Section 143(3) – Scrutiny Assessment under Income Tax Act. This article is about the scrutiny assessment notices received by the assessee in cases where the income tax officer has doubt about the authentication of the income. I have discussed about the matter regarding scrutiny time limit, why only your case is selected, what do when the notice of scrutiny is received, purpose for scrutiny assessment, etc have been briefly explained. Here the full detailed evaluation of the company is happening.

Section 143(3): Scrutiny Assessment under Income Tax Act

What is meant by Scrutiny?

Scrutiny is the procedure where the department initiates scrutiny proceedings when the department has reason to believe that the income has been lower shown or expenditure has been over booked. There are many cases where the assessee come with a confused mind, that why such notice is coming, will I be prosecuted. There is no such fear of receiving the notice. It is only the notice which the department issues because of doubt aroused from the side of department.

Why your case is selected?

Many times the questions arises in the mind of the assessee, that why my case is only taken by the department for the scrutiny and not the other. The answer to this question is that every year the department has to fix some criteria regarding the scrutiny notices to be issued. For example, if the department has fixed that they want to issue notices to the incomes having more than 25 Lakhs, so they would be sending notices to the assessee having income of more than that. They are equipped with the latest technology software which has very much smart technology that finds the incomes of assessee which has some differences or some kind of fraud involved in it.

Procedure for assessment under Section 143(3):

When the doubt arises in the minds of the officer, he would be sending the notice for assessment under section 143(2). The time limit for giving the notice under this section is six months from the end of the financial year in which the return is filed. In this notice, the officer will call upon the assessee on the appropriate time and place. The taxpayer has to attend his premises as and when called. In this time, the officer would be collecting the various information regarding the assesses previous returns and his total wealth from the bank statements and other relevant facts. When he has been called, then the officer would be given the relevant facts that why you should not be taxed more.

Time Limit for completion of Assessment:

As per Section 153, which prescribes the date of completion of the assessment, says that scrutiny assessment needs to be completed within 2 years from the end of the relevant assessment year. In case the notice is served to the assessee who is falling under the criteria for transfer pricing, than the time limit is extended to further 12 months.

Penalty for non-compliance:

There is flat rate of penalty which prescribes the assessee to pay Rs 10,000 for each such non compliance.


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