The Income Tax Act 2025 introduces comprehensive changes to assessment procedures and return of income filing requirements, including mandatory return filing for 10 categories of persons (companies, firms, individuals, specified entities, universities, business trusts, investment funds, loss-sustaining persons, residents with foreign assets, and persons meeting prescribed conditions), extended due dates (31st July for non-audit cases, 31st August for audit cases), belated and revised return provisions with extended deadlines, updated return filing within 48 months, defective return rectification within 15 days, and faceless assessment procedures. The act also introduces new provisions for valuation officer references, special audit requirements, and reassessment notice timelines (4 years and 3 months, extendable to 6 years and 3 months with possession of evidence).
Virtual session on Assessment Procedures & Return of Income under the Income Tax Act 2025 | 27.05.26Añadido:
Yeah, good evening members. Office of SIRC takes great pleasure in welcoming you all to this virtual session on assessment procedures and return of income tax income under the Income Tax Act 2025.
As tax laws and compliance procedures continue to evolve, sessions like these help our professionals to stay updated with the latest developments and practical aspects of implementation. We have with us today chairman of direct taxes committee of SIRC of ICAI I am Palayam Venkatesan Arun and renowned session speaker CA Naveen Garivalsar. On behalf of office of SIRC, we welcome both of you, sir.
A warm welcome to both of you.
Yeah, we will start the today's proceedings with the invocation of moto.
>> [music] [music] [music] [music and singing] [singing] [music] [singing] [music] [music] [music] [singing] [music] [music] >> Thank you.
I request the chairman of direct access committee of SIRC to please welcome address and also introduce our session speaker CA Naveen Garival, sir.
Over to you, Arul.
>> Yes, sir.
Uh good evening uh good evening all. On behalf of direct tax committee, I welcome you all for the first online program on assessment procedure.
Our speaker Naveen Garival is no need any introduction. He's well versed income tax expert across South. He's delivering his speeches. However, on I have his profile with me. I welcome I read out the profile.
Uh Naveen Garival sir is become graduate as completed a FCA and he's partner in HC Kincha and family of he's from the family of accountant grandfather, father, and brother are chartered accountant. He specialized in direct taxes.
Currently member of direct taxes committee of ICA New Delhi for the comprehensive review of the income tax act 1961.
Member of committee formed by income tax department for obtaining suggestion for project inaugurated e-filing and CPC and currently member of central tax corporate law GST committee of Federation of Karnataka Chamber of Commerce and Industry. Currently member of study circle study group committee of Chamber of tax consultant Mumbai.
Corporate member of direct taxes committee of ICA New Delhi for 2020-21. Member member in finance advisory committee of Karnataka State Cricket Association.
Was part of the team nominated by the Bangalore branch of SIRC of ICAI to represent before the honorable Justice RB Eswar Committee for simplification of the taxes, coordinator and moderator of the Jingsha one day workshop on scrutiny survey summon search.
So I think he's a speaker well versed attending more than 50 branch across all over India.
In the south across India he's attended his meeting. He's well versed in speaker and his extracurricular activities is keen cricketer having represented college and university matches and played in league registered in Karnataka State Cricket Association. Represented in cricket matches organized by Bangalore branch of SIRC of ICAI. With this few I welcome our today's speaker Naveen Gaggarwal sir and also welcome our past chairman of SIRC Geetha madam. She's also program attending this program and also I welcome our international taxation committee chairman Banu Narayana sir for participation. Sir welcome you sir. Sir Mr. Naveen sir this stage is yours.
>> Thank you sir. Thank you so much.
Hope my voice is audible sir.
>> Yeah yeah sir audible sir.
>> Yes sir.
So our dignitaries on the dais of the dais past chairman of SIRC and chairman of the international committee taxation committee.
It gives me great pleasure to you know deliberate on the assessment procedures and return of income online under the new Income Tax Act 2025.
Now there are two things here. First to Chennai whenever a call comes from Tamil Nadu basically or even Chennai there is no question of my refusal for the simple reason my wife is from Chennai.
So you know always it goes without saying that I have to you know comply. It is like a dictum for me and when I SIRC calls I have to just abide by them.
Secondly, this assessment procedures my dear friends 25 years back a great chartered accountant who is no more amongst us late and great Shri T.N.
Manoharan.
I referred his book 25 years back and what a wonderful fantastic book.
That assessment procedures what I studied from that book is still ingrained in my head.
Still ingrained in my head and I have mastered all the sections at a cost of sounding immodest I'm telling you. I have mastered all the sections assessment procedures courtesy the late and great Shri T.N. Manoharan because what a simple language the book was you know and how beautifully explained with lot of examples. In fact I'm telling you you know there is section 150 the old act income tax act 1961. 150 subsection 1 which is subject to 150 subsection 2 which says hey goodbye all the timelines of section 149. I will reopen whenever I want to hell with your timelines up to four years beyond six years. See there are three timelines now. Earlier it was three years and five years then with effect from 1st of September 2024 there was an amendment which says three years and three months five years and three months. Then come to the new act under 2025 which you are going to deliberate it says four years and six months and four years three months six years and three months etc. etc. Why we remember is because of this great human being great personality. So we move forward sir.
We will try to complete as much as possible and I also want to take up each and every question which is there online. We will see how what best can be done sir. We will try to take up all the important provisions regarding return of income and regarding assessment procedures. So I will just, you know, uh present my PPT.
>> [snorts] >> It will be shared with all of you. Don't worry, my dear friends. I will upload it to SIRC. Don't worry. They will share it. Don't worry.
Is it visible, sir?
PPT is visible, sir. I hope.
>> Yes. Yes. Yes. Visible, sir.
>> Yeah, we'll we'll continue, sir.
Straight away we'll go to the topic.
Now, straight away I am dwelling into the topic of return of income and assessment procedures.
So, now, my dear friends, what is the permanent account number? We start with this. We'll try to cover all the important provisions. Then we'll try to take up all the questions. My dear friends, the permanent account number in the old act was 139A, which is now 262 subsection one. So, what is the section telling? Every damn person on this earth under the Income Tax Act has to be allotted a PAN. Okay? Who will allot the PAN? The assessing officer. When to allot the PAN? Obviously, when my total income is above the basic exemption limit or if I'm carrying on business or profession, my turnover, my sales, my gross receipts should be more than 5 lakh of rupees. And if I'm required to file a return under section 263 of the act. What is 263 of the act? My dear friends, 263 is under 139 one. Now, earlier 263 is what? Revisionary provisions. So, my dear friends, when you come under the new act, don't get confused. Section 263 is equivalent to section 139 one of the earlier act.
Okay? So, 263 is what? 139 on the present act. So, it is not 263 is revisionary powers.
Then, if you're a resident other than individual, financial transaction aggregating to 25,000 or more in a tax year. So, what is a tax year? All of you know, very very simple concept, there is no confusion. Sir, what is a tax year?
Take tax year 26-27, assessment year 26-27. Up to March 26, my dear friends, when the financial year ends, that will be assessment year 26-27, which I have to file return. Now, what is happening is tax year 26-27. When should I file the return for tax year 26-27, my dear friends? In the next tax year, that will be 27-28.
Then, if my managing director, director, trustee, karta, etc. Okay?
Or any such person competent to act on behalf of the person referred to in clause B, because it is other than individual.
Then, such transactions as may be prescribed by the board yet to prescribe.
Move forward, sir. These are all important, you know, provisions.
Now, somewhere in the PPT also, I have given, my dear friends, the observations, recommendation of the select committee of Lok Sabha.
So, what has happened is why I have given this?
See, what has happened, the government before implementing this act, that is new act 2025, they formed something called as a select committee consisting of 31 or 32 members of Parliament.
So, the here the Karnataka state the Chartered Accountants sent me as one of the representatives. I appeared before the select committee. SIRC also, I was there in Nungambakkam. Uh myself and, you know, Banu Sekhar, sir, and other six, seven CAs were there from entire South. So, we were working under the uh famous chartered accountant of Kerala, Babu Abraham Kalivayalil, sir.
On one Sunday, we were there in SIRC, we were there in Nungambakkam.
I had the opportunity to take the hospitality of SIRC morning till night on a Sunday. We all deliberated on various provisions which our chairman had given. In turn, we gave all the inputs, and those inputs were forwarded to the president of ICAI who in turn forwarded the same to the finance ministry.
Let me tell you my dear friends, similar with the select committee of 31 MPs. And as a common man, what we thought, oh you know, they will not have any knowledge.
What knowledge do they have of the law?
I was pleasantly surprised. They had beautiful knowledge, I'm telling you, about the subject. They had fantastic knowledge, enormous knowledge. More than 285 recommendations were accepted by the select committee, I'm telling you.
Whatever recommendations given by the chartered accountants across 285 recommendations have accepted by select committee and was incorporated in the law before its implementation. Now, come to return of income, my dear friends.
What is 139 1? It's 263 subsection 1 clause A. So, what is 139 and 263 1A?
So, every person will now for a tax year file a return. When to file, sir? On or before the due date. So, who are these persons? There are 10 persons, my dear friends. What was scattered earlier in 139 have all come under one umbrella.
So, this is one of the advantage of the new act. You cannot hoodwink the revenue today because for example, you take this charitable trust.
So, there is section 11, section 12, section 13. Then you're accredited income, that will go to some other chapter. So, there you know that 115 BBC, you know, uh fair market value of assets less liabilities, etc. Different different chapters. It was scattered, staggered all along. Now, what has happened? Everything has come under one roof. So, for this 263 1A, they are telling every person should file a return of income. Very good.
When? Before the due date. How many persons? There are 10 persons. Number one, company.
Whether the income of the company is zero, minus one, or plus one, he has to file return of income. Then, number two, firm. Whether the income of the firm is zero, minus one, plus one, mandatory to file return of income. Number three, a person other than a company or firm.
When to file return of income? If its total income or the total income of any other person in respect of which he's assessable under this act during the tax year. Now imagine it is during the tax year. What was assessment year? Tax year. Without giving effect to provisions of 17B, schedule 8, or deductions allowable under 82 to 88 of chapter 4E. What is chapter 4E? My dear friends, in the earlier act, chapter 4E was capital gains. Fortunately, even under the new act, it is same capital gains. So chapter 4E is still capital gains under the new act. Then he's telling basically, person other than a company or firm, see the total income.
Which total income before claiming deduction 82, 83, 84 means before 54, 54F, 54G, etc., etc. Of chapter 4E means capital gains. Similarly, what is chapter 17B and chapter 8, schedule 8?
My dear friend, chapter 7B 17B is for your registered nonprofit organizations.
Then your chapter 8 is for the old section, what was 13A, political parties. And chapter 4E we discussed, 82 section 54, 83 54B, 84 54D, 85 54EC, 86 54F, section 87 54G, section 88 54GA.
And what is chapter 8, my dear friend?
One more we saw, chapter Chapter 8 is nothing but your chapter 6A deductions.
Chapter 6A deductions. So what are the old sections, sir? Earlier it was 80C to 80U. Now it is section 123 to section 154 of the new act. Earlier chapter 6A, now chapter 8. Earlier 80C to 80U, now 123 to 154. So before claiming all these deductions, all these exemptions, is your income more than basic exemption limit? Yes, sir. Then please file return of income. That is the third category of person. Now, we move to the fourth category of person. He says specified entity as defined in 263 subsection 9 clause C. If it's total income without giving effect to provisions of section 11 exceeds the maximum amount which is not chargeable to tax. That is your old section 10. Then university college or other institution in as per 45 3A. That is your earlier 35 section. 35 12 35 13 etc. Then sixth one is business trust.
Then investment fund.
Earlier it was 115 UB. Now 224. So basically all these persons have to file return of income. Under which section?
263 subsection one clause A. Who is the eighth person? Now eighth person what are they telling? The person who has sustained a loss in the tax year under the head PGBP or under capital gains and who intends to claim that such loss is to be carried forward as per this act on the act new act.
So a person who has sustained a loss in the tax year. Okay, that is PGBP.
Earlier what was it my dear friend? 72 capital loss. 73 speculation loss. 74 capital loss. 74 capital A loss from owning and maintenance of race horses.
32 within bracket two loss from house property. Oh sorry. Loss from house property 71 capital B. What is 32 within bracket two unabsorbed depreciation? So only for these two losses earlier 139 three. What was 139 three? All the losses you want to carry forward. Please file the return within the due date. Similarly for 71B loss from house property as well as 32 to unabsorbed depreciation, you need not file the return in time. So now here is telling 263 subsection one clause A subclause eight. Person who has sustained a loss in the tax year. You guys want to carry forward that loss. Section is telling only PGBP and capital gain. No more, sir. PGBP capital gain you guys want to carry forward such loss or you want to claim such loss, then please file the return within the due date. That's all it says.
Earlier 139 three read with section 80 read with section 157.
Why 157? I told you I'm a non-audit student, so 156 was notice of demand.
157 is notice. That is the intimation for when when there is a loss. That is merely theory, sir. There is no such intimation passed till today by the department under 157, but there exists a section under 157 of the act which says intimation of loss. So, earlier I'm collecting 139 three read with 80 read with 157. Come to the ninth person, my dear friends. A person who is a resident other than a not ordinary resident. It was always there, sir. Even this was there in the previous act. Person a resident other than not ordinary resident is a beneficial owner or otherwise any asset. Okay, including any financial interest in entity located outside of India or has a signing authority in any account located outside India. Either is a beneficial owner or is a beneficiary of any asset. Same thing it continues, including any financial interest located outside of India, except where any income arising from such asset is includable in the uh income of a person referred to in item A, obviously. So, then also you have to file return of income. The last one, 263 1A clause 10, says a person other than a company or firm fulfills such conditions as may be prescribed. What are the conditions prescribed, sir? Kindly go to income tax rules of 2026 163. Here I want to commend the department also with the swift the swiftness which it they have moved. Earlier, 2 years back or one 1 year back 1 and 1/2 years back I had an opportunity to meet the principal chief commissioner in Chennai there and they were under tension, you know, they were preparing for all these deductions because the finance minister set certain goals. 150 officers committee, my dear friends, spending 60,000 man hours by the department. They have implemented this very simplified act within 1 year.
Okay. So, commend my kudos and my congratulation to the entire team. As also the finance minister Nirmala Sitharaman ji who will be presenting her record-shattering, record-breaking 10th budget next year.
The most budgets presented in our Finance Ministry is by late and great Sri Morarji Desai. Next year it will be broken by Nirmala Sitharamanji, 10th budget, my dear friends. Come to 263 1810.
Such persons as may prescribe, you have to file return of income, okay? So always don't think, my dear friend, there is no income. It is below taxable limit. Why should I file return of income? Wrong. Please. You have to see 263 1810. The 10th category of persons, even though their income may be a zero, still you have to file return of income.
Why?
AS says, you have deposited 1 crore rupees or more in current account, okay?
I'm not bothered about your income. It may be zero.
But if you have deposited more than 1 crore in current account, 263 1810, they are telling file return of income. If you guys have entered incurred expenditure of 2 lakhs on either yourself or on a year person for travel to foreign country.
Your income may be zero. Still you have to file return of income. Number three, for consumption of electricity, you have spent 1 lakh rupees or more, more than 1 lakh rupees. Still you have to file return of income. If your sales, gross turnover, or gross receipts in the business is more than 60 lakh rupees.
So you know, it may be below taxable limit. They are telling, I don't know.
You have to file return of income, mandated.
Then your total receipts in profession is more than 10 lakh rupees.
File return of income.
Sixth case they are telling, suppose your TDS and TCS is round about 25,000 or more, and in case of a resident of age of 60 years or more, so a senior citizen. I would like to tell you, my dear friends, in the earlier act, senior citizen was defined in six places. Now in the new act it's defined in only one place. Earlier act, six places.
Everywhere the senior citizen definition was there. Now only one, it is at one place now. So this everything is under one umbrella. So senior citizen when to file return of income, my dear friends?
More than 60 years, amount shall be taken as 50,000 or more.
Then in your savings bank account, if you have deposited 50 lakh rupees or more, etc., etc., you All these conditions, if you by default, if you fall in any of these conditions, you'll have to file return of income.
Move forward, my dear friends. And 263 1B says, all these guys have to file return of income on or before the due date, regardless of the income or loss. Company form, I told you. Whether you have income or loss, you have to file return of income. It's a mandatory. There is a company, form, university, college, or other institution referred to in 45 3A. Okay?
Then business trust, then investment fund. Person who is a resident other than non-resident, etc. So, what are the due dates?
All the due dates are same, my dear friends. Only thing is what happened?
There is an amendment. There are 128 amendments in this Finance Act 2026.
See how fast the government is moving.
Even before the new act was implemented at 2025, you know, they have brought in amendments. 128 amendments are there.
So, please understand, in the due date, what is the amendment? They have gone back to the olden days, 20 years back, when the due date for business was 31st August. So, they are telling, not only 31st July now, it will be 31st August for all those guys, you know, for all non-audit business cases or trust.
ITR1, ITR2, it will be 31st of July.
All the non-audit business cases or trust are proposed to be allowed time till 31st of August.
So, 263 1C is the due date, my dear friends. 263 1A, different categories of return of income. How many people have to file? 10 people. 263 1B, who are who for whom all it is mandatory to file return of income. 263 1C is what, my dear friends? It is the due date.
Earlier, where was the due date? It was in explanation to 139. Do not worry, more or less, the spirit of the act, how the act moves, it is all the same. There are not uh changes. How that moves is almost same, my dear friends. Only thing is you have to remember the section number. For that also, already you have this comparison.
You have this tabular form already. If you put the old section, new section, easily it comes. So, don't worry about that. That also, you can do it. Do not worry.
So, now 263 (1) (c), I told you the due date amendment. See, this is the I have given in this the memorandum to Finance Bill '26. I've also given the Finance Minister's speech. So, what is it being told in the memorandum? In order to facilitate the taxpayers who are engaged in business or profession and partners of a firm who do not require to get their books of account audited and also the trusts, it is proposed that more time should be made available to them to prepare their books so as to make them the necessary compliances. So, rationalization of due dates in such non-audit business cases and trusts is envisaged to facilitate taxpayers and to reduce grievances. So, therefore, my dear friend, the due date is extended to 31st of July 20 I mean, your 31st of August.
Now, amendments made in Income Tax Act '25 shall come into force on 1st day of April '26 for tax year '26-'27 subsequent tax years. Amendments made in Income Tax Act 1961 shall come into force on 1st day of March '26 for Assessment Year '26-'27 previous year '25-'26.
Why for all, you know, Assessment Year '26-'27 is only from 1st March '26?
Because from 1st of April, there is no Income Tax Act '61. So, from 1st of April, the tax year kicks in the new Income Tax Act 2025 kicks in. Therefore, all the amendments whatever they made in Income Tax Act 1961, but for the four retrospective amendments, are all with effect from 1st of March '26. We are deliberating only on the new Income Tax Act. So, this is the 263 subsection (1) clause (c) the amendment. We move forward, sir.
Now, >> [clears throat] >> this 139 6 etc. Board may prescribe form for furnishing return, etc. Okay?
Then 139-6A, particulars prescribed in the return of income. So, in the return of income, so many things are prescribed. What are the income exempt from tax, assets of the prescribed nature, value held by assessee as beneficial owner or otherwise, or which is in beneficiary, bank account, credit card, etc., etc. All these are there in prescribed in the section. That is why they are giving that name and address of partners, etc. All these are asked in the return. The power to ask all these things, all these particulars prescribed comes from 263 subsection two, clause B.
Then [clears throat] 263-3, my dear friend, it is akin to 139-1C, which says, "Central government may by notification exempt any class or classes of persons from the obligation to file a return of income under this section, subject to conditions therein yet to prescribe."
Now, what is 263-4?
It is belated return. What was earlier, my dear friends, belated return? 139-4.
So, what was the belated return earlier?
"Any person who has not furnished a return within the time allowed to him under subsection one, that is 139-1, may furnish a return for any previous year at any time before 3 months prior to the end of relevant assessment year, or before the completion of assessment, whichever is earlier." 31st December was the due date. Sir, 31st March, year is ending.
Assessment year, end of relevant assessment year. 3 months prior to the end of relevant assessment year, that is 31st December. It was there in the 139-4, old act. What is there in the new act, similar section? Under 263, subsection four, what is the definition of a belated return? Rather, what is how it is worded? "Any person who has not furnished a return within the time allowed to him under subsection one."
Sir, subsection one, 269-1A. Subsection one, 269, due date. Due date given in 269, subsection one, clause C. He may furnish a return for any tax year now, not assessment year.
Excuse me, for any tax year. Now, what is the time period? "Within 9 months from the end of relevant tax year. 9 months from the end of relevant tax year, same thing or before the completion of assessment, whichever is earlier. Don't get confused. Take the example, tax year 26-27.
What is the due date to file, my dear friends? Tax year 26-27.
It will be next year, 31st of July 27.
No problem. So, within 9 months from the end of relevant tax year. So, 26-27.
March 27, tax year is ended. 9 months from the end of relevant tax year. 9 months, 9 months plus 31st March is 31st December 27. Nothing but same thing.
Okay, 9 months from the end of relevant tax year, you have time to file belated return or before the completion of assessment, whichever is earlier.
Come to revise return.
So, if a person having furnished return under subsection 1 or subsection 4.
Subsection 1 is your 263 1A, which is 139 1 or under subsection 4, which is 139 4 or 263 subsection 4. Very good. No problem. When can I file revised revised return? When I discover any omission.
>> [clears throat] >> When I discover any wrong statement, then that guy can file a revised return.
Again, time limit. Ditto of the belated return, my dear friends. 9 months from the end of relevant tax year or before the completion of assessment, whichever is earlier.
Earlier, what was 139 5? Any person having furnished return under subsection 1 or subsection 4 of 139 discovers any omission or wrong statement. Those two keywords are there in the new act also.
Omission or wrong statement. Then that fellow can furnish a revised return at any time before 3 months prior to the end of relevant assessment year. 3 months prior to the end of relevant assessment year. Same thing. That will be 31st of December. Now, what it says?
Within 9 months from the end of relevant tax year. Again, 26-27 tax year.
Tax year will end on 31st of March 27.
Let us take the due date is for a it's a non-business trust. It's a business trust. It's a business, but it is not a audit. So, it is a non-audit business.
What is the due date? 31st of August 2027. I want to file a belated return 31st of December 2027. I want to file a revised return 31st of December 2027.
That's all. Move forward, sir.
Now, now what are they telling? Sir, time limit you know for filing original return, for filing belated return, for filing revised return. The government is in a hurry to collect all the taxes. It is not in the earlier, you know, within 1 year from the end of relevant assessment year when they used to levy penalty, etc. Now, they are not even waiting for the year to end assessment year. They are telling up to 31st December finish. Beyond 31st December, what can you do? I had to file only updated return 139 8A. Now, they are telling I will extend the time.
Honorable Finance Minister is telling in this budget, I will extend the time for revising the return from 31st of December up to 31st of March, but with payment of nominal fee. What is the logic? Honorable Finance Minister is saying, "My dear citizens of India, the time limit for filing belated and revised return is the same, 31st of December.
Therefore, a person filing belated return on the last day or 1 week before, etc., has no time to file revise the return.
So, therefore, I am going to extend the time for only revision revision of returns, not for belated return.
I will extend the time for revising the return from 31st of December up to 31st of March, but you'll have to make a payment of a nominal fee. What is a nominal fee? Less than 5 lakhs total income, 1,000 rupees. More than 5 lakhs total income, 5,000 rupees. That's all.
It can be done under the old act. It can be done under the new act. Which is the section under the new act? 428 clause B.
Very simple. 428 B. Subject to 428 B.
Now, under the new act, my dear friends, 263 subsection 5, there is an amendment.
Which way amendment? Finance Act 26 Income Tax Act 2025 What does the amendment say at 428B?
My dear friends, less than 5 lakhs 1,000 you pay extra. More than 5 lakhs you pay 5,000. What about under the new income tax old income tax act? There is a section 234I subject to 234I.
How much? Same thing. Less than 5 lakhs 1,000, more than 5 lakhs 5,000. Very, very simple. Okay, move forward, sir.
Now we will move forward. Yeah, this is what I was telling you 428 sub class B. That is for the new act.
Now, this is the how the new section is worded revised return, my dear friends, after the amendment. 263 subsection 5 akin to 139 subsection 5. If any person having furnished a return under subsection 1 or subsection 4. What is subsection 1? Original return 263 1.
What is 263 4? Belated return. Discovers any omission or wrong statement therein, he may subject to the provisions of 428B, which I told you. He can furnish a revised return within 12 months from the end of relevant tax year. Very simple.
Within 12 months from the end of relevant tax year. For tax year 26-27 what is the due date for filing revised return? Up to 31st of December. Now, they are 31st of December 27. Now, we are telling I want to revise the return subject to 428B. Then 3 months more I have the time. So, therefore, beyond December up to March he's telling, you can revise the return subject to 428B.
So, there is no problem.
Similarly, my dear friends it says here 428B. Now, the doubt will come. How do you know that the fee is to be paid only between January to December?
Where is that given? Where is that sentence?
Please see 428B.
Furnishes a return under section 263 5 beyond 9 months from the end of relevant tax year, he shall be liable to pay by way of fee beyond 9 months, beyond 9 months from the end of relevant tax year. What is the relevant tax year end?
March 27, tax year 26-27, March 27. So, from that you know, beyond the 9 months I'm furnishing. That is after 31st of December 27. That means I can I have to pay fee. 1,000 if the total income does not exceed 5 lakhs and sum of 5,000 in any other case. Therefore, 263 1A original return, 263 subsection 4 belated return, 263 subsection 5 revised return. Again, subject to 428B up to 31st of March I can file, my dear friends.
So, see how much you can file the return of income. Everywhere you have got Now, move forward [clears throat] for return of income. What is the time limit? I told you even under the old act Income Tax Act there is an amendment 139 subsection 5. All the amendments are applicable with effect from 1st day of March 2026 subject to 234I. Same thing.
That 5 lakhs and more than 5 lakhs, you know, 1,000 and 5,000 etc. Move forward, sir.
So, now he the assesse, this fellow is filing return of income even the time limit for revised return has been over.
So, time limit for revised return is also over. So, what this fellow can do?
He can still file updated return. 139 8A, you know, updated return was there.
4 years I could have filed. 12 months, 12 months to 24 months, 24 months to 36 months, 36 months to 48 months.
4 years I could have filed return of income subject to what? Additional tax and penalty 25%, 50%, 60%, 70%. What is already there in the act, my dear friend? 139 subsection 8A. What was there? You have not filed the return either under 139 1 original return, 139 4 belated return, 139 5 revised return.
No problem. Late Latif, you are coming in the last, I'm still giving you opportunity. You file a return. It is called updated return, ITR-U. File return updated return 139 8A up to 12 months from the end of assessment year between 12 months to 24 months from the end of assessment year. 24 months to 36 months from the end of assessment year.
36 months to 48 months from the end of assessment year. Prevailing law under the old income tax act rate of tax additional tax and penalty 25% 50% 60% 70%. Even in case of search today my dear friends 158 BC is only 60%. If I file updated return between 36 months to 48 months it is 70%.
Now what you have made sir amendment?
Now please tell me what is the amendment you have made?
They are telling we will see what are the amendments. So now just go through the section. I'm coming back to 263 subsection 6 which is the updated return under the new act. Updated return under the new act 263 subsection 6 clause A.
What are they telling now? Whether or not you guys have furnished a return under 263 subsection 1 original return 263 subsection 4 belated return 263 subsection 5 revised return. Then you may furnish updated return at any time. Why I'm telling you my dear friends just to go through the law how the law has changed.
At any time within 48 months from the end of financial year succeeding the tax year. Okay?
So at the any time within 48 months same it is a period 48 months from the end of financial year.
Again tax year 26 27. When does the financial year end? March 27. So March 27 financial year end 48 months from the end of financial year succeeding the relevant tax year. Financial year when it will end succeeding the relevant tax year 26 27 add one year March 20 26 27 tax year March 28 from March 28 48 months. Okay?
No problem. Now move forward sir. So 263 6B. 263 6A gave the time limit. Now, 2636B is telling provisions of clause A shall continue to apply for a tax year even if a person has sustained a loss and has furnished the return of loss within the due date. Mark the language.
You can file updated return even if you have sustained a loss.
The loss is and and has furnished the return of income >> [clears throat] >> within the due date.
So, that loss return also you should have furnished within the due date. Then you can update what? A return of loss, which was not allowed in the earlier.
Earlier act would not allow. Now, they are telling even return of loss you can file updated return. But but that updated in return should be a return of income. It should not be return of loss.
My dear friend, 2636B is telling person has sustained a loss file that return of loss within the due date.
That return of loss you can file updated return of income. Return of income, not return of loss. Provided that return of loss filed within the due date. Don't ask me if the system will allow.
Excuse me.
If the system allows, you can do anything, sir.
Don't tell me. For example, all your you know, we'll be seeing 280, you know, 280 your 148 notice. What is now 280?
See, 148 uh 3 months time is there. Even after 6 months and the portal it does not close.
I can file a 148 return, although that will be invalid. That 148 return I can file even after 5 months on the portal.
3 months are over, but on the portal, I'm telling the practicality, I can upload the return 148, I can even get an acknowledgement. But that is not a valid return. Whatever income declared in such a invalid return filed in pursuance to notice under 148 will not be considered.
When the assessing officer will issue notice he will continue a return income nil only. He will not take that declared in the return. Because it is filed beyond the due date. Certain things portal allows.
Certain things law stops, but certain things portal will allow.
Move forward, sir. So, now what is the amendment made in this clause? 263 6B.
Now, he's telling no problem.
Even for loss, I allowed you update return of income. Now, he's telling one amendment is what? That updated return is a return of income.
Okay? Why I stressed there? Because that was the existing section. Now, there is amendment in this B.
There are two amendments. What are the amendments? First is, you told sir, return of loss is there. Return of loss should be filed within the due date. And it should be return of income. Very good. Now, they are telling it need not be return of income. It may be return of loss only, which updated return, but the loss should be reduced.
Updated return has the effect of reducing such loss. That is one amendment.
Second amendment they are telling, very beautiful amendment. They are telling even if you have received notice under 280, that is 148, you can update the return. You can file updated return, meaning to say. Earlier, you knew my friends, if the case is reopened, notice under 148 issued, no question of filing updated return. So, now they are telling no problem. Even though you have now received this 148 notice, you can still file updated return. Once you file updated return, you cannot file 148 return. You cannot do this two timing. You have filed updated return for the year in response to that Okay? And you cannot file a return under 148 now.
Where an updated return is furnished by a person for the relevant tax year in pursuance of a notice issued under 280, >> [clears throat] >> within such period as specified in the said notice, in such a case, the assessee shall be precluded.
The assessee shall be precluded filing return in pursuance of said notice any other manner.
Okay. Now, move forward, sir. These are all the memorandum. So, you know, this amendment has been made. Suggestions were received from stakeholders that update return may also be allowed in such cases where tax payer is reducing the amount of loss. So they gave you know suggestions received from stakeholders.
Please allow us to file return even where my loss is reduced in comparison to the actual loss.
Original actual loss claimed as per the original return allowed.
Next they are telling when are the amendments applicable?
Obviously I told you sir under the new act 1st April 2026.
Similar amendment shall be made in Income Tax Act 1961 >> [snorts] >> to align with the proposed amendments in Income Tax Act 2025. You know from when it comes into place is 1st of March 2026.
Now >> [clears throat] >> you are telling very good. You are telling even after 148 notice issued or 280 notice issued you can file updated return. They are telling just wait.
If you want to file a return even after reassessment proceedings are initiated, you give me more money.
Give me 10% more.
Sir, 25% 50% 60% 70% now 80%.
Additional 10% rate of tax over and above the rate applicable for the relevant year.
Then assessing officer will then use only this updated return in his proceedings. So assessing officer obviously will do the assessment based on the updated return filed in response to notice under section 280. So reassessment notice have come. I filed an updated return. They are telling you file updated return. No problem. Even though reassessment proceedings have been initiated, I can file updated return. So that tax will be more 10% more. Additional 10% based on 25 50 60 70. So you add 10 35 60 50 + 10 60 60 + 10 70 70 + 10 80.
>> [clears throat] >> Thereafter assessing officer will use only the update return for to complete his assessments.
Okay? Why?
Earlier my dear friend, 263 subsection 6 clause C sub clause 5 what happened?
You know, it prohibited the filing of update return in such cases where any proceedings for assessment or reassessment or re-computation or revision of income is pending or has been completed for the set tax year.
Now, it was not allowed. Accordingly filing of update return not allowed where proceedings has been initiated. So now it is allowed based on the amendment.
Move forward, sir.
>> [clears throat] >> Now Yeah, this 263 6C. Sir, we are continuing with our discussion of updated return only. Now then what it says, what are the returns you cannot file your updated?
Suppose an updated return has the effect of decreasing total tax liability.
Okay, you cannot file your updated return. If the updated return results in refund, you cannot file updated return.
Updated return has already been furnished, you cannot revise. I mean, updated return already furnished, you cannot revise such return.
Then any proceeding for assessment or reassessment or re-computation is pending or has been completed. Okay?
There amendment is done now. You know that.
>> [snorts] >> Then the assessing officer in possession of the information that there is a violation of specified laws which is defined in 263 subsection 9 clause D and the same has been communicated to him prior to the date of furnishing of updated return. So in such circumstances also you cannot file a updated return. Information is received under an agreement referred to in 90 or 90 of the Income Tax Act 1961 or 115 of the Income Tax Act 2025. Okay?
And the [clears throat] same has been communicated to him prior to the date of furnishing of updated return, you cannot file updated return.
Suppose prosecution proceedings have been launched under chapter 22 of the new income tax act, you cannot file an updated return for such tax year.
Then, 36 months have expired from the end of financial year succeeding the relevant tax year, and any notice to the show cause under section 281. What is the show cause under 281, my dear friends?
148A.
See, when was 148 issued subject to 148A show cause? That 148A is nothing but 281. What is 148? It's nothing but 280.
So, they are telling 36 months have expired from the end of financial year succeeding the relevant tax year.
Any notice to show cause under 281 has been issued in this case, except where an order has been passed under 281(3) or a section 148A(3) determining that it's not a fit case to issue notice under 280, or such person or belongs to such class of persons as may be notified.
So, they are telling you suppose you know, notice to show cause is issued 148A, then except where an order has been passed under 281(3), I can file that. What is the 281(3)? My case was taken up for reassessment proceedings, but order was passed under 148A(3) determining it's not a fit case to reopen.
So, they themselves thought it's not a fit case to reopen. Therefore, then I could file an updated return because it was closed.
Suppose notice is issued, any notice to show cause, then it is not possible to and 36 months have expired.
Move forward, sir.
Person also shall not be eligible to furnish an updated return where search has been initiated. 247 means earlier 132.
Any books of accounts, other documents, any assets requisition under 248. What is 248? 132A.
So, search has been initiated, no question of filing updated return. Books of accounts, assets requisition under 132A or presently 248, no question of filing updated return. Survey has been conducted under section 253 other than you know, this uh subsection four of the said section. That is what is 253, my dear friends? 133A. Survey is conducted 133, I cannot file other than subsection four means what? TDS survey. TDS survey is there, I can still file an updated return.
Then notice [snorts] has been issued under 294 in pursuance to provisions of section 295 for the year that in which search is initiated or survey is conducted or requisition is made. So, what is that 294? Nothing but your block assessment 158 BC. And what is that 295? It is that uh you know, that 158 BD, undisclosed income of any other person. So, here also, my dear friends, I cannot file a updated return.
>> [clears throat] >> Move forward, sir.
So, what is 263 subsection six clause E?
Again, we are continuing the discussion.
So, what is this uh They are telling now akin to seventh proviso of 139A A.
Continue with the discussion of the updated return.
So, person has furnished a return under clause A and as a result, the loss or any part thereof carried forward in chapter seven or undisclosed, you know, chapter seven is a set off carried forward of loss, 333B depreciation old section 32, okay?
>> [snorts] >> So, yeah.
Under chapter seven or unabsorbed depreciation carried forward under 333B or tax credit carried forward 206C 1M 2P or 2062E2H, that is your AMT and you know, your uh MAT [clears throat] is to be reduced for any subsequent year. So, they want to reduce your loss or your MAT credit or AMT credit, etc. Then updated return shall be furnished for each such subsequent tax year. You want to reduce our loss? No, no, sir. 50 lakhs business, I want to reduce 50.
So, no problem, they are telling. You want to reduce your loss, then loss as a result loss or any part thereof. Why?
Because of unabsorbed depreciation carried forward 323B or tax credit carried forward.
So, therefore is to be reduced.
Then also you have to file update return for each such year AMT and MAT. Move forward, sir.
Now, defective return. What is defective return? 1399 you knew, sir? Defective return?
There were certain conditions now.
Return of income will be treated as defective. Sir, CPC will send 1431A.
You pay they will tell that return's defective. So, you'll have to, you know, reply within the time specified. Then they will cure the defect or they will tell, "No, no. 1431A etc. I will issue intimation 1431. I know I cannot accept it, whatever." Or they may cure the defect.
So, what is our telling? 1399 equivalent to 263 subsection seven. What is it?
Where the assessing officer considers that the return of income >> [clears throat] >> furnished by the assessee is defective, then he will intimate the defect and give an opportunity to rectify the defect within 15 days from the date of such intimation.
15 days time will be given. That mandatory they have to give, sir. Or within further period as may be allowed on an application made by the assessee.
If the [snorts] defect is not rectified, if the defect is not rectified within the period allowed, then the return shall be treated as invalid return. Suppose they give seven days time.
Or they give, you know, 15 days time.
Or you filed an application, "Kindly give me five days more etc." But you did not rectify the defect within the time allowed, then it will become an invalid return. Consider you know 10 crores loss was carried forward.
You filed the return within time.
10 crores loss is there.
It became defective return.
They send you the notice.
You did not reply. 15 days time is there as per law.
You did not reply.
So, what will happen? It will treat as invalid return. Treated as return having not been filed or one crore loss goes for a toss. Return is not filed within the due date.
It will considered a deemed not to be filed at all. Non-GST, void ab initio.
Where the assessee rectifies the defect after the expiry of the period allowed.
For example, 7 days time the assessing officer has given.
I rectified say after the ninth day.
Online it is still open.
It is still open. That fellow has not touched. Okay, he will tell. I gave 7 days time. But you rectified the defect within 10 days. Anyway, so I will give you time, not an issue. Don't worry. So, I will condone the delay and I will treat the return as a valid return.
Now, as per the rules, my dear friend, when can a return of income be treated as defective?
Conditions for treating a return as defective under section 263 subsection seven.
So, that is in What are the rules? 166 of IT rules.
>> [clears throat] >> All return of income shall be treated as defective any of the following conditions is satisfied. This is not given in the act. This is given in the rules.
Return of income shall be regarded as defective any of the following conditions satisfied. All fields parts schedules statements columns in the return as applicable not duly filled in including those relating to computation of income. See, it becomes defective.
All the fields in the return, parts in the return, schedules in the return, statements, columns in the return are not filled in including those relating to computation of income. It may be treated as defective.
Report of audit in auditable cases referred to in section 63 >> [cough and laughter] >> has not been furnished prior to the date of filing return of income.
Referred to in 63 is your 44 ABA section. Report of audit referred to in 63 has not been furnished prior to the filing of return of income or if the return of income is furnished under 263 six, details of payment of tax as per section 267 are not duly filled in the return. That means you know your uh 140B details.
Tax paid on updated return. Then brought forward credit of brought forward credit of minimum alternate tax or MAT, your alternate minimum tax AMT >> [clears throat] >> claimed in the return not in accordance with the carry forward of MAT or AMT in the latest assessment. Okay, so all this it may treat the return as defective.
Board may notify the class or class of person to which any of the conditions specified in clauses A to D shall not apply or shall apply with such modifications as may be specified in the notification.
Okay?
Move, sir. Next is 139 9A.
So 263 subsection eight. What is 139 9A?
>> [clears throat] >> Nothing but 263 subsection eight.
So the provisions of this What is this 239 3B, sir? Provisions section shall also apply to a return of income which is furnished in pursuance of an order passed under section 239 3B. 239 3B is nothing but 119 2B. What is 119 119 2B, my dear friend? Nothing but we used to file, you know, earlier before the Principal Commissioner of Income Tax condonation of delay in filing return of income.
119 2A, 119 2B. 2A is for tax, 2B is for the refund, you know.
So there is condonation of delay. Today you cannot file condonation of delay. In the PCIT will tell, "My dear, go and file updated return. If there's a refund, I have no other choice. I need to file petition to PCIT only."
Then the provisions of this section shall not apply to a specified senior citizen as referred to in section 402 subsection 39 for the relevant tax year in which tax has been deducted at source under section 393 subsection one that is your TDS.
For the purposes of this chapter 492 subsection 39, senior citizen is defined specified senior citizen.
Means an individual being a resident in India who is the age of 75 years or more and that fellow has only pension income and no other income except interest received or receivable from any account maintained by such in same specified bank. So, in the same bank, there should be pension income. In the same bank, in the same account, there should be interest received in which is receiving this specified pension income. You should not have any other account. Then, he has furnished a declaration to the specified bank containing particulars such form and verified in such manner as may be prescribed, you also need not file the return of income. But, what to do if you want refund?
If you not file return of income, fine, sir. But, if you want refund, you have to file return of income. That TDS you want to claim, you have to file return of income.
I remember, you know, having given the suggestion to the select committee which was not accepted. I gave a suggestion, you know, to the select committee stating that, you know, in India, my honors, person who has attained or age 75 years and above, if the person is not carrying on any business, he's having only some interest income or you know, some you know, uh yeah, some shares income, you know, mutual funds, etc. or some rental income, etc. He is not active in business or profession.
So, therefore, what will happen?
Because he's not carrying on business, I told them you exempt such individuals.
Don't ask them to file return of income at all.
Don't collect any tax from them unless they are active in business or they are active in profession. So, they told no, very good suggestion, but uh it cannot be accepted like this. Anyway, uh 75 years of India's independence that thought struck and I thought anyway we are not giving any social security measures etc. to our respected senior citizens. So I thought you know in the income tax at least you know we could make a provision that they told very good suggestion sir but it cannot be accepted. Anyway, move forward sir.
So what [snorts] is this now? This yeah, these are all the definitions.
263 subsection nine will give you all the definitions. See that beneficial owner, beneficiary everything all definitions are there.
You saw that no 263 1A. First one was what? Company, firm, then that individual before claiming. Fourth one was this person, beneficial owner, beneficiary etc. Who is beneficial owner in respect of an asset means an individual who has provided directly or indirectly consideration for the asset for the immediate or future benefit.
Similarly beneficiary of an asset means an individual who derives benefit from the asset during the tax year.
And consideration for such asset has been provided by any person other than such beneficiary. Here the definitions are given.
All those definitions are also given in 263 subsection nine under the same chapter under the same section.
Specified entity we saw that.
They have to file return of income. Who is specified entity? Research association, association or institution all in aspect table. Schedule three table. Lot of tables are there in the act my dear friends now.
Earlier there were few tables you have lot of tables Then a person referred to in schedule seven, institution, university or other educational institution, hospital, medical institution etc. etc. Move forward sir. Specified loss.
If you are you know violation of specified loss I told you then you cannot file update return. What are those specified loss given in the the section? Smugglers and foreign exchange manipulators forfeiture of property act 76 or prohibition of benami property transaction act 88 or PMLA a prevention of money laundering act 2002 or black money undisclosed foreign income and assets and imposition of tax act 2015.
So even that specified loss my dear friend, the meaning is given definition is given it's given in 263 subsection nine. Okay?
And you please see this uh the specified entity, you know, they are told that specified entity also should file return of income. Here the meaning is given. How many types of specified entity are there? There are 14 types of specified entity. So these even these 14 guys have to file return of income.
There only they told specific entity.
That specified entity is given in 263 subsection nine 14 types. So even they have to file return of income. So there 10 263 1 2 3 4 there 10 263 1A there are 10 types of persons. Just I will tell you so that you know we understand very well.
And then specified entity meaning is given here.
Yes sir, 263 1A.
Company firm three person other than company firm. Specified entity what I told you four.
So I told you here eight eight here four specified entity defined in 263 9C. Who is that specified entity?
That section 11 they are telling total income without giving effect to provisions of section 11. What is section 11 in the new new act my dear friend 2025? Nothing but what was there in the section 10. Exempt from exempt.
All the income was exempt section 10 that has now become section 11.
So even these my dear friend specified entity defined in 263 9C. How many types of specified entity? We just saw 14 types. Even those guys who are claiming exemption under 11 not 10 now anymore.
Earlier at 10 now 11. Even those 14 guys should file return of income. So include those also here.
We move forward, sir.
Yes.
So, this is what specified loss. We saw that. You move forward, sir. This is tax return preparer. Same thing, 139 B1, sir. Same thing it is.
Then Return by whom to be verified a dictator dictator, don't worry. The spirit is the same. Even the law is the same. 140 means return by to be verified by whom.
Who should you know >> [clears throat] >> verify the return means who should sign the return of income.
By an individual individual himself. You suppose individual is not possible for individual to verify the return, then any person holding holding duly authorized by him through valid power of attorney.
Individual mentally incapacitated attending to his affairs by guardian or any other person competent to attack.
Hindu undivided family, karta.
Company managing director.
Company not being resident in India, any person holding valid power of attorney.
Company which is wound up by orders of the court, liquidator referred to in 322 subsection one of the new Income Tax Act 2025.
Company whose management taken over by central government, that is by principal officer of the government.
Then a company for which application seeking corporate insolvency resolution process has been admitted by the adjudicating authority by the insolvency professional appointed by such adjudicating authority. A firm by the managing partner of the firm.
Where the managing partner is not able to verify the return due to any unavoidable reason, or there is no managing partner as such by any partner of the firm not being a minor. LLP, designated partner. Local authority, principal officer. Political party by the chief executive officer of such political party.
Any other association, any member of the association, or by principal officer of the association. So, this is same thing, nothing to What is self-assessment tax?
Really, all of you know, sir. 140 capital A. Same thing it is, nothing to worry.
>> [clears throat] >> Dito dito provisions are there. 140 capital A.
Move [snorts] forward, sir.
Tax on update return, everything is same. What was 140 capital B? Tax on update return. We discussed that. You know what you have to do?
You have to pay, you know, extra tax, you know. Under that earlier 140B, now it is 267. How much to pay?
Very simple, sir. 25%, 50%, 60%, 70%. If you are filing a return in response to update in response to 148, add a 10% additional tax. That's all. So, what is it now? Additional income tax payable at the time of return furnishing the return under 263 subsection 6 shall be equal to So, what is 267 subsection 5? Same thing.
>> [clears throat] >> 50% etc. How they are telling?
50% of aggregate of tax and interest payable if such return is furnished after expiry of 12 months but before completion of 24 months from the end of financial year succeeding the relevant tax year. Continue, sir.
No change, same thing, sir. Don't worry.
Go forward.
Now, there are some FAQs also I have taken from this Sarthak portal of the income tax department. So, even that, you know, FAQs are very useful, my dear friends. I have put that here.
I put those FAQs also for your reference.
>> [snorts] >> Yes.
Some questions we will see which are useful. Then you can we can go ahead.
If a taxpayer discovers an error in the ITR filed for assessment year 2026-27 and wishes to file a revised return, which act governs the section? Which act governs the revision?
Revised return for assessment year 26-27 will be governed by Income Tax Act 1961.
Please understand everything up to assessment year 26-27 will be governed by Income Tax Act '61. From tax year 26-27 it will be governed by Income Tax Act 2025. Okay? So, what is 139(5)?
Because I'm filing revised return for assessment year 26-27, as and when I will file. What is the revised return, sir? 139(5) before the expiry of relevant assessment year. That is before 31st of March '27 for assessment year 26-27 or before the completion of assessment, whichever is earlier.
Why I told before the 31st March?
Because of the amendment.
234(I). If I put December to March, that extra fees I have to pay.
The fact that the revision is being done after 1 April 1st April '26 does not change the applicable act. Old act will continue to govern all filings relating to 26-27 and earlier years.
Now, suppose search is initiated.
Just for your information, that's all.
We are not going to, you know, search. I remember SIRC, you know, which was held in Bangalore under Geeta madam's, you know, chairmanship.
So, I had the occasion to, you know, discuss with There were three stalwarts on the stage.
And, you know, we were discussing the It was, you know, There were three stalwarts on the stage and we were discussing the FAQs like this. So, pertaining to search, we had a very good discussion.
There were two, three very good speakers on the stage. I just remembered.
Now, my dear friend, they are telling search happens.
Search is initiated on a person under Section 132 of the old act before the new act came into effect.
Understand carefully.
Initiated on a person under 132 of the old act before the new act came into effect. But, notice for filing return for the block period is issued after 1st of April '26.
Then under which act tax were required to file return?
All proceedings connected with such search continue to be governed by the old act only as if the new act had not been enacted. Why?
Because the search took place before the new act came into force. But notice of filing return for block period will obviously be issued after 1st April 26.
Therefore, the tax were required to file his return of income for block period as per provisions of 158 BC only. For example, tax on search on tax payer is initiated in the month of January 26, then assessments and all other proceedings connected with the search will be under the provisions of the old act.
Anyway, this is only assessment procedures other than search it is, okay? So just, you know, this questions we just discussed because that is a topic in itself.
Suppose the books of accounts other documents are assessed by requisition 132A of the old act before the new act comes into force, say follow-up action under the old act or new act?
All proceedings connected with such requisition will be under the provisions of the old act only.
Now, move forward, sir.
Now, we'll go to the next section, procedure for assessment, chapter 16, part A, earlier chapter 14. So now assessment procedures.
Now, sir, inquiry before assessment. What is inquiry before assessment, my dear friend? 142 1. What was 142 1? It's now 1268 1. Ditto ditto provision, nothing to worry. What was 142 1? Inquiry before assessment has now become 268 subsection 1. So assessing officer, what will you do? Have you filed return of income before the due date?
You have not filed. Earlier, what they used to do, they used to wait till the due date. Or otherwise, after the due date, they will issue notice under 142 1, you file return of income. Who will issue sir nowadays, sir? Nobody issues 142 one for filing return of income.
Nobody issues.
Earlier, you know, they used to issue.
Now, nobody will issue.
Otherwise, they are telling, suppose you have filed return of income, that is under 263 now, earlier 139.
Or [clears throat] in whose case time allowed under 263 one, that's what I told you, 139 once it has expired, then notice required him on a due date specified therein.
Person has not made a return within the time allowed under 263 one or before the end of financial year succeeding the relevant tax year, they will ask you to furnish return of income. Or they are telling, if you have filed return of income, you have to they can call for such accounts or documents as the assessing officer may require, or such information and on such points or matters, including a statement of assets and liabilities, whether included in accounts or not, can be asked by assessing officer after taking prior approval of the joint commissioner of income tax.
That is why when you see 143 two, even 142 one will come.
So, they want to ask all these points in the course of these scrutiny proceedings.
Now, move forward, sir. That I told you, 142 one, if you want to ask for statement of assets and liabilities not included in the accounts, you have to take the previous approval of the honorable joint commissioner of income tax.
And the assessing officer shall not require production of any accounts relating to period of more than 3 years prior to the relevant tax year.
More than 3 years prior to the relevant tax year, okay?
>> [snorts] >> Next.
This 268 subsection three says, notice under subsection 1A may also be served by the prescribed income tax authority. Who is prescribed income tax authority?
This was what? Where was this 268 three earlier? It was in second proviso to 142 one.
There is no proviso, my dear friend. No explanation, my dear friend. 1,209 minute explanation provisos have been, you know, removed from the statute. That is what people think. It is all coming one after either in the form of simple sentences. Only the provisos and explanations have been removed, but still retained in the form of simple sentences in the act. There are no more provisos explanations, but they have become part of the section subsection clause etc. That's all. Okay?
Next, who is the prescribed income tax authority 2683 for issue of notice under subsection one?
That is given in rule 170.
Prescribed income tax authority they say for 2683 for the issue of notice under subsection one of the said section shall be an income tax authority not below the rank of ITO who has been authorized Central Board of Direct Taxes to act as such authority for the purposes of 268 subsection three.
So, they are telling for the purpose of obtaining full information respect of income or loss, they will make any such inquiry as considered [clears throat] necessary.
So, that takes care of 142 one. Come to 142 2A which is akin to 268 subsection five.
Which was this?
This is 268 subsection one inquiry before assessment. Now we go to 142 2A which is nothing but 268 subsection five.
Now you know the 142 one proceedings have begun, scrutiny proceedings have begun etc. If at any stage of proceedings before him, the AO having regard to five situations, understand carefully, at any stage of proceeding proceedings are still in progress, not yet completed, order is not yet passed.
What are the five situations my dear friends? Having regard to nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts. You are just having mere doubts.
You are having just doubts.
Nature and complexity, volume of accounts, even volume of accounts, doubts about correctness or multiplicity of the transactions in the accounts or specialized in of the business activity and in the interest of revenue is only of the opinion that it necessary so do then he may call for special audit 142 and nothing but special audit. When can he call for special audit because of these five situations?
Then he has to give the assessing reasonable opportunity of being heard after taking the approval of the honorable principal chief commissioner or chief commissioner of the principal commissioner.
Then you will direct the assessing to get either or both of the following.
>> [clears throat] >> You will direct the assessing to get the accounts audited by an accountant and to furnish a report of such audit.
Even though your accounts are already audited also you can call for audit or to get the inventory valued by a cost accountant. Sorry, that business is gone. Only a cost accountant do inventory valuation. It is no more the priority of the chartered accountant.
Department [snorts] has outsourced that to a cost accountant.
So either they can call for special audit of the accounts or they can call for special audit of the inventory valued by a cost accountant. And to furnish a report of such inventory valuation in the prescribed form as duly signed and verified by such cost accountant.
Now, which is the form, sir? Under 268 (5) The report of audit of accounts of the assessing required to furnish under 268 subsection (5) clause (1) your audited accounts will be form 100.
Where that is given, sir? It is given in rule 171 of IT rules 26.
Then report of inventory valuation that will be given in 260 What is given in 268 subsection (5) clause (2)? It shall be in form number 101. Okay, sir? So audit report form 100. What? Audit of the accounts. Which audit? Special audit. Directed by assessing officer with the prior approval of the chief commissioner, principal commissioner, etc. Then based on those five parameters actually.
Okay?
So, if you see even the rules my dear friends what was the rules earlier and what is the rules now?
So, even the rules have reduced.
Move forward, sir. The accountant or the cost accountant as referred to in subsection five shall be nominated by the Principal Chief Commissioner or Chief Commissioner. Obviously, because you are calling for the special audit.
So, that accountant also shall be nominated by the PCCIT. Okay?
And then who has to pay the fees?
Obviously, you called for special audit.
So, the PCCIT only has to remunerate the chartered accountant or the cost accountant.
268 subsection seven is telling what?
Provisions will have effect irrespective of not whether or not accounts of the assessee have been audited under any other law for the time being in force or otherwise.
That means what my dear friends?
Even though your accounts are audited still you can call for special audit.
That means why I want to highlight this is because provision shall have effect irrespective of whether their earlier law, earlier section 142B, there was the word notwithstanding.
Notwithstanding they are telling who will use the word notwithstanding daily life. So, they are telling I want to make income tax act simple. Therefore around 400 places notwithstanding was there in the act. It is removed. And in place of notwithstanding what comes irrespective. Therefore, here it was notwithstanding earlier, now it has come irrespective. Irrespective they are telling you use many things. So, remove the word notwithstanding. Therefore, it is now irrespective. So, therefore they are telling irrespective of not whether our accounts have been audited, I can call for a special audit.
Then every report under subsection five shall be furnished within such period as specified by the you know assessing officer. Earlier my dear friends there were 511 rules. Now the the number of rules are 333.
511 rules earlier, now only 333 [clears throat] rules.
Then all obviously every time you want extension of time. So you give me some time to furnish the audit report. So the AO either on his own motion or on an application made in his behalf by the assessee and for any good and sufficient reason extend the period by such further period or periods as he thinks fit. All done sir. Some time you gave, you gave further extension, you gave further extension. Overall originally time fixed and period or period so extended cannot in any case exceed how much time? 6 months from the end of the month in which direction is given to the assessee. Direction is received by the assessee. Maximum time how much sir? It cannot be beyond 6 months from the end of the month in which direction under subsection 5 is received by the assessee. 6 months from the end of the month. Okay? He may give 1 month time, 2 months time. Then you will tell I want some more time. You will tell I want some more time. Okay.
Original time, extended time, further extended time, further extended time cannot go beyond 6 months from the end of the month. Next.
I told you expenses of audit or inventory valuation. Who called for it sir?
Assessing officer with the prior approval of the chief commissioner. So you only called for special audit.
Therefore you only remunerate the chartered accountant as well as the cost accountant.
Expenses of audit or inventory valuation.
Who will determine? Obviously who appointed principal chief commissioner.
Then paid by the central government.
Then So but the report come now.
Report has come in the hands of the assessing officer. What will you do with the report?
The assessee shall except where the assessment is made under section 271.
What is section 271? 144 ex parte assessment, best judgment assessment. Be given an opportunity of being heard.
Why? They got that no special audit report.
>> [snorts] >> So, that special audit report will be given to a copy to the assessee. They will tell now before before passing that special audit report.
Be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under subsection four or in audit or inventory valuation under you know, subsection five and proposed to be utilized for the purposes of assessment. Obviously, before using, you know, any material, they will give an opportunity of being heard.
If suppose, you know, assessment is made under 144, then obviously there is no opportunity.
Cost accountant means cost accountant defined under cost and works accountant act of 1959.
Okay?
>> [snorts] >> Next.
Estimation of value of assets by the valuation officer. That is 142A.
So, 142A is over. Now, 142A.
What is 142A? Nothing but estimation of value of assets by a valuation officer, which has now become 269 subsection one.
Assessing officer may for the purposes of assessment or reassessment See, these are all the arrows in the quiver of the assessing officer to frame an assessment.
Arrows, one by one, one by one, I will leave all the arrows.
>> [snorts] >> Now, 269 one is what? Estimation of value of assets by the valuation officer.
So, it starts section like this only, 142A, 142A.
Assessing officer may for the purposes of assessment or reassessment make a reference to evaluation officer for what we work to estimate the value including the FMB of what? Asset, property, investment.
Asset, property, investment.
Obviously, he will refer the case to Vevo and Vevo has to give a report.
Vevo report to the assessing officer.
Estimate the value including fair market value of asset, property, investment.
Who is the Vevo, sir?
Vevo is defined in two within bracket 110 of the Income Tax Act of 2025.
Valuation officer means a person appointed by Central Government as a valuation officer who shall exercise powers as specified in 2693. We will see now 2693 and includes a regional valuation officer, a district valuation officer, and assistant valuation officer.
The assessing officer may make a reference to the Vevo whether or not he's satisfied with the correctness or completeness of the accounts.
Please understand, AO shall make may make reference to the Vevo whether or not he's satisfied about the correctness or completeness.
Now, 2693 for estimating the value including the fair market value of the asset, property, investment.
Now, what happens? Four other persons have entered now. Apart from the valuation officer >> [snorts] >> what will they will do? Valuation officer now along with him, engineer overseer, surveyor, assessor.
All these are authorized by the such Vevo. Valuation officer engineer, overseer, [clears throat] surveyor, assessor authorized by such valuation officer.
Subject to rules made in this regard and at such reasonable time such reasonable time, such reasonable time.
Understand such reasonable time.
He can enter. Obviously, now he wants to value now. He wants to He's been referred for valuation. Fellow will, you know, has to enter.
So, he can, subject to the rules and subject to reasonable time, he will enter any land within the limit of the area assigned to the VEO.
Area assigned to the VEO.
Or enter any land, building, or other place belonging to or occupied by any person in connection with whose assessment reference has been made to the VEO.
Or inspect any asset, property, or investment in respect of which a reference has been made to the VEO. So, he can inspect asset, property, investment. Those three words are there from the beginning. Asset, property, investment, okay?
Now, 263, 269 subsection three clause B.
VEO or any engineer, overseer, surveyor, assessor may require any person in charge of or in occupation or possession of such land, building, or any other place, or such asset, property, or investment to afford necessary facility.
Okay? So, whoever is that person in charge of or in occupation or in possession. So, person either in charge of or in occupation or in possession of what?
Such land, building, or other place, or such asset, property, investment. He has to afford necessary facility to survey or inspect the land, estimate its value, and share all the documents for the valuation.
Then the VEO and those four guys will enter such land, building, or place to uh to inspect uh that the asset, property, or investment with the consent of the person in charge or in occupation or possession of such land, building, place, or asset, property, investment after giving at least 2 days time, my dear friends. Straight away you cannot enter.
You have to give at least 2 days notice in writing.
2 days at least 2 days in advance you have to give to such person.
Then take his consent.
Okay, and then enter.
Then if a person under this subsection is required to afford any facility to the VO and those four guys, they don't cooperate.
They refuse. They evade. They tell we have we cannot uh give you such facility. That means to inspect that asset, property, or investment.
Then the VO will utilize all his powers because what powers are vested in him are vested in the court under code of civil procedure act 1908.
Okay? So, he can utilize such powers.
The VO shall also estimate the value of the asset, property, or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered after giving an opportunity of being heard to the assessee.
Then the VO will estimate the value of asset, property, or judgment or investment to the best of his judgment.
Obviously, if you don't cooperate.
Then now the VO has completed the valuation of the asset, property, investment. So, he will send the report of the estimate to the assessing officer. One copy to the assessing officer, one copy to the assessee.
Now, suppose there is mistake in that valuation report.
So, this the new section 269 subsection 7 newly added. It was not there in 142A earlier.
With a view to rectify any mistake apparent from record, the valuation officer may amend any report made by him as per 287. 287 is nothing but that 154, sir. So, don't worry.
So, he will amend the report. Now, they have given that power rectify the you know, the valuation report if there is any mistake apparent from record. Okay?
Now, 269 subsection 8. The assessing officer may on receipt of the report from the valuation officer and after giving the assessee an opportunity of being heard take into account such report in making the assessment or reassessment. Obviously, why did the assessing officer refer to valuation officer?
>> [clears throat] >> Asset, investment, property. This will add a doubt. No, no, sir. This according to me the construction cost can maybe 5 crores. Value of the property maybe 5 crores. SSC has shown only 2 crores. So, VO report will tell it is 4 crores, etc. That is why he referred the case to the valuation officer.
So, he will take into account that report in framing the assessment or reassessment.
Again, time limit. You call for valuation.
So, valuation officer has to send the report to assessing officer. So, what is the time limit? Within 6 months from the end of the month in which reference is made. Again, sir. Within 6 months from the end of the month in which reference is made.
So, 269 subsection 10 again newly added.
Central government will appoint as many valuation officers as necessary subject to obviously the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts.
Then a principal chief commissioner or a chief commissioner or a principal commissioner or commissioner may appoint as many engineers, as many overseers, as many surveyors, and as many assessors to assist the VOs in performance of their functions. That takes care of VO.
That is reference to the VO. That is section estimate of value of assets by the valuation officer. That is asset, property, investment, 269, which was earlier 142 capital A. Move to the next section, my dear friends. It is what?
143 (1) intimation. Same thing, don't worry. What is that intimation, sir? 143 (1) It has now become 270 subsection (1). So, any return made under 263, that is 139 (1) or in response to a notice under 268 (1), that is 142 (1), return will be processed.
Return will be processed after making the following adjustments. What all adjustment they can do? Same thing, sir.
Even in 270 subsection 1, even in 143-1, arithmetical error. Number one, arithmetical error. What all adjustments you can do? Arithmetical error.
Then an [snorts] incorrect claim, if such incorrect claim is apparent from any information in the return, any such inconsistency in the return with respect to information in the return of any preceding year as will be prescribed.
Disallowance of loss claimed in the return if the return for which set off of loss is claimed was furnished beyond the due date. Now they know, sir.
This eight years, uh you know, all this set off, carry forward of loss, etc. You have filed the return, everything is computerized, link is there. You have filed the return uh belatedly, not within the due date. They know one crore loss claimed year in which return was filed for the set off of loss, carry forward of loss, year in which loss was incurred, filed beyond due date.
Intimation will pass disallowing the set off of loss.
Then disallowance of expenditure or increase in income indicated in the audit report not taken into account in computing the total income.
Okay. So, disallowance of expenditure you indicated in the form 3CD, but you have not made addition there. For example, you know, your 43 uh H, uh 43B clause H, payment to MSMEs, etc. Paid beyond the you know, the time period of 15 days or 45 days as the case may be, etc. The you know, that addition will be made. You have indicated there in the tax audit report. For example, 36-1-5A, you are you know, ESI, PF, etc. You have paid beyond the due date under the specified statutory act. You have indicated in the audit report, but you have not made an addition.
Then the sixth situation is deduction of disallowance claimed under section 144.
You know, or under any of the provisions of chapter 8C. What is chapter 8C? That is you know, that 80IA, 80IB, etc. 80IA to 80RRB. And what is section 144?
That was you know that units in special economic zone section 10AA etc. Okay? Why? Why you want to disallow the deduction? Because the return is furnished beyond the due date specified under section 263 subsection one. So, these are the six scenarios.
Intimation may be passed, my dear friend. Same thing, intimation will be passed. Okay?
Now, they are telling that before passing the intimation, before making any adjustment, what adjustment that those six types of adjustments. I have to give you 143 1A.
Communication is to be given to the assesse of such adjustments either in writing or in electronic mode.
Then, the response received, if any, shall be considered. And where no response is received within 30 days of the issue of such communication, act itself is telling sir, 30 days. 270 subsection two.
Such adjustments will be made.
Thereafter, intimation under subsection 1D sent. Okay?
So, then the 270 subsection three.
Then 270 subsection four. Do what is 270 subsection three? That is, you know, akin to first proviso of 143 1. They are telling where the loss declared in the return of the assesse is adjusted but no tax or fees payable, no refund is due to him, still intimation shall be sent.
Then 270 subsection four gives the time limit. What is the time limit for, you know, processing of return of income or for issue of no intimation shall be sent after the expiry of nine months from the end of financial year in which the return is made.
Nine months from the end of financial year in which return is made.
So, tax year 26-27.
Okay?
Financial year, the tax year will end on 31st of March 27.
So, the limit is there up to, you know, uh return is made they are telling expiry of 9 months from the end of financial year in which the return is made.
So, March 27.
So, whenever you file the return, suppose you filed your return in December 2027, no problem. When will that financial year end? March 27. 9 months from the end of that financial year, that is 31st of December 2028, okay? So, you'll have to file the return of income. I mean, your 143.
Processing of intimation. They are giving the meaning of incorrect claim of return of income. What is the incorrect claim? Apparent from any information in the return, that meaning is given.
Suppose there is no intimation passed at all, then they are telling 270 subsection five clause B says, "Acknowledgement of the return only shall be deemed to be intimation." Why?
There is no sum payable, no sum refundable, and no adjustment is also made. Therefore, you know, there is only acknowledgement. They have not sent any intimation. Example, normally they will send the intimation in all the cases.
Returns are processed. So, acknowledgement shall be deemed to be the in- intimation. Next, move forward, sir.
Now, 270 subsection eight. All your bread and butter, sir. Bread and butter of the chartered accountant, scrutiny notice 143 subsection two. What is 143 subsection two? Your scrutiny notice.
That is now 270 subsection eight. So, return has been furnished under 263, that means 139 one, or in response to a notice under 268 one, that means 142 one, then the AO or the prescribed income tax authority. AO or prescribed authority, if it considers it necessary or expedient, ensure that the assessee not understated the income, computed excessive loss, underpaid tax. Same things are shall serve on the assessee a notice. Service versus issue. So, 143 two or 270 subsection eight, notice shall will served, okay?
Then, what is the time period for 143 to or you know this uh 270 subsection 8 notice? What is the time period? It's given in 270 subsection 9. No notice under subsection 8 shall be served on the SSC after the expiry of 3 months from the end of financial year in which the return is furnished. Same thing. So, 30th June.
So, for the assessment year 26-27 okay?
30th June is the due date for scrutiny.
For example, again they are telling again for expiry of 3 months from the end of financial year. April, May, June.
Simple. So, same thing. It is only from the end of the financial year, okay?
Shall be served on the SSC after the expiry tax year 26-27.
So, tax year will end on March 27. Then again 1 year financial year you have time sir up to March 28. So, June 28 will be the you know expiry of 3 months from the end of financial year in which return is furnished. Move forward, sir. 270 subsection 10 is what? 143 (3).
143 (3) is what? Nothing but 270 subsection 10 assessment order. 143 (3) is now assessment order. Which section?
270 subsection 10.
Same thing. Nothing to worry, sir.
Hearing such evidence as SSC may produce and such evidence as AO may require on specified points. After taking into account all relevant material etc. Order in writing making an assessment of the total income or loss of the SSC etc. Same thing. Nothing to worry, sir.
Everything is same.
Move forward, sir. Next best judgment assessment. Now, what is best judgment assessment? You are 144. That 144 has now become 271 subsection 1. What was 144 has now become 271 best judgment assessment. When can you make a best judgment assessment? What is 144 subsection 1? 271 subsection 1. Return is not filed under 263 1 that is 1391 or 2634 which is 1394 or 263 subsection 5 is 1395 or 139 >> [clears throat] >> or 263 subsection 6 nothing but updated return 1396 is what? 139 you know this 2636 is 1398A okay?
So you failed to file all these returns.
Or failed to comply with all the terms of a notice issued under 268 subsection 1. What is 268 subsection 1?
268 subsection 1 263 subsection 6. What is 268 subsection 1? Nothing but 142 on my dear friend. So if you failed to comply with all the terms of a notice under 2681.
Failed to comply with a direction under 268 subsection 5. What is 268 subsection 5 my dear friend? Special audit 142 2A 268 subsection 5.
Or having made a return fails to comply with all the terms of a notice issued under 270 subsection 8.
Obviously when a return is filed then only it can be taken up for scrutiny.
So that is why the section starts 271 1C is telling having made a return failed to comply with all terms of a notice issued under 270 subsection 8. What is 270 subsection 8? Nothing but it is 143 subsection 2 okay? So all these failures are there then what will happen? Assessing officer after taking to account all relevant material which is gathered shall after giving the assesse an opportunity of being heard make the assessment of total loss or income to the best of his judgement and determine the sum payable by the assesse on the basis of such assessment. That's all.
Next.
Then he's telling assessing officer before making an assessment under subsection 1 that is your 2711 144 shall subject to the provisions of subsection 3 serve a notice on the assesse to show cause as to why assessment should not be completed to the best of judgment.
Before making best judgment assessment, he will give a show cause.
Okay? [snorts] What is 271 three?
He's telling I will not give any show cause to complete the case under 144 or 271.
Okay?
271 one, okay? When?
If you have where notice is issued under 268 one, okay?
That means what? 268 one 142 one is issued already. Now, I'm not giving you opportunity of being heard.
I giving you opportunity under 142 one issued. You did not comply. So, you cannot tell now give me one more opportunity.
Okay? 268 one is by 142 one issued. You have not filed return of income, filed return of income, or you asked all these details, you have not submitted.
Therefore, you will not give one more opportunity. Next.
Power of joint commissioner to issue direction in certain cases. What was 144 capital A is now 272 subsection one.
Joint commissioner may on his own motion or on a reference made to him by the AO or an application by an assesse call for an examining the record of which assessment is pending.
Having regard to the nature of the case or amount involved or for any other reason, issue such directions for the guidance of the AO to enable him to complete the assessment. Such directions are binding on the assessing officer. Let me tell you, my dear friends, now for this year 148 notices.
You are receiving for assessment year either 20 to 23 three years or five years etc. The joint commissioner additional commissioner has the power to drop all 148 cases. He has become all the more powerful now. So, therefore, you can go to your additional commissioner etc. You can appear before him. If the case That means what? 148 A has come.
A1, you have received show cause. A2, A3, still 148 has not come. Okay?
You can still have the case dropped subject to the satisfaction of the honorable additional commissioner providing all the details. Why? Because this power is there now with the additional commissioner to drop. He can close the reassessment proceedings. Now come to your faceless assessments.
So your 273 one is nothing but your 144 B1.
So here earlier notwithstanding anything to the contrary contained in any other provision of this act now irrespective of any thing. Assessment, reassessment, recomputation 270 subsection 10 143 three 271 144 279 your reassessment 147. Okay? As the case may be with respect to the cases referred to in subsection two shall be made in a faceless manner.
Okay?
Move forward, sir.
Faceless assessment shall be made in respect of such territorial area or persons or class of persons income or class of income class case or class of cases specified by the board.
So you know board you know all the center and units etc. National faceless assessment center, assessment unit, verification unit, technical unit, review unit etc. etc. Okay?
So the faceless, headless, senseless assessment will continue. Don't worry.
So 273 12 13 everything is you know related to this faceless assessments.
Okay? Move forward, sir. Next reference to principal commissioner or commissioner in certain cases. What is that 274 nothing but GAR sir. You want to declare an arrangement as impermissible avoidance arrangement then you know the assessing officer will make a reference to the principal commissioner or commissioner at any stage of the assessment or reassessment proceedings before him based on the material evidence available with him. Move forward, sir.
Then >> [clears throat] >> reference to DRP. So you know this DRP is nothing but your 144 C. What was that 144 C? It was given earlier under who is a DRP 144 C subsection 15 used to define that. What is that 144 C subsection 15 was defining DRP. Today 144 C subsection 15 is in 275 subsection 17. Who is a DRP? DRP means a collegium comprising of three principal commissioners constituted by the board for this purpose. Who is eligible as you see? Any person in whose case variation arises as a consequence of TPO. So, that is why the DRP TPO passed under 1666 or a non-resident not being a company or any foreign company. Okay, move forward, sir. Method of accounting 276 subsection one.
What is method of accounting? Same thing. Your PGBP or other sources only are to be computed as per the cash or mercantile system of accounting regularly employed by the assessee.
Okay, then 276 subsection two is what?
Like your 145 two, Central Government will notify all the ICDS. What is 276 subsection three? Akin to 145 three.
I told you best judgment assessment under 271.
>> [clears throat] >> There are three more situations of best judgment assessment. It is not there in 271 or it is not there in 144. It is there in 145 three or 276 subsection three. What is 276 subsection three?
I can still make a best judgment assessment under 271 if not satisfied about the correctness or completeness of accounts of the assessee, method of accounting provided in subsection one has not been regularly followed by the assessee cash or mercantile system, or income has not been computed as per the standards notified under subsection two. That means your income disclosure, your income computation and disclosure standards ICDS. Income has not been computed as per the standards notified under subsection two. It can still result in best judgement, assessment.
145 you know valuation of inventory. What is 145 is nothing but 277 subsection one.
Valuation of inventory will be lower of cost or net residual value computed as per the ICDS under 276 subsection two.
Then again you know class two is what value of purchase or sale of goods or services valuation of inventory shall be adjusted to include any tax duties as or fee etc. Beautiful recovery is there in our you know guidance note on the tax audit. Move forward sir.
Then taxability of certain income 278 subsection one nothing but 145B subsection one. Interest received on any [clears throat] compensation or enhanced compensation shall be deemed to be income of the tax year in which it is received. That's all.
Okay, move forward. Now income escaping assessment. Income escaping assessment I'm not quite happy with the way the act is worded you know.
147 they are telling order.
Then 148 they are telling notice.
149 they are telling time limit.
Then 151 they are telling sanction.
So ideally it should have been first sanction.
Okay, then notice, then time limit, then you know order. So first sanction then see the time limit, then issue notice, then order. But act is going 147 order 148 notice, 149 time limit and 151 sanction. Same thing in the new act sir.
First they are telling 279 one nothing but 147.
They have simplified.
If in the case of an assessee any income chargeable to tax has escaped assessment.
Act is clearly telling any income chargeable to tax.
Okay. But left right and center you people reopen.
With due respects, if in the case of an assessee any income chargeable tax escaped assessment for any tax year, then you have to follow the procedure 280 286. Okay, assess or reassess such income, recompute the loss or depreciation allowance or any other allowance or deduction for relevant tax year.
Okay? Very, very simple. 280 is nothing but 148. 281 is that procedure, you know, before issuance of notice, old section 148A. 282 is the time limit for issuance of notice under 280 and 281, old section 149.
>> [snorts] >> Then 283, provision for cases where assessment is in pursuance of an order on appeal, etc. 284 is sanction for issue of notice, which is nothing but 151.
285, other provisions, 152. That is, when can reassessment proceedings be dropped? That is given in 152.
Then time limit for completion of assessment, reassessment, recomputation.
Old section is 153.
Then 279, subsection 2.
279, subsection 1, you saw, sir. Any income chargeable to tax. That's all it told.
Now they are telling, subsection 2 is telling, for the purpose of assessment, reassessment, recomputation, AO may assess or reassess the income in respect of any issue which has escaped assessment, which comes to his notice subsequently in the course of proceedings, irrespective of the fact that provisions of 281 not been complied with. Okay?
So, even though I have not issued show cause notice, I have I I'm telling you income at Mysore has escaped assessment in the case of Ramchandra. Uh information is there, income at Chennai escaped assessment. Now in the course of the proceeding, they come to know income at Mysore has also escaped assessment. I will not give you show cause notice again. 148A1, they are telling no need to comply with the provisions of 281.
Straight away you can include it in 148.
Straight away you reopen that case.
Next.
This is the most important amendment, you know, that 279.
Jawahar versus Paul. So, in 279, after subsection 2, following subsection shall be inserted. 279, subsection 3.
The assessing officer, for the purposes of 280 and 281, 148, 148A1, shall be into be an AO other than in a FAC or any assessment unit referred to in 2733.
So, here they have put that amendment.
Issue of notice for income as escaped assessment. So, 280 subsection 1, that is nothing but your 148 subsection 1.
So, here they are telling before issuing notice under 148, I will give you show cause notice, okay? That is nothing but subject to 281 and 2813, that is 148 A1 or sorry, 148 1, 148 2, 148 3. Earlier 148 A A AB AC AD. So, that is only now 281 1 2 3.
>> [snorts] >> Okay? So, show cause notice will be given.
Then So, this is 148 first actually.
Then 281 is your show cause notice. So, 280 is issue of notice, that is 148.
So, first notice will be given 148 to file return of income.
Period will be specified in that 148, my dear friend. What is 140? Nothing but 280 notice, okay? What is the maximum time period? It shall not exceed 3 months from the end of the month in which notice is issued.
Don't tell me online I can file even after 6 months. Oh, you can file, sir, but it will not be treated as a valid return by the department.
148 is issued, 280 is issued, maximum time limit is 3 months from the end of the month in which notice is issued, okay? That is 148.
So, return of income required under one subsection one shall be furnished in such form verified in such manner. All provisions of this actual apply accordingly as if such return return required to be furnished under section 263. 280 subsection 3, my dear friends, any return furnished after expiry of the period specified in the notice shall not be deemed to be a return under 263. Here itself it says.
Although the CPC will allow you in the portal to upload, 280 subsection 3 debars you.
They are telling any return furnished in response to notice under 280 after the expiry of the period specified in the notice. That means more than 3 months from the end of the month in which notice is issued, it shall not be deemed to be a return under 263. Okay?
Now, what is 280 subsection 4?
280 subsection 4 is crystal clear, sir.
No notice under this section shall be issued unless there is information with the AO which What is it telling? Which suggests that income chargeable to tax has escaped assessment in case of assessing for relevant tax year.
Next, 280 subsection 5.
No notice under this section Excuse me. Shall be issued >> [clears throat] >> without the prior approval of the specified authority where the AO has received information under the scheme notified under section 260. So, no notice and shall be issued without prior approval where the AO has received.
So, all this, you know, you have to take prior approval. Information is received under the scheme notified under 260.
What is 260? Nothing but your 135A. What is 135A?
My dear friend, go back to your portal.
There is a CC.
That fellow is receiving rent example.
Say at 5 lakhs per month.
AIS is there. TIS is there.
You will go on the portal. You will call out all the information.
You see there 1336. There are three notices there. Nobody bothers to reply.
First notice, second notice, third notice. What will happen? This becomes 135A information.
The law is telling INCA of the department is there. INCA.
So, that information is being uploaded, but you people have not responded to that 1336. First, second, third, inspector also department will call, no response. So therefore, it is deemed reopening.
Information under modified under 260 means 135 A this deemed information. I am not disputing sir that you have not offered the rent to tax. That rent what information has come maybe more, maybe less, maybe correct.
But you have not responded. You are not telling yes yes or does not belong to me or different belongs to different person, different pan, etc. etc. No response on the portal.
So therefore, it becomes a deemed information. Case will reopen based on that.
Information under scheme notified under 260 that is 135 A your faceless information etc. You have to take approval. Direction of approving panel.
Approving panel will discuss that GAR.
Okay, general anti-avoidance rule. Any finding or direction contained in an order passed by an authority, tribunal or court. Okay.
Finding or direction, no problem.
Contained order under this act, authority, tribunal, court.
By way of appeal, reference, revision, no problem. Appeal, reference, revision.
Or by a court. Imagine my dear friends, by a court in any proceeding under any other law.
Or by a court in any proceeding under any other law.
That also becomes an information.
Suppose you are caught under PMLA.
You are caught under you know the smuggling goods. You are caught under customs act.
Or by a court in any proceeding under any other law.
>> [clears throat] >> Any finding or direction contained in an order passed by a court in any proceeding any other law. Income tax act okay authority, tribunal, court, any proceeding appeal, reference, revision.
Okay, all these things you have to take the approval of the specified authority. Move forward, sir.
For the purpose of this section and section 281. This section means what?
280. What is 280? 148. And then this and one 281. What is 281? Nothing but 148A.
Okay? 148 148A, that show cause notice.
Okay?
The information with the assessing officer which suggests that the income chargeable to tax has escaped assessment means any information in the case of the assesse for relevant year as per risk management strategy formulated by board from time to time. Any audit objection that the assessment has not been made as per that. Imagine the word, sir. Audit objection, any audit objection.
One order is passed.
Faceless assessment. All the orders are passed. After the orders are passed, it's all papers and documents are transferred to the JAO. JAO means from forward transfer to JAO, jurisdictional assessing officer.
See the dangerous word, any audit objection. They will tell audit objection 234 ABC. Rebate not claimed correctly 87A.
>> [snorts] [clears throat] >> Whatever, they remove some audit objections. Creditors confirmation not taken.
Any any audit objection, assessment is not framed properly, reopen.
Any information received on agreement 159, that is 1990A.
>> [clears throat] >> Any information, you know, you're available to the assessing officer scheme notified 260. I told you that 135A. These are all information, okay?
Then next one, any information which requires action in consequence of order of tribunal or court. Okay.
Sixth information. Any information in the case of an assesse emanating from the survey conducted under 253, nothing but 133A, sir. Other than TDS survey.
Then any direction in the case of assesse given by approving panel under 274 subsection six. What is 274 subsection? Nothing but your 144B, sir.
>> [clears throat] >> That is what GAR.
Then sub eighth one, information.
Any finding or direction contained in an order passed by any authority, tribunal or court in any proceeding under this act by way of appeal, reference or revision or by a court in any proceeding in any law, what he discussed, eight types of information.
So, information means they have given the meaning of information.
280 subsection six is telling for the purposes of issuing notice under 148A, show cause notice, or 148, meaning of information. Eight types of information.
Word use is means.
Okay? That means what? Means what a tight compartment. Means means this only. That's all. No question of any inclusions or exclusions. Eight types of information.
Now, very simple, sir. Before issuance of notice under 280 means before issuing 148, I will issue 148A. Similarly, before issuing 280, I will issue show cause notice under 281. What? I will give you an opportunity. I will issue show cause and asking him why I should not issue notice under 280. Then that show cause notice will be accompanied by the information which suggests that income chargeable tax has escaped assessment. On receipt of such notice, >> [clears throat] >> assessee will file his reply.
Then assessing officer will consider the reply. Okay? Based on the material available on record and taking the account reply of the assessee, then he will pass an order. But that order has to be passed with the prior approval of the specified authority. Specified authority I told you additional commissioner additional commissioner.
You can go there in Chennai now. Go there, meet him, give all the details.
If it's a fit case to be dropped, they will drop it now.
They have the power now.
So, pass an order. Which order? 148 A subsection three. Nothing but your 281 three. Okay?
Pass an order with the prior approval of the specified authority. Now, earlier it was 148A, now it became 148 1 2 3. Okay?
Determining whether or not it's a fit case under 280. Okay. 281 four.
Provisions of this section shall not apply to any income chargeable to tax escaping assessment for any tax year where the assessing officer has received information under the scheme notified under 260. What provisions of the section? I will not give you show cause notice. I will not give you 281.
Straight away I'll issue 280.
That means I will issue straight away 148. I will not give you 148A. When?
Three situation. Number one, that 135A or information received scheme notified under 260 135A. Faceless reassessment.
Directions issued by approving panel guard. Any finding or direction contained order passed by any authority tribunal or court in any proceeding by way of appeal reference revision or by court in any proceeding under any other law. Sir, he will not give you the you know, he will not give you the show cause but he's bound to take the approval of the respective authorities. Next, time limit.
What is the time limit sir now? 280 280 is what here? 148.
>> [clears throat] >> How much sir?
Thankfully they have gone back to the good old days, 4 years and six six years now. 4 years and 3 months I will have from the end of 11th tax year unless the case falls under B. Why 3 months? 3 months is for filing return of income. 4 years and 3 months unless the case under B means 4 years and 3 months but not more than 6 years and 3 months. So, 4 years and 6 years time limit to issue notice under 148. Okay, 148A.
4 years and So, 4 years and 6 years will be your for completion of the that 3 months is only for filing the return of income. So, 6 years and 3 months, 4 years and 3 months. Unless the AO has in his possession when he can I go beyond 4 years and up to 6 years.
Unless the AO has in his possession books of account document evidence.
Understand carefully when can I go beyond 4 years up to 6 years.
Unless the AO has in his possession that AO should have in his possession what?
Books of account document evidence.
Related to what? Related to asset expenditure transaction entry.
Related to asset expenditure transaction entry. Which will show what? That the income chargeable to tax escaped assessment amounts are likely to amount to 50 lakh rupees or more in case I want to go beyond 4 years up to 6 years.
Therefore, the assessing officer very cleverly what he does he will tell the wing to issue a summons 131.
Hey, collect all the information from him. I don't have any information. I want to issue notice under 280 or 148, but I don't have information. Law is telling unless has in his possession in his possession what? Books of accounts, documents, evidence related to what?
Asset expenditure, no problem asset expenditure. Transaction?
Or entry? My God, entry. Entry means what? What is entry? What do you mean by the word asset expenditure transaction?
Okay. Entry means what? Entry in the books of account.
There are some bogus entries in the books of account you can reopen. Entry means what? Entry in the books of account.
So, some creditors are there.
They are all bogus creditors. Entry in the books of account.
Income escaping assessment amounts are likely to amount to 50 lakh rupees or more. Okay? That is why they will tell you know they don't have information.
Practically what will happen? 131 will come one summons. Hey, please give me a return of income. Give me bank statement. You have sold a property, give me the deed, etc. etc. All information are taken.
That INCI will issue also notice, take all the information. All these are modes of collecting all the information.
So, all information will collected, given to the assessing officer. After assessing officer in his possession, he will go for approval. Please give approval and I will reopen the case.
Understood.
Next.
No notice to show cause. That is your show cause, sir. More than 4 years and 6 years, okay? That 148 and this is 148A similarly. 4 years, 6 years, same thing.
There it is 4 years and 3 months, 6 years and 3 months. Why? You failed return of income, you know it is 3 months, that's all. Last 1 minute only I will close. No notice under section 280 or 281 shall be issued within 1 year from the end of tax year. Law is telling 282 three debar. He's telling, "Hey, you cannot issue notice under 280 or 148 or 281." That means 148 A. Within 1 year from the end of tax year. Why? Sir, scrutiny you do. There is time limit for you to do scrutiny. You cannot straight away bypass scrutiny procedures and start with the reassessment proceedings.
Do scrutiny first. I'm giving you 3 months time.
Up to June I'm giving you.
You should have done scrutiny.
So that 1 year time is there for scrutiny.
Thereafter you have time to pass order.
Directly you cannot go and reopen my case. So they are telling within 1 year keep quiet within 1 year from the end of any tax year you want to do any inquiry do it.
You issue notice. You know that 143 two.
Or you are 217 you know subsection 10. [clears throat] So he's telling you do that 143 three etc. Move forward, sir.
No.
That sanction I will do and I will close it, sir. So sanction to issue the notice for 148 or 280. Specified authority there is no more confusion, my dear friends. I've been repeatedly telling you. Specified authority for the purposes of 280 and 281 shall be the additional commissioner or additional director or joint commissioner or joint director. 280 is 148. 281 is 148.
Okay. Due to positive of time and lot of sections I thought whatever is important let me complete it because the limited time given to me was 4:30 to 6:30. I thank all the members for being very patient here.
>> [clears throat] >> Yes, I will share the PPT, sir.
Some of them are requesting for PPT. If Some of them are requesting for PPT.
[snorts and clears throat] You share the PPT.
>> Raman, are you or are you there, Raman Ali?
>> Yeah, I'm very much available, sir.
>> Yeah.
>> Yeah, yeah, yeah. Shall we conclude, sir?
>> Thank you, sir. Thank you so much.
>> Yeah, yeah, yeah. Thank you.
In fact, our today's session speaker CA Naveen Gadiwala is a pan-India renowned speaker on the direct taxes matter. He's widely appreciated for his practical and analytical approach towards income tax law, especially in the areas of assessment and litigation and procedural aspects of taxation. Uh may now request a CA Yaram Setty Venkata Bhanu Narayana Rao, chairman of indirect international taxation committee and a chairman of members in practice committee of SIRC, to give us closing remarks.
>> One minute.
>> Before that, before that, I think GB Ravi Kumar has Naveen, he will ask the question. Sir, >> Sir, please, please, sir.
>> Uh sir, any information uh after during the course of assessment >> Yes.
>> audit objection, any audit objection you referred >> Mhm.
>> after the assessment is over CAG audit will be there.
>> Correct. Your IAP and RAP, sir. You're right.
>> Yes. That audit objection will not have a direct impact on the regular assessment in the old act.
>> Correct.
>> What about that sub objection in the present act, sir?
>> Correct, sir. That IAP RAP objections, as you have rightly pointed out, there are Supreme Court judgments, High Court judgments to that effect. So, we'll have to argue those notifications, circular instructions will still hold good now.
Based on that, you need to argue in the present situation also.
Based on that, we have to create now.
Now that the new act has now see, it is applicable barely from 1st of these we have to argue.
>> Yes sir.
Okay, nice sir.
>> But that is very much >> Excellent presentation. Excellent presentation.
>> Thank you sir. Thank you so much.
>> Wonderful. My best wishes to you.
>> Thank you sir. Thank you so much.
>> Uh dear friends, I think still 213 participants are on the screen.
That shows the popularity of any session taken by Naveen Khariwal.
I only call him as senior NTR.
Uh Shivaji Ganeshan and Sai Kumar for his powerful presentations, the dialogue delivery, the modulation. You keep uh the audience engaged, sir. You keep all of us engaged with your powerful presentations. You are a PowerPoint on whatever subject you speak. Mostly you speak on direct taxes. And I though I have heard you many times, every time it is a like watching the movie a new movie or watching Sholay again and again. You never get uh Uh you never feel that you have already seen it. So today so many stalwarts are there. Just to name one or two or even Geeta madam was here till now. I am hopeful she's still there. Then Santhana Krishnan sir is there. Then my Lions Club governor Manoj Purohit ji also is there.
So so many uh Geeta madam Hello. And thanks for being there uh in the seminar.
And Naveen ji, you have extremely uh in an extremely easy manner you have explained the comparison between the old act and the new act. And uh I think whatever doubts we had, you have really clarified them in a uh very very lucid manner in your own inimitable style and very very sure that we will all be struggling or we'll all be now trying to cope up with the re-numbered sections. You already become perfect.
Now we have to do that. Like we had this problem with the 1956 Companies Act through 2013 Companies Act and now we have to really pull up our socks and do all the memory test for remembering the new sections and also try to compare with the old sections because all the as you said all the circulars and all the case laws pertaining to the old act will come will continue and we will not say that they are not applicable. All are applicable. So thank you very much for such a wonderful session. I thank the Direct Taxes Committee of SIRC Chairman CA Arun who has organized this program and I'm also very much thankful that I have been given the opportunity to propose a vote of thanks. We plan to hear from you more often as this year is very important for us to learn. Experts like you will definitely make the learning easy. Thank you very much. Thanks to all the participants.
Any program's success is measured only by the number of participants and it's called icing on the cake and today's the more than double century speaks volumes about the success of today's program.
Over to Raman Ali. Thank you very much Naveen by. Once again, thank you very much.
>> Yeah, thank you Narayanan sir. Sir, with the permission of the Naveen sir, we will record this session. because we already recorded with your permission we will upload this session in S A R C YouTube channel for the benefit of members at large is there.
Yeah, yeah, yeah, thank you. Thank you.
Thank you very much.
So with that we have come to the conclusion of today's session on assessment procedures and return of income under the Income Tax Act of 2025.
S A R C is a planning to have some more series on Income Tax Act.
Please do join us in all of our programs. Thank you one and all for your valuable time and presence. Thank you.
Thank you.
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