Test: Assessment and Appeals - CLAT PG MCQ

Faceless Assessment is characterized by its electronic processes that eliminate physical interaction between the taxpayer and the tax officer. This system enhances transparency and efficiency in the assessment process, reflecting modern approaches to tax administration while reducing opportunities for corruption.

Appeals against orders issued by the Commissioner of Income Tax (Appeals) are heard by the Income Tax Appellate Tribunal (ITAT). This body serves as the second level of appeal, where decisions can be challenged based on facts and legal interpretations, providing an essential check in the tax appeal process.

The maximum time limit to file an appeal in the High Court against an order from the Income Tax Appellate Tribunal (ITAT) is 120 days. This time frame allows taxpayers to challenge decisions based on substantial questions of law, emphasizing the legal aspect of the appeals process at this higher level.

The primary purpose of assessment under the Income Tax Act, 1961, is to verify the taxable income and tax liability of an assessee. This process ensures that the income declared in the Income Tax Return (ITR) is accurate and compliant with the law. Effective assessment is critical for maintaining the integrity of the tax system and ensuring that taxes are collected fairly.

Section 263 of the Income Tax Act allows the Commissioner to revise an assessment order if it is found to be erroneous and prejudicial to the revenue. This provision serves as a mechanism for ensuring that all tax assessments are accurate and fair, protecting the interests of both the tax authorities and the public.

A Scrutiny Assessment is typically triggered by high refund claims or discrepancies found in the Income Tax Return (ITR). The Assessing Officer (AO) issues a notice to conduct a detailed examination of the taxpayer’s claims to ensure the accuracy of the reported income and deductions, which helps prevent tax evasion.

A Best Judgment Assessment is conducted when the taxpayer fails to file their ITR or does not comply with notices from the Assessing Officer. In such cases, the AO estimates the taxpayer's income and tax liability based on available information, which may include past returns or standard industry practices.

Taxpayers have a time limit of 30 days to file an appeal with the Commissioner of Income Tax (Appeals) after receiving an assessment order. This prompt filing is crucial for maintaining the right to contest the assessment, ensuring that taxpayers can seek redress if they believe the assessment was incorrect.

Self-Assessment enables the taxpayer to calculate their own tax liability, adjust for any Tax Deducted at Source (TDS) or advance tax, and pay the necessary amount before filing their ITR. This method streamlines the process for most taxpayers, allowing them to take responsibility for their own tax calculations while ensuring compliance.

A Summary Assessment is characterized by the fact that it is conducted without the taxpayer being called for scrutiny. This preliminary assessment checks for basic compliance issues like arithmetical errors and incorrect claims, and it results in an intimation sent to the taxpayer regarding any adjustments or tax liabilities.