), 143(3), 147 or 153A

• and the tax determined as reduced by advance tax, TDS/TCS, relief u/s
90/90A/91, MAT or AMT credit

Important points

• in case where the entire tax is paid u/s 140A before the due date of filing of
ROI, then no interest u/s 234A is chargeable even ROI filed belatedly

• if the entire tax is paid u/s 140A after due date and before filing of ROI,
then interest is chargeable from the due date to the payment u/s 140A

Interest u/s 234B

• As per Section 208, advance tax shall be payable by the taxpayer during the
FY if estimated tax liability during that year is Rs. 10,000 or more.

• Interest under section 234B is levied in following two cases:

a)When the taxpayer has failed to pay advance tax though he is liable to pay
advance tax or

b) Where the advance tax paid by the taxpayer is less than 90% of the
assessed tax

Assessed tax means the tax on total income determined u/s 143(1) or on regular
assessment and reduced by TDS/TCS, Relief u/s 90/90A/91, MAT and AMT credit
Rate of interest

• Interest is levied @ 1% per month or part of a month.

Amount liable for interest

• Interest is levied on the amount of unpaid advance tax. If there is a shortfall

in payment of advance tax, then interest is levied on the amount by which
advance tax is short paid.

Period of levy of interest

• Interest under section 234B is levied from the first day of the AY, i.e., from
1st April to the date of determination of income under section 143(1) or
completion of regular assessment

Interest u/s 234C

• Interest is payable u/s 234C, if the assessee has not paid advance tax or if
the AT paid in installments is less than the required amount

• the taxpayer is liable to pay simple interest @ 1% per month or part of a

month for short payment/ non-payment of instalment(s) of advance tax

• Interest is levied for a period of 3 months, in case of short fall in payment of

1st, 2nd and 3rd installment and for 1 month, in case of short fall in
payment of last installment

• W.e.f. AY 2017-18 interest u/s 234C is payable as follows:

• In case of taxpayers who opted for presumptive taxation scheme u/s 44AD
or 44ADA, interest shall be levied if advance tax paid on or before 15th
March is less than 100% of advance tax payable.

• Simple interest @1% for 1 month shall be payable for the shortfall of
advance tax

• Interest under section 234C is not levied, if, the shortfall in payment of
advance tax is due to failure to estimate the amount of capital gains or
income from winning from lotteries, crossword puzzle, etc. or income from
a new business

Interest u/s 234D

• Interest u/s 234D is charged on excess refund granted to the assessee

• Interest is charged in any of the following situations:

1. refund is granted u/s 143(1) but no refund is due on regular assessment

 2. refund granted u/s 143(1) exceeds the refund arrived on regular assessment

Rate of interest

• Interest @ 0.5% per month or part of the month is chargeable

Period for which interest is payable

• Interest is chargeable from the date of grant of refund u/s 143(1) to the
date of regular assessment

Amount on which interest is payable

• Whole of the amount refunded or excess of amount refunded u/s 143(1)

Sec. 244A - Interest payable to assessee

• Interest is payable to assessee where any refund arises due to excess

payment of tax

• no interest is payable if the refund amount is less than 10% of the tax
determined u/s 143(1) or on regular assessment

• Interest is calculated @ 0.5% for every month or part of the month

• W.e.f. 01.06.2016, interest is calculated in the following modes:

1. Refund due to excess payment of TDS/TCS and Advance tax

(a) Interest is calculated from 1st day of AY to the date of grant of refund in
cases where ROI is filed within due date

(b) from date of filing ROI to the date of grant of refund in cases where ROI
is filed after due date

2. Refund due to excess payment of 140A

Interest is calculated from the date of filing ROI or date of payment of 140A
whichever is later to the date of grant of refund

SEC. 142(1) – Notice for Enquiry Before Assessment

• If the assessee has not submitted ROI within the time allowed u/s 139(1) or
before the end of the relevant AY, the AO shall issue notice u/s 142(1)
requiring him to submit the ROI within the date specified in the notice.

• Such notice can be issued at any time after the expiry of time limit given
u/s 139(1)
• The AO shall ask the assessee for production of documents or accounts as he
may require by issue of notice u/s 142(1).

• However AO cannot call for production of any accounts pertaining to a

period more than 3 years prior to the PY.

• The AO shall require the assessee to furnish information including statement

of all assets and liabilities whether included in the account.

• However to call for statement of all assets and liabilities not included in the
accounts, the AO has to get previous approval of the JCIT/Addl. CIT

• Failure to comply with notice u/s 142(1) shall attract penalty u/s
272A(1)(d) amounting Rs. 10,000(w.e.v AY 2017-18)

Sec. 142(2A) to (2D) Giving direction for audit

• At any stage of the proceedings, AO may direct the assessee u/s 142(2A) to
get the accounts audited by an CA with the previous approval of the CCIT if

1. considering the nature and complexity of the accounts,

2. volume of the accounts,

3. doubts about the correctness of the accounts,

4. multiplicity of transactions in the accounts or

5. in the interests of the revenue

➢ such audit report should be submitted in Form 6B by the CA duly signed and
verified by him within the period specified by the AO

➢ CA shall be nominated by CCIT

• The assessee should be given an opportunity of being heard before the

direction for audit

• The expenses to such audit including the fee for CA has to be fixed by CCIT
and shall be payable by Govt.

• Non compliance by assessee will lead to best judgment assessment u/s 144.
Sec. 143(1) – Summary assessment without calling the assessee

• Under this section the AO can complete the assessment without passing a
regular assessment order

• The assessment is completed on the basis of return submitted by the

assessee

• The total income of an assessee will be computed after making the

following adjustments to the total income in the return viz.,

a) any arithmetical error, in the return

b) any incorrect claim,

c) disallowance of loss claimed where the assesee is not eligible for

adjustment of loss due to delay in filing of ROI

d) disallowance of expenditure indicated in audit report but not reflecting in

return,

e. disallowance of some deductions claimed where the assessee is not eligible

for such claim due to late filing of ROI,

f. additional income reflecting in Form 26AS but not included in ROI

• Before making any adjustment, an opportunity should be provided to the

assessee to explain and rectify the same within 30 days of issuance of such
letter

• After making adjustments or corrections an intimation under this section

shall be prepared or generated and sent to the assessee specifying the sum
determined to be payable by or refundable to assessee.

• No intimation shall be sent after the expiry of one year from the end of the
FY in which the return is made

• In case where no sum is payable or refundable or where no adjustments has

been made, the acknowledgement of the return shall be deemed to be the
intimation

SEC. 143(2)- ISSUE OF NOTICE

• In the return filed u/s 139 or in response to the notice u/s 142(1), if AO has
reason to believe that the assessee has

➢ understated the income

➢ computed excessive loss

➢ underpaid the tax

• then the AO may serve a notice on the assessee requiring him to attend his
office or to produce evidence in support of his claim

• Such notice shall be served on the assessee within a period of 6 months from
the end of the FY in which return is filed

• Failure to comply with notice u/s 143(2) shall attract penalty u/s
272A(1)(d) amounting Rs. 10,000(w.e.v AY 2017-18)

SEC. 143(3) – SCRUTINY/REGULAR ASSESSMENT

• Notice u/s 143(2) will be served on the assessee by AO directing him to

produce any evidence which he rely on support of his claim for the ROI filed
u/s139

• After hearing such evidence produced by the assessee and after taking into
account all relevant materials which the AO has gathered, he shall pass an
assessment order determining the total income or loss of the assessee and
the sum payable by or refundable to the assessee

• If assessment order u/s 143(3) is passed without issuing any notice u/s
143(2), then the said order becomes invalid

SEC. 144- BEST JUDGEMENT ASSESSMENT

• If assessee fails to file ROI as required u/s 139 or

• fails to comply to the notice u/s 142(1) or

• fails to comply with the direction to get his accounts audited u/s 142(2A) or

• If after having filed ROI fails to comply with the notice u/s 143(2) requiring
his presence or production of evidence or documents or

• If the AO is not satisfied about the correctness or the completeness of the

accounts of the assessee or if no method of accounting has been employed
by the assessee

• Then the AO after considering all relevant material which he has gathered
shall make an assessment of the total income or loss to the best of his
judgment

• In best judgment assessment, an assessee has a right to file an appeal

before CIT(A) u/s 246A or to make an application for revision u/s 264 to the
Pr.CIT
 • The best judgment assessment can only be made after giving the assessee
an opportunity of being heard

• A refund cannot be granted u/s 144

• Time limit for making assessment u/s 143(3) or 144:

For AY 2017-18 or earlier Within 21 months from end of AY in which income was
first assessable

For AY 2018-19 Within 18 months from end of AY in which income was

first assessable
For AY 2019-20 Within 12 months from end of AY in which income was
first assessable

SEC. 147 – INCOME ESCAPE ASSESSMENT

• If the AO has reason to believe that any income chargeable to tax has
escaped assessment for any AY then

• The AO may assess/reassess such income

• Any other income which has escaped assessment and which comes to the
notice of the AO during the course of the proceeding u/s 147 can also be
included in the assessment

➢ If AO wants to take action u/s 147 after the expiry of 4 years from the end
of the AY where the original assessment was made u/s 143(3)/147 , the
following conditions should be satisfied:

a) The AO must have reason to believe that income or profits or gains

chargeable to income tax had escaped assessment

b) Also such escapement is due to omission or failure on the part the assessee
to disclose income fully or to make ROI u/s 139 or in response to notice u/s
142(1) or 148

• Only condition (a) should be satisfied:

i. If the AO wants to take action within 4 years from the end of the AY where
the original assessment was completed u/s 143(1), 143(3), 144 or 147

ii. If the AO wants to take action after the expiry of 4 years but not beyond 6
years from the end of the AY where the original assessment was completed
u/s 143(1) or 144
SEC. 148 – ISSUE OF NOTICE FOR INCOME ESCAPED ASSESSMENT

• If the AO has reason to believe that any income chargeable to tax has
escaped assessment for any AY then

• Before making assessment, reassessment, the AO he will serve notice u/s

148 requiring the assessee to file return of income within specified period

• ROI to be filed as per sec. 139

• AO should record his reasons before issuing notice

SEC.149 – Condition and time limit for issue of notice U/S 148

RELEVANT AY CONDITION/INCOME LIMIT

Upto 4 Years from the end of relevant For Any Amount Of Income Escaping
AY Assessment

Beyond 4 Years And Upto 6 Years from Only If Income Escaping Assessment Is Rs. 1
the end of relevant AY Lakh Or More

Beyond 4 Years And Upto 16 Years from Income Escaping Assessment Relates To Any
the end of relevant AY Assests Located Outside India

• SEC. 151 – AUTHORITY/SANCTION FOR ISSUE OF NOTICE U/S 148

Time Limit Authority

Upto 4 Years AO shall issue notice u/s 148 only if JCIT/ADDL.

CIT is satisfied that it is a fit case for reopening

After the expiry of 4 years from AO shall issue notice u/s 148 only if
the end of the relevant AY PR.CCIT/CCIT OR PR.CIT/CIT is satisfied that it
is a fit case for issue of such notice

• Time limit for making assessment u/s 147:

Notice u/s 148 issued before Within 9 months from end of FY in which notice u/s 148
01.04.2019 is served

Notice u/s 148 issued on or Within 12 months from end of FY in which notice u/s
after 01.04.2019 148 is served
SEC. 156 – NOTICE OF DEMAND

• Where any tax, interest, penalty, fine or any other sum is payable
consequent to any proceedings under IT Act, then AO will serve the assessee
a notice of demand in the Form No. 7 specifying the sum so payable

• This notice directs the assessee to pay the amount mentioned in the notice
within 30 days of receipt of notice

• where any sum is determined to be payable by the assessee u/s 143(1), then
intimation shall be deemed to be a notice of demand for the purposes of
this section.

RECTIFICATION OF MISTAKE UNDER SECTION 154

• Sometimes there may be a mistake in any order passed by the Assessing

Officer.

• In such situation, mistake which is apparent from the record can be

rectified under section 154

• An Income-tax authority may rectify the following orders:

a. any order passed under any provisions of the Income-tax Act

b. any intimation sent under section 143(1)

c. any intimation sent under section 200A(1) (processing of TDS return)

d. any intimation under section 206CB (processing of TCS return)

• If due to rectification the tax liability of the taxpayer is enhanced or refund

is reduced, the taxpayer shall be given an opportunity of being heard

• If any order is the subject-matter of any appeal or revision, such order

cannot be rectified by the AO.

• The AO can rectify only those matters which are not decided in such appeal

• The IT authority can rectify the mistake on its own

• The assessee can also intimate the mistake to the IT authority by making an
application to rectify the mistake.

• If the order is passed by the CIT (A), he can can rectify mistake which has
been brought to notice by the AO or by the assessee

• No order of rectification can be passed after the expiry of 4 years from the
end of the FY in which order to be rectified was passed
• In case an application for rectification is made by the assessee, the
authority shall rectify the order or refuse within 6 months from the end of
the month in which the application is received by the authority

SEC.263 – REVISION OF ORDER

• the Pr. CIT/CIT has power u/s 263 to revise any order passed by AO which is
erroneous and prejudicial to the interest of revenue

• Pr. CIT/CIT on his own can call for record and examine and revise the order
u/s 263

• the matter which are not subject matter of appeal can be revised

• revision order shall be enhancing/ modifying/cancelling assessment &

directing fresh assessment

• the assessee should be given an opportunity of being heard before passing

the order

• time limit for passing order u/s 263 is two years from the end of the FY in
which the order was passed

• Assessee has right to appeal before ITAT against the order u/s 263

SEC.264 – REVISION OF OTHER ORDERS

• The PCIT/CIT has power to revise the order u/s 263

• an assessee aggrieved by an order passed by the AO may file an application

before the PCIT/CIT for revising the orders passed by the AO.

• The PCIT/CIT shall not revise any order which is pending before appeal or
the time limit for filing an appeal before CIT(A) has not yet lapsed and the
assessee has not made such appeal

• The application should be made within one year from the date on which the
order was communicated to him

• Every application for revision u/s 264 should be accompanied by a fee of

Rs. 500

• Before passing order, the assessee should be given an opportunity of being

heard

• Time limit for passing order is within one year from the end of the FY in
which the application was filed

• The assessee has no right to go for appeal against the order u/s 264
 Sec. 246A – APPEAL BEFORE CIT(A)

• First appeal against the order of the AO lies before CIT(A)

• An assessee or deductor or collector aggrieved by an order passed by the AO

shall file an appeal before CIT(A)

• The appeal should be filed in Form No. 35 along with statement of facts and
grounds of appeal

• No appeal shall be admitted when assessee has not paid tax due on returned
income and in case of non filing of return, no advance tax was paid
(however CIT(A) can exempt)

• Appeal should be made within 30 days from the date of service of

order/notice of demand

• However, CIT(A) can condone the delay in filing the appeal if genuine
reason exists for delay

• Appeal should be accompanied by a fees as below:

Assessed total income of Rs. 1 lakh or less Rs. 250

Assessed total income of more than Rs. 1 lakh but less than Rs. Rs. 500
2 lakhs

Assessed total income of more than Rs. 2 lakhs Rs. 1000

• Assessee has right to being heard either in person or through AR

• During hearing of appeal, the CIT may allow the assessee to add any
grounds of appeal which was not specified in the original grounds of appeal
if he is satisfied the omission was not willful

• Before disposing off appeal, the CIT may make enquiry as he thinks fit. He
may also direct the AO to make enquiry and report the same

• The order shall be communicated to the assessee and PCCIT/CCIT/PCIT/CIT

• CIT(A), where it is possible shall dispose off the appeal within a period of 1
year from the end of the FY in which appeal was filed

Sec. 251 – POWERS OF CIT(A)

In disposing of an appeal, the Commissioner (Appeals) shall have the

following powers—
• in an appeal against an order of assessment he may confirm, reduce,
enhance or annul the assessment

• in an appeal against an order imposing a penalty, he may confirm or cancel

such order or enhance/reduce the penalty

• he may pass such orders in the appeal as he thinks fit.

• The Commissioner (Appeals) shall not enhance an assessment or a penalty or

reduce the amount of refund unless the assessee was given a reasonable
opportunity of showing cause against such enhancement or reduction

• In disposing of an appeal, the Commissioner (Appeals) may consider and

decide any matter which was not raised before the Commissioner (Appeals)
by the assessee

Sec. 253 – Appeal to Appellate Tribunal

• The Income tax Appellate Tribunal(ITAT) is constituted by the Central

Government and functions under the Ministry of Law

• Appeal to the ITAT can be filed by the aggrieved assessee or by the

Department

• Appeal to ITAT is to be filed in Form No. 36 within a period of 60 days from

the date on which order is communicated to the assessee or to the
Department

• Within 30 days in the case of appeal against order u/s 158BC(search

assessment cases)

• The ITAT may admit an appeal even after the due date if it is satisfied that
there was sufficient reason for the delay

• Appeal should be accompanied by a fees as below:

Assessed total income of Rs. 1 lakh or less Rs. 500

Assessed total income of more than Rs. 1 lakh Rs. 1000

but less than Rs. 2 lakhs
Assessed total income of more than Rs. 2 lakhs 1% of assessed income subject to
maximum of Rs. 10000

• Appeal should be filed by the department only in cases where the tax effect
exceeds Rs. 10 lakhs(Tax effect is the difference between the tax on total
 income assessed and tax on total income arrived by giving effect to Appeal
order)

• ITAT after giving both the parties opportunity of being heard, shall pass such
orders as it thinks fit

• ITAT where it is possible may pass an order within a period of 4 years from
the end of the FY in which the appeal was filed

• ITAT shall send a copy of order to the assessee and department

Sec. 254 – Rectification of ITAT order

• Any mistake in the order passed by ITAT which is apparent from record may
be rectified by the Tribunal.

• Mistake can be brought to the notice of Tribunal by the assessee or AO for

rectification

• Rectification can be done by ITAT on its own also

• If rectification has the effect of enhancing an assessment or reducing a

refund, tribunal should give reasonable opportunity of being heard to the
assessee

• The tribunal can rectify order passed by it within 4 years from the date of
the order

Time limit for filing appeals

Appeal Time limit Tax effect if appeal is

before preferred by Dept.

High Court Appeal shall be made within 120 days More than Rs. 20 lakhs
from the date of ITAT order received by
assessee or by the CCIT/PCIT
Supreme Within 60 days from the date of More than Rs. 25 lakhs
Court communication of order of HC

• Sec. 192 to 206AA - TDS

• Any person (deductor) who is liable to make payment of specified

nature(salary, interest, rent, commission, etc) to any other person
(deductee) shall deduct tax at source if the payment exceeds the specified
limit. The deductor should remit the TDS into the account of the Central
Government
 • Person responsible for deducting tax are:

CENTRAL/STATE DRAWING AND DISBURSING OFFICER(DDO)

GOVERNMENT

PRIVATE/PUBLIC PRINCIPAL OFFICER

COMPANIES

FIRMS PARTNERS

HUF KARTHA

TRUST MANAGING TRUSTEES

SEC. 200 - Duty of person deducting tax

(1) Any person deducting any sum in accordance with the TDS provisions shall
pay within the prescribed time the sum so deducted to the Credit of the
C.G. or as the Board directs.

(2) Any person deducting any sum in accordance with the TDS provisions, after
paying the tax deducted to the Govt. Account should file a TDS return for
such period within due date

(3) TDS should be paid within 7 days from end of the month in which deduction
was made

(4) TDS deducted on March should be paid before 30th April

Sec. 203 - Tax deduction and collection account number (TAN)

• Tax Deduction Account Number or Tax Collection Account Number is a 10-

digit alphanumeric number issued by the Income-tax Department

• TAN is to be obtained by all persons who are responsible for deducting tax
at source (TDS) or who are required to collect tax at source (TCS)

• Application in Form 49B should be submitted for allotment of TAN

• First 3 alphabets of TAN represent the jurisdiction code, 4th alphabet is the
initial of the name of the TAN holder who may be a company, firm,
individual, etc

• Deductor or Collector should quote TAN in all challans, TDS/TCS

certificates, quarterly returns and in all other communications with
department
Consequences of not quoting TAN

• If Deductor or collector fails to obtain TAN then he shall be liable to pay

penalty upto Rs. 10,000 u/s 272BB(1)

• If Deductor or collector fails to quote TAN in return, challan, certificates or

any other documents or quotes wrong TAN, then he shall be liable to pay
penalty of Rs. 10,000 u/s 272BB(1A)

Time limit for filing TDS/TCS Returns

th th st st
Quarter
30 June 30 Sep 31 Dec 31 March
ending
st st st st
Due date
31 July 31 October 31 Jan 31 May

Forms for filing e-TDS returns

Form 24Q - For salary deductions

Form 26Q - Non salary

Form 27Q - For non residents

Sec. 194IA – TDS on Transfer of certain immovable property other than

agriculture land

• W.e.f 01.06.2013, for any sale/transfer of immovable property other than

agricultural land, TDS should be deducted where consideration exceeds Rs.
50 lakhs

• TDS @ 1% to be deducted at the time of payment or at the time of giving

credit to the seller, whichever is earlier

• This TDS has to be deposited along with Challan/statement in Form 26QB

within 7 days from the end of the month in which TDS was deducted

Sec. 194IB- TDS on Rent paid by Individual / HUF

• W.e.f 01.06.2017, any Individuals & HUF who are not under tax audit (under
section 44AB) has to deduct TDS for rent payments to any resident if it is Rs.
50,000 or more per month

• TDS @ 5% should be made in the last month of PY(i.e. March) or in the

month when the premises is vacated
 • Deposit of TDS to be made within 30 days from the end of month where tax
was deducted along with Challan/statement in Form 26QC

Sec. 197A – No deduction of tax

• The individuals getting payments in the nature of Interest on Securities,

Dividend, Bank/Company Deposits, NSS, Interest on Units, rental receipts &
insurance commission which is below the taxable limit shall submit Form
15G/15H to the deductor for no deduction of TDS

• These forms can be used only by a person having valid PAN

• Form 15G is for the depositors below the age of 60 Years and Form 15H for
above 60 years.

Sec. 200A – Processing of TDS returns

• The computerized processing of TDS returns is made after making following

adjustments:

a) Any arithmetical error in return or

b) Any incorrect claim

• After making the above adjustment, the tax and interest would be
calculated

• An intimation will be sent to the deductor informing about his tax liability

• The time limit for processing is within one year from the end of the FY in
which the return is filed

Sec. 203 –Time limit for issue of TDS certificate

Form No. Periodicity Time limit

16 Annual st
By 31 May of the FY immediately following the PY in
which the tax was deducted

16A Quarterly Within 15 days from the due date of furnishing the
statement of TDS for each quarter

16B Within 15 days from due date of furnishing statement in Form 26QB

16C Within 15 days from due date of furnishing statement in Form 26QC
Section 206C - TAX COLLECTED AT SOURCES

• TCS is collection of tax by the sellers(Collector) of certain specified goods

from the buyers(Collectee) at the time of purchase

• Specified goods are Alcoholic liquor for human consumption, Tendu leaves,
Timber obtained under a forest lease, Scrap, charcoal, wood oil, natural
varnish and lease for parking lot & toll plaza

• For non deduction of TCS, declaration in Form 27C should be submitted by

buyer having valid PAN to seller

Collector Every Person being a seller(State & Central Government, Local

authority/ corporation, Company, Firm, Society and
Individual/HUF(only covered u/s 44AB)

Collectee The buyer(Other than State & Central Government, Public Sector
Company, Retail seller)

Time for Collection At the time of receipt or at the time debiting the account of the
buyer

Time for deposit Within a week from the end of the month during which payment
was received

TCS Return Form 27EQ

Due date for filing Same time limit as TDS return

TCS returns

TCS Certificate Form 27D(Should be issued within 15 days from the due date of
furnishing the statement of TCS for each quarter)

Sec. 201 - Consequences of failure to deduct or pay TDS

• Where any person required to deduct TDS under IT act does not deduct or
after deducting fails to pay the whole or any part of the tax then such
person shall be deemed to be an assessee in default in respect of such tax

• No order shall be made deeming a person to be an assessee in default after

the expiry of 7 years from the end of the FY in which payment was made or
credit was given.
Sec. 201(1A): If deductor fails to deduct the whole or any part of the tax or after
deducting fails to pay the tax has to pay simple interest

(i) @ 1% for every month or part of a month on the amount of tax non
deducted. It is calculated from the date on which such tax was deductible to the
date on which such tax was deducted; and

(ii) @ 1.5% for every month or part of a month on the amount tax not paid.
It is calculated from the date on which such tax was deducted to the date on
which such tax was actually paid

• such interest shall be paid before filing of respective e-TDS return

Sec. 206C(7) – Consequences of failure to collect or pay Tax

• If person responsible for collecting tax at source fails to collect the tax or
after collecting tax fails to credit into the Govt. account, he shall be liable
to pay interest u/s 206C(7)

• Interest is payable on non payment or short payment @ 1% for every month

or part of the month from the date on which tax was collectible to the date
on which the tax was actually paid

• such interest shall be paid before filing of respective e-TCS return

Sec. 234E – Failure to file TDS/TCS returns

• If deductor/collector fails to file the TDS/TCS return as prescribed u/s

200(3) or 206C(3) within the time limit then he shall be liable to pay by way
of fee of Rs. 200 for every day during which the failure continues

• The amount of fee shall not exceed the amount of tax deductible or
collectible as the case may be

• The amount of fee shall be paid before the submission of TDS/TCS return

• The provisions of this section shall apply on or after the 1st day of July,
2012

Sec. 206AA - Requirement to furnish PAN by Deductee

• Any person (deductee) entitled to receive any sum or income or amount on

which tax is deductible under TDS provisions

• shall furnish his PAN to the person responsible for deducting such tax
(deductor)

• failing which, tax shall be deducted at the higher of the following

i. at the rate of 20%

ii. at the rates in force

Sec. 206CC - Requirement to furnish PAN by Collectee

• W.e.f 01.04.2017, Collectee should furnish his PAN to the person responsible
for collecting tax(Collector)

• Failure to which, tax shall be collected twice the normal rate or at the rate
of 5% whichever is higher

SEC. 271C Penalty for failure to deduct tax

• If any person fails to deduct the whole or any part of the tax as required by
the TDS provisions

• Within the prescribed time limit

• then such person shall be liable to pay penalty of sum equal to the amount
of tax which such person failed to deduct

• Any penalty imposable under Sec. 271C shall be imposed by the Joint
Commissioner

SEC. 271CA Penalty for failure to collect tax at source.

• If any person fails to collect the whole or any part of the tax as required by
the TCS provisions

• then such person shall be liable to pay penalty equal to the amount of tax
which such person failed to collect

• Any penalty imposable under Sec. 271CA shall be imposed by the Joint
Commissioner

SEC. 271H Penalty for failure to furnish TDS/TCS returns

• The Assessing Officer may direct a person to pay by way of penalty if he

fails to submit a statement of TDS or TCS within the time prescribed in Sec.
200(3) or 206C(3)

• Or furnishes incorrect information in the statement of TDS or TCS

• The penalty shall be a sum not less than Rs. 10,000 but which may extended
upto Rs. 1 lakh

SEC. 272A(2) Failure to issue TDS/TCS certificate

• If person deducting or collecting tax fails to issue TDS or TCS certificate

within the time limit
 • then he shall pay Rs. 100 for each day of default and maximum upto the
amount of tax deductible or collectible

• Penalty shall be imposed by the Joint Commissioner or Higher Authority

SEC. 276B Failure to pay tax to the credit of Central Government

• If a person fails to pay to the credit of the Central Government the tax
deducted at source by him

• shall be punishable with rigorous imprisonment for a term which shall not be
less than three months but which may extend to seven years and with fine.

SEC. 276BB Failure to pay the tax collected at source.

• If a person fails to pay to the credit of the Central Government, the tax
collected by him

• he shall be punishable with rigorous imprisonment for a term which shall not
be less than three months but which may extend to seven years and with
fine.

SEC. 220 –COLLECTION AND RECOVERY

• SEC. 220(1) - Any amount of tax specified as payable in a notice of demand

u/s 156 shall be paid within 30 days of the service of the notice

• if AO has any reason to believe that it will be unfavorable to revenue if the

full period of 30 days is allowed, then with previous approval of
JCIT/ADDL.CIT, direct to pay the demand within a period less than 30 days

SEC. 220(1A)

Where demand notice has been served on assessee and if there are any
appeal or other proceedings are pending in respect of such demand, then such
demand shall be deemed to be valid till the disposal of the appeal by the last
appellate authority

Interest u/s 220(2)

If the demand is not paid within the period specified in the demand notice,
the assessee is liable to pay interest at 1% for every month or part from the day
immediately following the end of the period mentioned in notice and upto which
the demand is paid
SEC. 220(2A) – Waiver of interest

Interest charged u/s 220(2) may be reduced or waived, if

Pr.CCIT/CCIT/Pr.CIT/CIT are satisfied that

• payment of such amount would cause genuine hardship to the assessee

• default in payment of demand was due to circumstances beyond the control

of the assessee

• the assessee was very cooperative in any enquiry relating to the respective
assessment proceeding

• the order accepting or rejecting the application for waiver either in full or
part shall be passed within the 12 months from the end of the month in
which application is received

• the order rejecting the application for waiver either in full or in part shall
be passed only after the assessee has been given an opportunity of being
heard

SEC. 220(3)

If the assessee before the expiry of the due date mentioned in the demand
notice, request the AO by an application to extend the time for payment or allow
payment in installments, then AO may allow such extension or installment
payments if he think it is fit case.

SEC. 221 – PENALTY PAYABLE ON TAX DEFAULT

• If the assessee is in default or deemed to be in default in making payment

of tax, the AO may direct the assessee to pay a penalty not exceeding the
amount of tax in arrears

• it can be levied even if the tax is paid belatedly before the levy of penalty

• the assessee shall be given an opportunity of being heard before levying

penalty

• if assessee satisfies the AO that the default is for good and sufficient
reason, then no penalty shall be levied

• if the whole tax is reduced in final appeal order, then the penalty levied
shall be cancelled and penalty amount shall be refunded
SEC. 222 – TAX RECOVERY CERTIFICATE

❖ If an assessee is in default or deemed to be in default in payment of tax,

then AO intimates to TRO, where arrears are pending for more than one
year after getting approval of JCIT/Addl.CIT

❖ TRO may issue a statement under his signature in form 57 on assessee

specifying the amount of arrears due. Such statement is called certificate

❖ The notice directs the defaulter to pay the demand due within 15 days of
the receipt of notice

❖ If the arrear not paid, then the TRO may recover the arrears in any of the
following modes:

1. attachment & sale of assessee’s movable/immovable properties

2. appointing a receiver for management of assessee’s movable/immovable

properties

3. arrest of the assessee and his detention in prison

• TROs are authorized to attach & sell the defaulters properties

• As per the CBDT’s instruction No.41 dated 22.04.1969 TROs can authorize
their Inspectors to carry out process of attachment of property

Procedures for attachment of movable property

• Warrant of attachment of movable property is issued by the TRO in Form

No. ITCP2

• Warrant should be served on the defaulter, in case defaulter refuses to

receive it, service by affixture as per CPC may be adopted

• If after service of warrant, the amount is not paid by defaulter, the TRO
shall proceed to attach the movable property

• The attachment should be commenced after sunrise and completed before

sunset. Any violation in this regard would result the attachment void

• the TRO should call for two witnesses and also the defaulter to his side
during attachment

• In order to effect attachment, the TRO may break open any inner or outer
door or window of the defaulter’s building and enter to seize the movable
property

• The TRO has no power to search the premise and he has no power to break
the doors of almirahs, safety lockers, etc.,
 • The attachment value should not be more than the amount specified in the
warrant

• The TRO is personally responsible for the safe custody of the attached
articles

• After attachment, the TRO shall prepare an inventory of all the property
attached

• The Panchanama must be written by one of the witnesses

Procedures for attachment of immovable property

• Attachment is made by issue of order in ITCP16

• It prohibits the defaulter or all other persons by either transferring or

charging it in any way

• The order should be served on the defaulter, and a copy to be affixed on a

conspicuous portion of the property

• The affixture must be witnessed by atleast two witnesses

• Proclamation to be made by drum beaten with announcement in the local

language and additionally in English

• A Panchanama evidencing the proceedings to be prepared by witness

PROCLAMATION OF SALE & AUCTION OF MOVABLE AND IMMOVABLE PROPERTIES

• TRO will issue warrant in ITCP 12 to TRI authorizing him to sell the property
by public action

• Proclamation of sale is issued in ITCP 13, this is a notice to the public that
certain properties will be sold by public auction on a certain day

• There should be 15 days interval between date of affixture of proclamation

and the date of sale for movable properties and 30 days in the case of
immovable properties

• The TRO should determine the reserve price of property below which no bid
will be accepted

• Property will be sold to the highest bidder

• In case of immovable property, the purchaser is required to make 25% of

initial payment and balance payment within 15 days
 Write Off Of Demand

• Write off of arrears can be considered only where the demand remains
irrecoverable in spite of exercise of the powers given under the act.

• The reasons for ir-recoverability may be assessee has died/insolvent/not

traceable/ left India/no attachable assets/ liquidation/discontinuation of
company and all the modes of recovery proceeding as laid down in the act
have been exhausted.

Order write off by Monetary Ceiling

ITO/TRO UPTO Rs. 5,000

ACIT/DCIT UPTO Rs. 25,000

ADDL/JT.CIT UPTO Rs. 1 LAKH

CIT/PCIT UPTO Rs. 10LAKHS

PCCIT/CCIT UPTO Rs. 25 LAKHS

PCCIT/CCIT WITH APPROVAL OF BOARD UPTO Rs. 50 LAKHS

PCCIT/CCIT WITH APPROVL OF BOARD AND OVER Rs. 50LAKHS

FM

Summon issued u/s 131

• Section 131 gives power equivalent to court of law to the IT authorities viz.,
Pr.CCIT, CCIT, Pr.CIT, CIT & AO in respect of following matters:

a) Discovery and inspection

b) Enforcing the attendance of any person and examining them under oath

c) Compelling the production of books of account and other documents and

d) Issuing commission

• An AO can invoke section 131 for making enquiries only in a case where
proceedings are pending before him

• However, Authorised officers of the investigation wing can exercise these

powers even if no proceedings are pending with them.

• The Authorized officers may impound and retain any books of account or
other documents
 • Penalty to non compliance shall attract Rs. 10000 for each failure u/s
272A(1)(C)

SEC. 133A – POWERS OF SURVEY

• Authorities to survey are CIT, PCIT, DIT, JCIT, JDIT, DDIT, ADIT, ITO, TRO,
ITI(for limited purpose)

• No action U/S 133A shall be taken by DDIT, ADIT, ITO, TRO, ITI without
obtaining the approval of JDIT/JCIT

• Area of survey is any place within jurisdiction assigned to Income tax

authority and any person who falls within the jurisdiction of Authorities

• Any person or place where ITA are authorised by a higher authority having
jurisdiction on any person or place

• Time of survey shall be after sunrise and before sunset.

• The IT authority may enter only during business hours in place of business or
profession. In case of any function, ceremony or event, shall be after such
function, ceremony or event

• Residential premises can also be covered if some business or profession work

are carried out there or documents are being kept there

• Right to inspect books of accounts or other documents available in such

place, if necessary shall place marks of identification

• Such authority may impound and retain books & documents after recording
the reasons

• W.e.f 01.10.2014, books & documents shall not be retained for a period
exceeding 15 days(excluding holidays) without obtaining approval of
Pr.CCIT, CCIT, Pr. DGIT, DGIT, Pr. CIT, CIT

• Such authority may make inventory of any cash, stock or other valuables
things in the premise

• Authority cannot remove any cash, stock or other valuable things in the
premise

• Shall record statement of any person which will be useful for further
proceedings

• Premises cannot be sealed u/s 133A

SEC. 133B- POWER TO COLLECT CERTAIN INFORMATION

• An IT authority for the purpose of collecting any information which may be

useful for any IT proceedings can enter—

(A) any building or place within the limits of the area assigned to him or

(B) any building or place occupied by any person in respect of whom he

exercises jurisdiction

• The IT authority can enter any building only if it is used for the purpose of
carrying on business or profession

• Only during the hours at which such place is open for the conduct of
business or profession.

• Authority may require proprietor, employee or any other person present in

the premise to furnish information in Form 45D

• Authority has no right to remove any books of account or other documents

or any cash, stock or other valuable article or thing.

• Non compliance attract Penalty u/s 272AA of Rs. 1000 levied by

JCIT/ACIT/AO

Sec. 133 – Power to call for information

• The AO has power to call for information required for the purpose of any
proceedings and can direct

1) any firm to furnish names and address of the partners and their shares

2) Any HUF to furnish names and address of the manager and members of the
family

3) Any trustee, guardian or agent to furnish names of person for whom he is

trustee, guardian or agent and their address

4) Any assessee to furnish names and address of all person to whom he has paid
any rent, interest, commission, royalty, brokerage or annuity more than Rs.
1000 in any PY with particulars of such payment

5) Any dealer, broker, agent of stock or commodity exchange to furnish names

and address of all person and particulars of any payments or receipts in
connection with the transfer of shares

6) Any person including a banking company, cooperative bank or any officer to

furnish information, statement of accounts and other various details which
will be useful for any enquiry or proceedings. This power can be exercised
 by the Pr.DGIT, DGIT, Pr.CCIT, CCIT, Pr.DIT, DIT. W.e.f 01.04.2017, Pr.CIT,
CIT, JDIT, DDIT or ADIT

• Failure to comply will attract Penalty u/s 272A(2) for an amount of Rs. 100
for every day during which default continues

SEC. 132 – SEARCH AND SEIZURE

• Section 132 gives enormous powers to the IT authorities regarding search &
seizure

• Who are authorizing officer?

DGIT, CCIT, DIT, CIT

• Who are authorized officer?

Authorizing Officer can authorize ADDL.DIT, ADDL. CIT, JCIT, JDIT, DDIT,
ACIT, ITO

• W.e.f 01.10.2009, authorization shall not be issued by ADDL.DIT, ADDL.CIT,

JCIT, JDIT unless Board give power to to do so

CIRCUMSTANCES IN WHICH SEARCH & SEIZURE CAN BE CONDUCTED:

• The authorizing Officer having jurisdiction over the person and the place of
the premises to be searched has reason to believe that:

1. such person on whom summon u/s 131 or notice u/s 142(1) has been served
to produce books & documents and has failed to produce

2. the person is in possession of money, bullion, jewellery or other valuable

thing which represents wholly or partly his income or property that has not
been disclosed

will issue an authorization in Form 45(warrant) to the authorized Officer to

search such person

POWERS OF AUTHORISED OFFICERS:

The authorised officer is empowered to:

• enter any building, place, vehicle or aircraft where he has reason to suspect
that books of a/c, other documents of undisclosed income or property are
kept

• break open the lock of any door, box, locker, almirah or other container
where the keys are not available
 • search any person, if the AO suspect that such person has concealed any
books/documents of undisclosed income or property of the searched person

• Require any person in possession or control of any books of account or other

documents in the form of electronic record to provide necessary facility to
inspect such books of account or other documents. Failure to which he shall
be punishable with rigorous imprisonment for a term which may extend to
two years with fine u/s 275B

• seize any books of a/c, other documents, money, bullion, jewellery or other
valuable article or thing during search.

• Stock in trade of business shall not be seized but shall take inventory of such
stock

• place marks or identification on any books of a/c or other documents or to

take extracts or copies therefrom

• Take inventory of any money, bullion, jewellery or other valuable things

• The AO can examine on oath any person who is found to be in possession or

control of any books of accounts, documents, etc

Sec. 132(3) - Deemed seizure

• where it is not possible to take physical possession of any valuable article or

thing due to its volume or weight and also due to huge stock or books or
documents

• the AO may serve an order(Prohibitory order) on the owner or the person

who is in immediate possession or control of such place that he shall not
remove, part or break or open it, except with the previous permission of
such AO

• If any contravention, then prosecution u/s 275A shall be initiated with

rigorous imprisonment which may extend upto 2 years with fine

• The PO shall be lifted within the period of 60 days from the date of issue of
PO

Sec. 132(2) - The Authorised officer may requisition the services of Police Officers
or any officer of Central Government or both to assist during search

Sec. 132(4) - The Authorised officer may examine on oath of any person who is in
possession or control of any books & documents, stocks, money, etc

Sec. 132(8) – Seized books of accounts or documents cannot be retained by the AO

for not more than 30 days from the date of completion of assessment u/s 158BC or
153A. Retention for more than 30 days can be made only if reasons are recorded
and approval is obtained from CCIT, CIT, DGIT or DIT

SEC. 153A - Assessment in case of search

• In the case of a person where a search is initiated u/s 132, the seized
material should be transferred to the AO within 60 days from the date of
authorisation for search was executed

• The AO shall

(a) issue notice to assessee to furnish within specified period, the ROI for
each AY falling within six AYs immediately preceding to the PY in which
search was made

(b) assess or reassess the total income of six AYs and determine the income

• The Income tax of each AY shall be charged at the rates as applicable to

such AY

Sec. 153B - Time limit for completion of assessement u/s 153A is within a period
of 21 months from the end of the FY in which the authorizations u/s 132 was
executed

• Prosecution u/s 276CC is applicable for non filing of return with 6 months of
imprisonment if tax evaded exceeds Rs. 25 lakhs, otherwise 3 months with
fine

Sec. 274 – Procedure for imposition of penalty

• No order imposing penalty shall be made unless the assessee is given a

chance of being heard

• Previous approval of Addl/ JCIT should be got in the following situations:

a) If penalty imposed by ITO exceeds Rs. 10,000

b) If penalty imposed by ACIT/DCIT exceeds Rs. 20,000

Sec. 275 – Time limit for completion of penalty proceedings

Situation Time limit

In cases where appeal is filed Before expiry of FY in which proceedings for imposition
before CIT(A) where appeal of penalty was initiated or
order passed before Before expiry of 6 months from the end of the month
01.06.2003 in which appeal order is received by Department,
whichever is later
 In cases where appeal is filed Before expiry of FY in which proceedings for imposition
before CIT(A) where appeal of penalty was initiated or
order passed after 01.06.2003 Before expiry of 1 year from the end of the month in
which appeal order is received by Department,
whichever is later
In cases where order is Within 6 months from the end of month in which
pending before Pr. CIT u/s 263 revision order is passed
or application filed before Pr.
CIT u/s 264
In any other case Before expiry of FY in which proceedings for imposition
of penalty was initiated
or
within 6 months from end of
month in which proceedings for imposition of penalty
was initiated, whichever is later

Sec. 273A(4) – Power to reduce or waive Penalty

• The Pr. CIT/ CIT may on an application made by the assessee shall reduce,
waive or stay the recovery of such amount if he is satisfied that:

a) It would cause genuine hardship to the assessee

b) The assessee has cooperated in any enquiry relating to the assessment or

any proceedings

• If the amount of penalty or aggregate of all penalties exceeds Rs. 1 lakhs,

the Pr.CIT/CIT shall reduce, waive or stay with previous approval from of
CCIT/DGIT

• There is no time limit for making application before Pr.CCIT/CIT for waiver,
reduction or stay of such penalty

• Time limit for Pr.CIT/CIT to pass an order accepting or rejecting the

application of an assessee shall be within 12 months from the end of the
month in which such application was received

• Any order passed under this section is final and no appeal can be made by
the assessee against such order.
Sec. 44AA - Maintenance of accounts by certain persons carrying on
profession or business

• The Income Tax Act specifies as to who should maintain books & account for
the purpose of Income tax scrutiny by an AO, whenever required. The
following persons are to maintain books of account:

1. Legal, Medical, Engineering, Architectural, Interior decoration,

Accountancy, Technical consultancy & Film artists

2. Anyone involved in other profession/business, who earns more than Rs. 1.2
lakh(2.5 lakhs for Indl. & HUF from AY 2018-19) or the total turnover/gross
receipts of business/profession is more than Rs. 10 lakh(25 lakhs for Indl. &
HUF from AY 2018-19) in any of the previous 3 years

3. Person who are covered u/s 44AD, 44AE, 44BB or 44BBB and who has
declared less income than the profits estimated under these sections

4. if the business is new, if it is expected to earn more than Rs. 1.2 lakh(2.5
lakhs for Indl. & HUF from AY 2018-19) or if its sales is expected to cross Rs.
10 lakh(25 lakhs for Indl. & HUF from AY 2018-19)

• Books and documents are cash book, journal, ledger, bills & receipts for
expenditure & purchase and should kept safe for a period of 6 years from
the end of relevant AY

• Failure to which penalty u/s 271A shall be levied by AO or by CIT for an

amount of Rs. 25000

Sec. 44AB – Audit of accounts

• The following persons are required to get their accounts compulsorily

audited by CA:

Carrying on business (not opting for Total sales, turnover or gross receipts
presumptive taxation scheme) exceeds Rs 1 crore

Carrying on business and opted

Total sales, turnover or gross receipts
presumptive taxation scheme under
exceeds Rs 2 crore
section 44AD

Carrying on profession Gross receipts exceeds Rs 50 lakhs

Claims profits or gains from business are

Carrying on the business u/s 44AE,
lower than the profits or gains calculated
44BB and 44BBB
under this sections
Carrying on the profession eligible for Claims profits or gains from profession are
presumptive taxation u/s 44ADA lower than the profit or gains calculated
 as per presumptive taxation scheme and
income exceeds maximum amount not
chargeable to tax
Carrying on the business and opted
Presumptive taxation scheme u/s 44AD If income exceeds maximum amount not
and fails to opt this scheme in any of chargeable to tax during such years
the 5 subsequent FY

• Audit report should be submitted in Form 3CA or 3CB and statement

particulars in From 3CD

• Due date for getting books & accounts audited is within the due date of
furnishing the ROI u/s 139(1)

• Due date of submission of audit report is within the due date of furnishing
the ROI u/s 139(1)

• From 01.04.2013, audit report should be submitted electronically

• If any person fails to get his accounts audited or to furnish audit report, the
AO shall impose penalty u/s 271B for an amount equal to 1.5% of total sales,
turnover or gross receipts subject to maximum of Rs. 1.5 lakhs

Sec. 115 JB - MINIMUM ALTERNATIVE TAX(MAT)

• Applicable for domestic or foreign companies

• Companies generating huge income during the year shows meager or nil
income by taking advantage of various provisions of Income tax

• As per concept of MAT, the tax liability of a company will be higher of the
following:

i. Tax liability of the company computed as per normal provisions of IT Act

ii. Tax computed @ 18.5%(plus Cess and SC as applicable) on book profit

➢ Every company is liable to pay MAT, if the tax computed as per IT provisions
is less than 18.50% of its book profit

Sec. 115JAA - MAT CREDIT

• If in any year the company has paid tax more than the normal tax liability,
then it is entitled to claim credit of MAT in subsequent years

• The MAT credit can be adjusted in the year in which the normal tax liability
is more than MAT liability
• The company can carry forward the MAT credit for adjustment in
subsequent years for a period of 15 years after which it will lapse

• As per Sec. 115JB(5A), MAT shall not apply to any income arising to a
company from life insurance business and shipping income

• Every company to whom Sec. 115JB applies is required to obtain a report

from a CA in Form No. 29B certifying that the book profit has been
computed in accordance with the provisions of section 115JB

Sec. 115JC to 115JF - ALTERNATE MINIMUM TAX(AMT)

• Applicable to all other non corporate assessees

• The provisions of AMT will apply to every non corporate tax payer who has
claimed any one of the

1. Deduction u/s 80HH to 80RRB(except 80P)

2. Deduction u/s 35AD

3. Deduction u/s 10AA

• The tax liability of a non corporate tax payer on whom AMT applies will be
the higher of the following:

1. Tax liability computed as per normal provisions of IT Act

2. Tax computed @ 18.5%(plus Cess and SC as applicable) on adjusted total

income

• If in any year the company has paid tax more than the normal tax liability,
then it is entitled to claim credit of AMT in subsequent years u/s 115JD

• The credit can be adjusted in the year in which the normal tax liability is
more than AMT liability

• The company can carry forward the AMT credit for adjustment in
subsequent years for a period of 15 years after which it will lapse

• Every non corporate assessee to whom the provisions of section 115JC to

115JF applies is required to obtain a report from a chartered accountant in
Form No. 29C certifying that the adjusted income has been computed in
accordance with AMT provisions
PRESUMPTIVE TAXATION SCHEMEU/S 44AD, 44ADA AND 44AE

• As per the Income-tax Act, a person engaged in business or profession is

required to maintain regular books of account and further, he has to get his
accounts audited as per Sec. 44AB.

• To give relief to small taxpayers from this tedious work, the IT Act has
framed the presumptive taxation scheme

• A person adopting the presumptive taxation scheme can declare income at a

prescribed rate and, in turn, is relieved from tedious job of maintenance of
books of account and also from getting the accounts audited

Presumptive Taxation Scheme of Section 44AD

• This scheme can be opted by small taxpayers engaged in any business,

except the following businesses:

a) Business of plying, hiring or leasing of goods carriages, agency business or

commission brokerage

• This scheme can be opted by Resident Individual, HUF & Partnership firm

• Income is computed on presumptive basis @ 8% of the total turnover or gross

receipts

• This scheme can be opted by the eligible persons only if the total turnover
or gross receipts from the business is below Rs. 2 Crores

• If a person opts for the presumptive taxation scheme of section 44AD, the
provisions of allowance/disallowances as provided under the IT Act will not
apply

• If a person opts this scheme then he is also required to follow the same
scheme for next 5 years.

• If he failed to do so, then presumptive taxation scheme will not be available

for him for next 5 years.

• Any person opting Sec. 44AD is liable to pay whole amount of advance tax
on or before 15th March of the relevant PY

Presumptive Taxation Scheme of Section 44ADA

• The presumptive taxation scheme u/s 44ADA can be opted by resident

Indian engaged in specified profession viz., Legal, Medical, Engineering or
architectural, Accountancy, Technical consultancy, Interior decoration

• whose total gross receipts does not exceed Rs. 50 lakhs in a PY

 • Person opting this scheme, the income will be computed on presumptive
basis, i.e. @ 50% of the total gross receipts of the profession

• Any person opting Sec. 44ADA is liable to pay whole amount of advance tax
on or before 15th March of the relevant PY

Presumptive Taxation Scheme of Section 44AE

• This scheme can be opted by every person (i.e., an individual, HUF, firm,
company, etc.) doing business of plying, hiring or leasing of goods carriages
and who does not own more than 10 goods vehicles at any time during the
year

• For Heavy Goods Vehicle, income to be computed @ Rs. 1,000 per ton of
gross vehicle weight for every month or part of a month during which the
such vehicle is owned by taxpayer

• In case of vehicles other than heavy goods vehicle, income will be computed
@ Rs. 7,500 per vehicle for every month or part of a month

• He shall be liable to pay advance tax as per existing installment for other
tax payers

Sec. 285BA - STATEMENT OF FINANCIAL TRANSACTION (SFT)

• To keep a watch on high value transactions by the taxpayer, the Govt. has
framed the concept of statement of financial transaction (previously called
as Annual Information Return (AIR))

• With the help of the statement the tax authorities collect information on
certain specified high value transactions undertaken by a person during the
year.

• w.e.f 01.04.2016, the specified persons have to file SFT in Form 61/61A
through online

Specified Persons who are required to file statement of financial transaction

are:

• A Banking company

• Cooperative Bank

• Non banking financial company

• the collector of land acquisition

• the Post Master General

• a company or institution
 • trustee of Mutual fund

• Foreign Exchange dealer

• Sub Register Officer

• Traders of goods or a service provider (only 44AB cases)

• Regional Transport Officer

• Stock/share trading agents

Specified transactions are:

Value of transaction Nature of transaction

Exceeding 1 lakh Cash payment against credit card bill

Exceeding 2 lakhs Cash receipts for purchase of goods or service

Exceeding 30 lakhs Purchase or sale of immovable property

Exceeding 50 lakhs Cash deposit/ withdrawal from one or more current

accounts in FY

Exceeding 10 lakhs

• Cash payment for purchase of bank draft/pay order/ banker’s cheque or

prepaid instrument issued by RBI

• Cash deposit in one or more accounts other than Current a/c in FY

• Time deposit

• Payment against credit card bill by other than cash

• Receipt for acquiring any shares, bonds or debentures

• Receipt for sale of foreign currency(exchange)

Filing for form 61:

• Persons who do not hold PAN are required to fill Form No. 60 for the
specified transactions where PAN is mandatory.

• The person who has received any declaration in Form No. 60 for the
specified transactions above on or after 01.04.2016 shall furnish a statement
in Form No. 61 electronically containing particulars of such declarations.

• Declarations received till 30th September should be filed before 31st

October
 • Declarations received till 31st March should be filed before 30th April

Time limit for Form 61 A:

• The SFT for high value transactions in Form 61A to be furnished in efiling
portal by specified person by 31st May immediately following the FY

Penalty:

• Failure to furnish Form 61/61A will attract penalty u/s 271FA of Rs. 100 per
day(Rs. 500 w.e.f 01.04.2018)

• Submission of wrong information or inaccurate statement will attract

penalty u/s 271FAA for Rs. 50,000/-

Sec. 269SS – Mode of acceptance of loan or deposit or advance

• A person cannot accept any loan or deposit or advance other than by an a/c
payee cheque, draft or through ECS

• If such amount exceeds Rs. 20,000

• However this rule is not applicable if such amount is accepted or taken by

the Government, bank/post office savings bank, cooperative bank or
Government company

• If any contravention, the JCIT/Addl.CIT shall impose penalty u/s 271D for an
amount equal to the amount of the loan or deposit or advance taken or
accepted.

Sec. 269ST - Mode of receipt of certain transactions

• This provision shall No person shall receive an amount exceeding Rs. 2 lakhs
other than by an a/c payee cheque, draft or through ECS

• This provision will be applicable where the recipient is seller of goods or

service provider or transferor of asset

• not apply to Government, bank/post office savings bank, cooperative bank

• If any contravention, the JCIT/Addl.CIT shall impose penalty u/s 271DA for
an amount equal to the amount of such receipt

Sec. 269T - Mode of repayment of certain loans or deposits or advance

• A bank, cooperative bank, company, firm or any other person shall not
repay any loan, advance or deposit made with them other than by an a/c
payee cheque, draft or through ECS

• If such amount exceeds Rs. 20,000

 • However this rule is not applicable in case of repayment of such amount is
taken or accepted by the Government, bank/post office savings bank,
cooperative bank or Government company

• If any contravention, the JCIT/Addl.CIT shall impose penalty u/s 271E for a
sum equal to the amount of the loan or deposit or advance repaid.

Sec. 270A - Penalty for under-reporting and misreporting of income

• A person shall be considered to have under-reported his income, if

1. the income assessed is greater than the income determined u/s 143(1)

2. the income assessed is greater than the maximum amount not chargeable to
tax, where no ROI has been furnished

3. the income reassessed is greater than the income assessed

4. the income assessed or reassessed has the effect of reducing the loss or
converting such loss into income

• The cases of misreporting of income are:

(a) misrepresentation or suppression of facts

(b) failure to record investments in the books of account

(c) claim of expenditure not substantiated by any evidence

(d) recording of any false entry in the books of account

(e) failure to report any international transaction

• In such case Pr.CIT, CIT or AO shall impose penalty @ 50% of tax payable on
under-reported income and 200% in the case of misreporting of income

• This penalty is applicable w.e.f AY 2017-18

Section Nature of default Penalty Who can

levy

271BA Every person who has entered Rs. 1 lakh AO

International transaction or
specified domestic transaction
has to submit report from CA in
Form 3CEB as required u/s 92E
271G Every person who has entered 2% of value of AO or CIT
International transaction or International transaction
specified domestic transaction or domestic transaction
has to maintain and keep
 information relating to such
transaction as required u/s 92D
271I Any person responsible for Rs. 1 lakh AO
paying any sum to a non
resident or to a foreign
company, should furnish Form
15CA, 15CB & 15CC as per sec.
195(6)

BENAMI TRANSACTION(PROHIBITION) AMENDMENT ACT’2016

• The Benami Transactions (Prohibition) Act, 1988 was amended through the
Benami Transactions (Prohibition) Amended Act, 2016

• to provide an effective system for prohibition of benami transactions.

• The amended Act, 2016 came into effect from 1st November, 2016

• The Act prohibits benami transactions and empowers the authorities

specified in the Act to provisionally attach and eventually sale the benami
properties.

• The Government has set up 24 Benami Prohibition Units (BPUs) across India
for taking effective action under the Benami Act

• These units were under the overall supervision of the PDIT(Inv)

• Central Government has notified specified Income-tax authorities to act as

Initiating Officer, Adjudicating Authority and Administrator in cases relating
to benami transactions.

• The Initiating Officer will identify the benami case and refer to the
Adjudicating authority who will decide whether the property is benami or
not. The property will be attached and disposed by Administrator

The Income Declaration Scheme, 2016

• Scheme was incorporated in the Finance bill 2016

Who Can Make a Declaration?

• All ‘persons’, such as individuals, HUFs, companies, firms, AOP, etc.,

Scope & Coverage of Scheme

• Any undisclosed income, investment in any asset representing undisclosed

income relating to any FY upto 2015-16
 • Provided opportunity to all persons who have not declared income correctly
in earlier years

Benefits of Declaration

• 1.No Wealth Tax on assets declared

• 2.No scrutiny or enquiry

• 3.Exemption from prosecution

• 4.Exemption from Benami Transactions (Prohibition) Act

Amounts payable by declarant

• 1.Tax @30% of undisclosed income

• 2. Surcharge @ 7.5 % of undisclosed income

• 3.Penalty @7.5% of undisclosed income

• TOTAL:45% OF UNDISCLOSED INCOME DECLARED

This scheme was Effective from 01.06.2016 and Declaration was received
upto 30.09.2016

Pradhan Mantri Garib Kalyan Yojana (PMGKY)

PMGKY is Union Government’s second income disclosure scheme (IDS) to

allow tax evaders to come clean with unaccounted wealth(black money)

Who Can Make a Declaration?

• 1. Can be availed by any person who wants to declare their black money by
depositing it in the bank account, at the RBI, or at a post office in India.

• 2. The scheme can be availed by any person against whom a search/ survey
operation was initiated, and cash seized during search/ survey can also be
declared

• 3. The scheme can be availed on the deposits made in bank accounts prior
to the FY 2016-17 also

• There is no limit on the amount to be deposited.

Critical Dates

• 1. Effective from 17.12.2016

• 2. Disclosure received upto 10.05.2017

Amounts payable by declarant

• 1. Tax of 30%

• 2. Penalty of 10%

• 3. Pradhan Mantri Garib Kalyan Cess of 33% on the tax

• All of which add up to around 49.9%

• The person making above declaration should deposit atleast 25% of

undisclosed income in the Pradhan Mantri Garib Kalyan Deposit Scheme’2016

• The deposit will not generate any interest

• The deposit can be withdrawn only after 4 years from the date of deposit