Unit 5 | unit 5 assessment procedures

Unit 5

Assessment procedure

Q1) State the provisions related to assessment of a firm. 5

A1) Assessment of firm (Section 184)

(1) A firm shall be assessed as a firm for the purposes of this Act, if—

(i) the partnership is evidenced by an instrument; and

(ii) the individual shares of the partners are specified in that instrument.

(2) A certified copy of the instrument of partnership referred to in sub-section (1) shall accompany the return of income of the firm of the previous year relevant to the assessment year commencing on or after the 1st day of April, 1993 in respect of which assessment as a firm is first sought.

(3) Where a firm is assessed as such for any asses9+sment year, it shall be assessed in the same capacity for every subsequent year if there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the assessment as a firm was first sought.

(4) Where any such change had taken place in the previous year, the firm shall furnish a certified copy of the revised instrument of partnership along with the return of income for the assessment year relevant to such previous year and all the provisions of this section shall apply accordingly.

(5) Notwithstanding anything contained in any other provision of this Act, where, in respect of any assessment year, there is on the part of a firm any such failure as is mentioned in section 144, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession" and such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause (v) of section 28.

Q2) Explain the authority of administration under the Income Tax Act. 1961. 10

A2) Income tax authority includes

 Commissioner

 a Joint Commissioner

 a Director

 a Joint Director

 an Assistant Director or a Deputy Director or an Assessing Officer, or

 a Tax Recovery Officer.

Section 133 provides power to call for information to the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals)] may, for the purposes of this Act,—

(1) require any firm to furnish him with a return of the names and addresses of the partners of the firm and their respective shares;

(2) require any Hindu undivided family to furnish him with a return of the names and addresses of the manager and the members of the family;

(3) require any person whom he has reason to believe to be a trustee, guardian or agent, to furnish him with a return of the names of the persons for or of whom he is trustee, guardian or agent, and of their addresses;

(4) require any assessee to furnish a statement of the names and addresses of all persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage, or any annuity, not being any annuity taxable under the head ―Salaries‖ amounting to more than 5[one thousand rupees, or such higher amount as may be prescribed], together with particulars of all such payments made;

(5) require any dealer, broker or agent or any person concerned in the management of a stock or commodity exchange to furnish a statement of the names and addresses of all persons to whom he or the exchange has paid any sum in connection with the transfer, whether by way of sale, exchange or otherwise, of assets, or on whose behalf or from whom he or the exchange has received any such sum, together with particulars of all such payments and receipts;

(6) require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the manner specified by the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), giving information in relation to such points or matters as, in the opinion of the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), will be useful for, or relevant to, any enquiry or proceeding under this Act.

The various tax authorities are discussed below-

(i) Administrative [ Income Tax Authorities ][ Sec. 116 ]

The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963),
Directors-General of Income-tax or Chief Commissioners of Income-tax,
Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals),
1. (cc) Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals),
2. (cca) Joint Directors of Income-tax or Joint Commissioners of Income-tax.
Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals),
Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
Income-tax Officers,
Tax Recovery Officers,
Inspectors of Income-tax.

(ii) Assessing Officer [ Sec. 2(7A)]

"Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act.

(iii) Appointment of Income-Tax Authorities [ Sec. 117 ]

Power of Central Government: The Central Government may appoint such persons as it thinks fit to be income-tax authorities. It kept with itself the powers to appoint authorities upto and above rank of an Assistant Commissioner of Income-Tax [ Sec. 117 (1) ]
Power of the Board and Other Higher Authorities: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, the Central Government may authorize the Board, or a Director-General, a Chief Commissioner or a Director or a Commissioner to appoint income-tax authorities below the rank of an Assistant Commissioner or Deputy Commissioner.[ Sec. 117 (2) ]
Power to appoint Executive and Ministerial Staff: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, an income-tax authority authorized in this behalf by the Board may appoint such executive or ministerial staff as may be necessary to assist it in the execution of its functions.

(iv) Control of Income-Tax Authorities [Sec. 118]

The Board may, by notification in the Official Gazette, direct that any income-tax authority or authorities specified in the notification shall be subordinate to such other income-tax authority or authorities as may be specified in such notification.

Q3) State the provisions related to appeal before the commissioner. 5

A3) Appeal before commissioner (appeals)

If any demand is raised by the Assessing Officer in the assessment, what’s the next step for Assessee. Aggrieved tax payer can file appeal before the Commissioner (Appeals) having, jurisdiction over the tax payer. Designation of the Commissioner (Appeals), with whom appeal is to be filed is also mentioned in the notice of demand issued by the Assessing Officer under section 156 of Income Tax Act.

When appeal can be filed before commissioner (appeals), i.e. Appealable orders:

Appeal can be filed before Commissioner (Appeals), when a tax payer is adversely affected by Orders as under passed by various Income tax authorities:

Order against tax payer where the tax payer denies liability to be assessed under Income Tax Act;
Intimation issued under Section 143(1) making adjustments to the returned income ;
Scrutiny assessment order u/s 143(3) or an ex-parte assessment .order u/s 144, to object to income determined or loss assessed or tax determined or status under which assessed,
Order u/s 115WE/115WF/115WG assessing fringe benefits;
Re-assessment order passed after reopening the assessment u/s 147/150;
Search assessment order u/s 153A or 158BC;
Rectification Order u/s 154/155;
Order u/ s 163 treating the taxpayer as agent of a nonresident;
Order passed u/s 170(2)/(3) assessing the successor to the business in respect of income earned by the predecessor;
Order u/s 171 recording finding about partition of Hindu undivided family(HUF);
Order u/s 115VP(3) refusing approval to opt for tonnage-tax scheme by qualifying shipping companies;
Order u/s 201(1)/206C(6A) deeming person responsible for deduction of tax at source as assessee in default on failure to deduct/ collect tax at source or to pay the same to the Government;
Order determining refund u/s 237;
Order imposing penalty u/s 221/271 /271A/271AAA/ 271F/271FB/272A/272AA/272BB/275(1A)/158BFA(2)/271B/ 271BB/271C/271CA/271D/271E

Q4) State the Penalty for under-reporting and misreporting of income under the Income Tax Act. 10

A4) Penalty for under-reporting and misreporting of income (Section 270A)

(1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income.

(2) A person shall be considered to have under-reported his income, if—

(a) the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143;

(b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished;

(d) the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143;

(e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been filed;

(f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessment;

(g) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income. (3) The amount of under-reported income shall be,—

(i) in a case where income has been assessed for the first time,—

(a) if return has been furnished, the difference between the amount of income assessed and the amount of income determined under clause (a) of sub-section (1) of section 143;

(b) in a case where no return has been furnished,—

(A) the amount of income assessed, in the case of a company, firm or local authority; and

(B) the difference between the amount of income assessed and the maximum amount not chargeable to tax, in a case not covered in item (A);

(ii) in any other case, the difference between the amount of income reassessed or recomputed and the amount of income assessed, reassessed or recomputed in a preceding order.

(4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as ―preceding year‖) and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment.

(5) The amount referred to in sub-section (4) shall be deemed to be amount of income under-reported for the preceding year in the following order—

(a) the preceding year immediately before the year in which the receipt, deposit or investment appears, being the first preceding year; and

(b) where the amount added or deducted in the first preceding year is not sufficient to cover the receipt, deposit or investment, the year immediately preceding the first preceding year and so on.

(6) The under-reported income, for the purposes of this section, shall not include the following, namely:—

(a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered;

(b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom;

(c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his own, estimated a lower amount of addition or disallowance on the same issue, has included such amount in the computation of his income and has disclosed all the facts material to the addition or disallowance;

(d) the amount of under-reported income represented by any addition made in conformity with the arm‘s length price determined by the Transfer Pricing Officer, where the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X, and, disclosed all the material facts relating to the transaction; and

(e) the amount of undisclosed income referred to in section 271AAB.

(7) The penalty referred to in sub-section (1) shall be a sum equal to fifty per cent of the amount of tax payable on under-reported income.

(8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income.

(9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:—

(a) misrepresentation or suppression of facts;

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

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

(e) failure to record any receipt in books of account having a bearing on total income; and

(f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.

(10) The tax payable in respect of the under-reported income shall be—

(a) where no return of income has been furnished and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income.

(b) where the total income determined under clause (a) of sub-section (1) of section 143 or assessed, reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-reported income as if it were the total income

(11) No addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year.

(12) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing Officer, the Commissioner (Appeals), the Commissioner or the Principal Commissioner, as the case may be.

Q5) State the provisions related to tax deducted at source. 10

A5) Processing of statements of tax deducted at source (Section 200A)

(1) Where a statement of tax deduction at source 4[or a correction statement] has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:—

(a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—

(i) any arithmetical error in the statement; or

(ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;

(d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 orsection 234E and any amount paid otherwise by way of tax or interest or fee;

(e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and

(f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor:

Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.

Advance payment of tax

Liability for payment of advance tax (Section 207)

(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as ―current income‖.

(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—

(a) does not have any income chargeable under the head ―Profits and gains of business or profession; and

(b) is of the age of sixty years or more at any time during the previous year.

Conditions of liability to pay advance tax (Section 208)

Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.

Computation of advance tax (Section 209)

(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely:—

(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;

(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

(c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

(d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be 1[deductible or collectible at source] during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.

Q6) Define assessing officer under the income tax act 1961. 2

A6) "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act.

Q7) State the provisions related to appointment of income tax authorities. 3

A17) Appointment of Income-Tax Authorities [ Sec. 117 ]

Power of Central Government: The Central Government may appoint such persons as it thinks fit to be income-tax authorities. It kept with itself the powers to appoint authorities upto and above rank of an Assistant Commissioner of Income-Tax [ Sec. 117 (1) ]
Power of the Board and Other Higher Authorities: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, the Central Government may authorize the Board, or a Director-General, a Chief Commissioner or a Director or a Commissioner to appoint income-tax authorities below the rank of an Assistant Commissioner or Deputy Commissioner.[ Sec. 117 (2) ]
Power to appoint Executive and Ministerial Staff: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, an income-tax authority authorized in this behalf by the Board may appoint such executive or ministerial staff as may be necessary to assist it in the execution of its functions.

Q8) State the liability for payment of advance tax. 4

A8) Liability for payment of advance tax (Section 207)

(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—

(a) does not have any income chargeable under the head ―Profits and gains of business or profession; and

(b) is of the age of sixty years or more at any time during the previous year.

Q9) State the administrative income tax authorities under section 116. 4

A9) Administrative [Income Tax Authorities ][ Sec. 116 ]

The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963),
Directors-General of Income-tax or Chief Commissioners of Income-tax,
Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals),
1. (cc) Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals),
2. (cca) Joint Directors of Income-tax or Joint Commissioners of Income-tax.
Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals),
Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
Income-tax Officers,
Tax Recovery Officers,
Inspectors of Income-tax.

Q10) Explain different types of assessment of tax. 8

A10) Every assessee, who earns income beyond the basic exemption limit in a Financial Year (FY), must file a statement containing details of his income, deductions, and other related information. This is called the Income Tax Return (ITR). Once you as a taxpayer file the income returns, the Income Tax Department will process it. There are occasions where, based on set parameters by the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an assessment. Different types of assessment are-

(1) Self Assessment (Section 140)

This is the type of income tax assessment in which the assessee calculates the tax themself, usually accompanied by payment of the amount they believe is due. After taking TDS and subtracting advance tax paid, tax payable is required to be given under section 139, section 142, section 148, or section 153A.

(2) Summary Assessment [u/s 143(1)]

The assessment under section 143(1) is similar to the initial review of a tax return. The taxpayer receives an intimation u/s 143(1) from the IRS under this section. The department will send you a comparative income tax calculation. The overall income or loss incurred is computed in the income tax assessment.

(3) Scrutiny Assessment [u/s 143(3)]

Scrutiny assessment is the assessment of a return filed by an assessee by providing an opportunity for the assessee to support the declared income and expenses, as well as claims of deductions, losses, exemptions, and so on, in the return using proof. The committee manages it using a single work plan. The committee undertakes specific work, as well as forming informal panels (for in-depth activities) or working groups. The assessing officer is given the chance to conduct an investigation in order to determine if the assessee correctly reported his or her income in the return. The claims for deductions, exemptions, and other benefits are legal and factually correct. In case of any omissions, contradictions, inaccuracies, or other errors, the assessing officer prepares his or her own assessment for the assessee, taking into account all relevant circumstances.

(4) Best Judgment Assessment [u/s 144]

The term ‘best judgement assessment’ refers to the assessing officer’s opinion or calculation of the assessee’s income in the context of income tax law. In the situation of best judgement assessment, the evaluating officer will make the decision based on the best reasoning, i.e., they will not be dishonest. The assessee will not be dishonest in his or her assessment, nor will he or she be hostile to the officer.

(5) Protective Assessment

This is a type of assessment that focuses on those that are made to ‘protect’ the revenue’s interests. The income tax legislation, however, has no provision for the imposition of income tax on anyone other than the person to whom it is due. It is open to the authorities to undertake a protective or alternative assessment if it is unclear who among a few probable persons is actually liable to pay the tax. The authorities just make an assessment and keep it on paper until the situation is resolved when they make a protective assessment. A protective order of assessment, but not one of penalty, can be issued.

(6) Re-Assessment (or) Income Escaping Assessment [u/s 147]

If the assessing officer has reason to think that income liable to tax has escaped assessment for any assessment year, they will conduct an income escaping assessment under Section 147. Moreover, it gives them the authority to reassess or re-compute income, turnover, and other figures that have escaped their notice. The goal of conducting an assessment under Section 147 is to bring any income that escaped assessment in the original assessment into the tax net.

(7) Assessment in Case of Search u/s 153A

The assessing officer will do the following in this type of income tax assessment:

Giving such a person notice requires furnishing it within the time frame mentioned in the notice. Clause (b) referred to the income return for each of the six assessment years, which is confirmed in the prescribed format. Setting forth such other particulars as may be prescribed, and the provisions of this Act shall apply as if such return were a return required to be furnished under Section 139, to the extent possible;
The assessor re-assesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search or requisition is made.

Q11) State the eligible deductions under section 80C. 5

A11) Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various deductions from the taxable income. Investments in following schemes are eligible for deduction under this section:

1. Payment of annual premium of a Life Insurance policy (LIC). The deduction is eligible only if the premium is less than 10% of the sum assured.

2. Payment of Children’s Tution fees for two chlidren.

3. Repayment of the principal portion of loan taken to buy or construct a residential house property.

4. Investment in Tax Saving FDs.

5. Investment in Public Provident Fund (PPF) and Employee Provident Fund (EPF)

6. Investment in Sukanya Samridhi Yojna.

7. Investment in National Pension system (NPS).

It is important to note that overall limit including the all the investments/payments for claiming deduction under this section is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed for contribution to Atal Pension Yojna.

Q12) State the eligible deduction s under section 80D. 2

A12) Deductions eligible for Section 80D – Medical Insurance

Deductions are eligible for individuals or alongside the policies availed in the name of individual, his/her spouse and dependent children. The maximum limit of deduction benefit is Rs 25000.
An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000 A deduction of Rs 5000 is also available for payment made in respect of health check-up.

Q13) Write a note on tax planning for individuals. 8

A13) Tax Planning may be described as legal way of reducing of tax liability in a year by investing in different schemes as prescribed by income tax Act. It may also include entering or exiting investment schemes so as to save maximum tax possible within the legal framework. The tax planning for individuals are discussed below-

Section 80C – Deductions on Investments/Payments

Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various deductions from the taxable income. Investments in following schemes are eligible for deduction under this section:

1. Payment of annual premium of a Life Insurance policy (LIC). The deduction is eligible only if the premium is less than 10% of the sum assured.

2. Payment of Children’s Tution fees for two chlidrens.

3. Repayment of the principal portion of loan taken to buy or construct a residential house property.

4. Investment in Tax Saving FDs.

5. Investment in Public Provident Fund (PPF) and Employee Provident Fund (EPF)

6. Investment in Sukanya Samridhi Yojna.

7. Investment in National Pension system (NPS).

2. Section 80D – Medical Insurance

Deductions are eligible for individuals or alongside the policies availed in the name of individual, his/her spouse and dependent children. The maximum limit of deduction benefit is Rs 25000.
An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000 A deduction of Rs 5000 is also available for payment made in respect of health check-up. Please refer the below table for details:

Individual	Exemption Limit	Health Check-up Include	Total deduction
Self or family	INR 25000	INR 5000	INR 25000
Self and family + Parents	INR (25000+25000) 50000	INR 5000	INR 55000
Self and family + Senior citizen Parents	INR (25000+50000) 75000	INR 5000	INR 75000
Self (Senior citizen) and family + Senior citizen Parents	INR (50000+50000) 1,00,000	INR 5000	INR 1,00,000

3. Section 80E – Interest on Education Loan

A deduction is allowed to an individual for interest on loans taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian. This deduction is available for a maximum of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier.

4. Section 80G – Donations

The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction. Donations to funds like Prime Minister’s National Relief Fund, National Defense Fund and National Foundation for Communal Harmony also allow 100% deduction Every taxpayer must smartly optimize their tax liability through tax-saving investments that offer financial growth besides saving tax outgo.

5. Section 80TTA – Interest on Savings Account

Individuals may claim a deduction of maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office.

This deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

6. Section 80TTB – Interest Income (Senior citizens)

Deduction with respect to interest income from deposits held by senior citizens will be allowed upto Rs 50000.

Q14) Define security assessment. 2

A14) Scrutiny assessment is the assessment of a return filed by an assessee by providing an opportunity for the assessee to support the declared income and expenses, as well as claims of deductions, losses, exemptions, and so on, in the return using proof. The committee manages it using a single work plan. The committee undertakes specific work, as well as forming informal panels (for in-depth activities) or working groups. The assessing officer is given the chance to conduct an investigation in order to determine if the assessee correctly reported his or her income in the return. The claims for deductions, exemptions, and other benefits are legal and factually correct. In case of any omissions, contradictions, inaccuracies, or other errors, the assessing officer prepares his or her own assessment for the assessee, taking into account all relevant circumstances.

Q15) What is best judgement assessment? 2

A15) The term ‘best judgement assessment’ refers to the assessing officer’s opinion or calculation of the assessee’s income in the context of income tax law. In the situation of best judgement assessment, the evaluating officer will make the decision based on the best reasoning, i.e., they will not be dishonest. The assessee will not be dishonest in his or her assessment, nor will he or she be hostile to the officer.

Q16) What is protective assessment? 2

A16) This is a type of assessment that focuses on those that are made to ‘protect’ the revenue’s interests. The income tax legislation, however, has no provision for the imposition of income tax on anyone other than the person to whom it is due. It is open to the authorities to undertake a protective or alternative assessment if it is unclear who among a few probable persons is actually liable to pay the tax. The authorities just make an assessment and keep it on paper until the situation is resolved when they make a protective assessment. A protective order of assessment, but not one of penalty, can be issued.

Q17) What is self-assessment? 2

A17) This is the type of income tax assessment in which the assessee calculates the tax themself, usually accompanied by payment of the amount they believe is due. After taking TDS and subtracting advance tax paid, tax payable is required to be given under section 139, section 142, section 148, or section 153A.

Q18) What is summary assessment? 2

A18) The assessment under section 143(1) is similar to the initial review of a tax return. The taxpayer receives an intimation u/s 143(1) from the IRS under this section. The department will send you a comparative income tax calculation. The overall income or loss incurred is computed in the income tax assessment.

Q19) What is income escaping assessment? 2

A19) If the assessing officer has reason to think that income liable to tax has escaped assessment for any assessment year, they will conduct an income escaping assessment under Section 147. Moreover, it gives them the authority to reassess or re-compute income, turnover, and other figures that have escaped their notice. The goal of conducting an assessment under Section 147 is to bring any income that escaped assessment in the original assessment into the tax net.

Q20) What is assessment in case of search? 2

A20) The assessing officer will do the following in this type of income tax assessment:

Giving such a person notice requires furnishing it within the time frame mentioned in the notice. Clause (b) referred to the income return for each of the six assessment years, which is confirmed in the prescribed format. Setting forth such other particulars as may be prescribed, and the provisions of this Act shall apply as if such return were a return required to be furnished under Section 139, to the extent possible;
The assessor re-assesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which such search or requisition is made.

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