Scrutiny Assessment | Scrutiny assessment notice | BTHAWK

Scrutiny Assessment


Under Section 143(3) of the Income Tax Act, 1961, it is compulsory for every individual filing an Income Tax return that the data he has given in the return would be assessed. It is done to assess the information regarding the actual income of the taxpayers, the total taxable amount due; detect hidden incomes, if any, examining the losses and expenses. Such information is obtained to know the actual amount of tax due and paid by the taxpayer. 

For the assessment, the tax officer conducts a detailed review of the required statements which includes income statements, tax due and paid, etc through a process named Scrutiny Assessment laid down in Section 143(3).

Scrutiny Assessment is the process of conducting a detailed review of the information contained in the income tax return of the taxpayer. It is done to check whether or not such information is based on accurate information given. 

The scrutiny assessment takes place when, 

  • A taxpayer has completed filing of his income tax return.
  • The tax officer has to the best of his knowledge deemed it necessary to conduct a test of income and expenditure and or loss statements of the taxpayer, in which, the tax officer checks that whether the taxpayer has committed any mistake in the return to hide income or pay less tax.

Scrutiny Assessment Notice 

For scrutiny assessment, a notice under Section 143(2) of The Income Tax Act, 1961, must be issued by the tax officer to the taxpayer; in which, he (Tax Officer) would summon him to appear in person or through the e-assessment process and bring forth the necessary documents the tax officer deems important to highlight the taxable income and tax paid thereupon.

  • Remedies over the Scrutiny assessment process 

During this process, if the taxpayer passed all the assessment tests, the Tax officer would then pass an order and if any additions have to be made by the taxpayer, he must pay the amount; else go for the refund application process.

  • Non-compliance by the Taxpayer 

Even if after the frequent requests, the taxpayer refuses/fails to produce the documents ruled in by the tax officer, the tax officer may take steps based on his judgment, whatever he thinks fit.

In simple words, it reveals information relating to the key elements of a person’s wealth highlighted in the income tax return such as income, expenses, losses, refunds, deductions, etc, which plays the main role in claiming the return over the tax paid by the individual.

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