Know all about Types of Income Tax Assessment

Last Updated On: July 12, 2021, 11:17 p.m.


The Income Tax Act of 1961 requires everyone in a taxable category to file their income tax return by the due date. Following the submission of the returns, the Income Tax Department verifies the accounts and assesses the taxability. This is referred to as an Income Tax Assessment. In simpler terms, the process by which the Income Tax Department examines ITRs is known as the ‘assessment’.


Types of Income Tax Assessment

  • Self-assessment – u/s 140A
  • Summary Assessment – u/s 143(1)
  • Scrutiny Assessment – u/s 143(3)
  • Best Judgment Assessment – u/s 144
  • Protective Assessment
  • Re-assessment or Income Escaping Assessment – u/s 147
  • Assessment in case of Search – u/s 153A


(1) Self-assessment – u/s 140A

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) 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.


(3) 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.


(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 

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


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