Assessments under Section 120 (1) (2A)
Previously, where a taxpayer had furnished a return of income, the Commissioner treated to have made an assessment of taxable income and tax due thereon equal to amounts specified in the return.
The Finance Act has introduced the concept of automated adjusted assessment whereby the return of income filed by the taxpayer would now be processed through automated system to arrive at correct amounts of total income, taxable income and tax payable by making adjustments for any arithmetical error in the return, any incorrect claim, disallowance of any loss, deductible allowance or tax credit, disallowance of carry forward of any loss under section 182A.
The adjustments highlighted by the system would be communicated through a system generated notice to the taxpayer. The response filed by the taxpayer shall be considered before making any adjustment.
In case no response is filed by the taxpayer within thirty days of the issuance of such notice, adjustments shall be made as communicated in the notice.
Adjusted assessment can be made within six months of the filing of return, failing which the amounts specified in the return filed by the taxpayer shall be deemed to be final and the taxpayer shall be automatically intimated through IRIS.
For the purposes of this section:
“arithmetical error” includes any wrong or incorrect calculation of tax payable including any minimum or final tax payable.
“an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return:
- Item which is inconsistent with another entry
- Tax payments not verifiable from the system
- In respect of deduction where such deduction exceeds specified statutory limits
