An ITR is a declaration of taxable income, significant tax liability, and taxes paid by a taxpayer. Certain different exposures are likewise needed to be outfitted in the ITR viz. Specified Assets, financial interests and transactions, and so forth. When an ITR is filed by the taxpayer, it is assessed and handled by the Indian Income Tax Authorities.
Once filed, an ITR goes through a progression of internal checks and approval measures by the tax authorities before the final tax liability is resolved and communicated to the taxpayer.
What happens after you File your ITR?
It is important for the taxpayers to understand the process followed by the tax authorities, which is broad as below:
Check For Completeness And Initial Processing
As an initial step, the ITR is checked for its fulfillment in all regards. On the off chance that any imperfection is recognized, a notification or insinuation is sent to the taxpayer requesting him to rectify the same. In the event that no reaction is received from the taxpayer within the specified schedule, the ITR is considered invalid or not filed. On the other hand, if the deformity is redressed, the ITR proceeds onward to the subsequent stage.
A while later, the ITR is processed by the personal duty division’s Centralized Processing Center (CPC). This processing is done in an automated way with no human intervention. The CPC checks the data given by the citizen in the ITR, including audit reports, reports, certificates, and so forth with some other data available with the tax authorities.
Any adjustments for arithmetic errors, incorrect claims, etc. are automatically done and an intimation is issued to the taxpayer. At this stage, if there is an apparent error in the processing, a taxpayer can file a rectification request.
The next step includes a detailed review of the ITR. Various kinds of evaluations that could be completed at this stage, depending on the facts of each case are:
This is also referred to as Scrutiny Assessment or Revenue Audit. The selection is done through a PC aided selection methodology based on certain pre-characterized models. Manual Selection is additionally done in certain particular cases. The purpose behind this assessment is to guarantee that a taxpayer has neither underreported pay nor exaggerated misfortune. The scrutiny undertaken could be detailed or limited to a few specific points.
On the off chance that a return is picked for a regular assessment, the tax authorities issue a questionnaire looking for subtleties needed for the assessment. When the subtleties are submitted by the taxpayer for example representations made, the tax authorities independently review the claims. In the event that they come to an end result that the cases are not as per the law or its legal interpretation, they complete suitable adjustments to the income. These changes are communicated to the citizen through a detailed reasoned order.
This kind of assessment can be started if no ITR has been filed or where an ITR was filed yet some pay or a part of pay had escaped tax. The tax authorities can commonly go back up to four to six years, to reopen the assessment relying upon the quantum of income involved. This period might be stretched out to 16 years where such income identifies relates to any asset including financial interest in an entity) located outside India. The notice for reassessment requires the citizen to outfit its ITR for the year for which the notice is issued.
Assessment in case of Search and Seizure
This is likewise alluded to as ‘block assessment’. At times, the tax authorities in order to carry out investigations and uncover undisclosed income, conduct search, and seizure proceedings on certain taxpayers. There are separate provisions in the law managing such cases. The assessment could be started for a time of six years preceding the year in which the inquiry is directed. In this circumstance, the notice gave by the tax authorities may require the citizen to outfit ITR for such years.
Best Judgement Assessment
There could be a situation where the ITR has not been filed or the taxpayer doesn’t give the data looked for by the tax authorities throughout the assessment proceedings. In such cases, the tax authorities have the ability to assess as per their “best judgment” i.e. based on the available information and documents.
Recovery and Collection Proceedings
When the assessment is finished, the subsequent step is to gather outstanding taxes. There are explicit proceedings for the recovery and collection of outstanding taxes radiating from changes made to the returned income either when the returns are electronically prepared by the CPC or in the request passed incompatibility of assessment proceedings.
On the off chance that the tax authorities discover any default in consenting to provisions of the Act, there is additionally an idea of penalty proceedings. Penalty proceedings are independent proceedings initiated post the culmination of assessment. There are specific provisions in the law managing various circumstances where the penalty could be collected and the quantum involved. Be that as it may, the penalty can be reduced or postponed after satisfying the prescribed conditions, subject to the general inclination of the tax authorities.
Grievance Redressal and Appeals
If there should arise an occurrence of clear missteps/mistakes in requests passed by the tax authorities, a taxpayer can file a rectification request. Further, any citizen abused by an order of the tax authorities has recourse to an appeal mechanism prescribed under the Income-tax laws. The Commissioner of Income-tax (Appeals) (‘CIT(A)’) is the main investigative authority, before whom an allure can be recorded. On the off chance that the CIT(A) doesn’t give alleviation, the citizen can move toward the Income-tax Appellate Tribunal (ITAT), the jurisdictional high court lastly the Supreme Court of India. This road is likewise accessible to the tax authorities, on the off chance that they are wronged by the request passed by the CIT(A) or any higher redrafting authority.
Evolution of Assessment and Proceedings
Till as of late, the assessment proceedings used to occur manually, wherein notices were served physically, and all responses were submitted in printed versions by home visits to the tax department. However, with the appearance and digital era, the government presented e-proceedings for assessments wherein all notifications and reactions are given/submitted through electronic methods on the e-filing portal of the tax department. Further, all notices and archives served on a taxpayer bear a remarkable Document Identification Number (DIN).
As of late, the government has uncovered the scheme of faceless assessment. If there should arise an occurrence of anonymous appraisal, the taxpayers are not needed to appear physically before the assessing officials and the character of the assessment authorities assessing the ITR and different archives filed by the taxpayer is not revealed.
For more information, visit the website of All India ITR