⁠Special Tips To Handle Assessment Under Income Tax In The Face Less Era

Every taxpayer in India who files an Income Tax Return (ITR) goes through some form of tax assessment. The assessment in income tax ensures that the income reported and the tax payable are accurate under the Income Tax Act, 1961.

The process helps the Assessing Officer verify whether the income, deductions, and exemptions claimed by the taxpayer are genuine. In the Faceless Assessment Era, these verifications happen entirely online, reducing personal interface and improving efficiency.

Whether you are an individual, company, or firm, it’s important to understand what an income tax assessment is, how scrutiny assessments work, and what to do when you get a notice from the Income Tax Department. If you find the process confusing or need expert guidance, consulting a tax consultant in Gurgaon can help you handle assessments and notices more confidently and accurately.

What Is Income Tax Assessment?

Income Tax Assessment is simply the process where the department checks your total income for a particular financial year and figures out how much tax you should have paid.

Based on this check, the Income Tax Officer issues an assessment order after reviewing the details you submitted in your return of income.

Purpose of Assessment

The main goals of assessment are to:

• Check whether your income has been correctly declared
• Ensure the right amount of tax and TDS has been paid
• Identify cases where income may have escaped assessment
• Make sure people are following tax laws and there’s no revenue loss to the government

Types of Income Tax Assessments under the Income Tax Act

The Income Tax Act has different types of assessment, depending on the situation. Here are the main ones:

1. Summary Assessment – Section 143(1)

This is the simplest form of assessment and is often called a preliminary or summary assessment.

• It’s done automatically by the system when you file your income tax return.
• The system checks for basic mistakes like arithmetic errors or obvious mismatches in income or tax credits.
• If there’s a difference between what you’ve shown in your ITR and what appears in Form 26AS or AIS, you may get a tax notice or intimation.
• You have to respond online within the specified time if any action is required.

If everything matches and no issues are found, the intimation under Section 143(1) works as your final assessment order for that year.

2. Scrutiny Assessment – Section 143(3)

A scrutiny assessment goes one step deeper. It’s a detailed examination of your:

• Income
• Deductions
• Claims and disclosures

The Assessing Officer may issue a scrutiny notice to verify things like:

• Sources of income
• Deductions claimed (like 80C, 80D, etc.)
• Large or unusual transactions
• Mismatched TDS
• Investment proofs or business expenses

Process

• A notice under Section 143(2) is sent if your return is selected for scrutiny.
• You must respond within the specified time, generally 3 months from the end of the month in which the notice is served.
• The AO may ask for more documents, clarifications, or explanations.
• After reviewing everything, an assessment order is passed stating:
• Your assessed income, and
• The final tax due or refund

Under the Faceless Assessment Scheme, all of this happens digitally. You upload documents, reply online, and receive orders on the portal no personal visits, no physical meetings, which makes the process more structured and traceable. 

For taxpayers who need help navigating these online procedures or responding to notices, an experienced income tax consultant Gurgaon can provide valuable support and ensure compliance with the requirements.

3. Best Judgment Assessment – Section 144

A Best Judgment Assessment comes into play when:

• A taxpayer fails to file the return, or
• A taxpayer doesn’t respond to notices, or
• The information given is incomplete or unreliable

In such cases, the Assessing Officer completes the assessment based on whatever data is available such as:

• Information already with the Income Tax Department
• Bank transactions
• TDS records
• Third party information

The officer then issues an order estimating the tax liability.

This type of order is usually not in favour of the taxpayer, but the law still gives you the right to appeal within the prescribed time.

4. Reassessment – Section 147

Sometimes, even after an assessment is completed, the department later finds that some income was not reported or escaped assessment.

In such situations, the officer can issue a reassessment notice under Section 147.

This generally happens when:

• New information comes in (for example, from banks, other agencies, or data analytics)
• There are unreported deposits, foreign income, or capital gains
• There’s a clear mismatch between lifestyle/transactions and reported income

The law allows the department to issue such notices within certain years from the end of the relevant financial year, depending on how serious the issue is.

When you receive such a notice, you must:

• File a response or
• File a fresh return, as required, within the time stated in the notice

5. Summary of Assessments

Here’s a quick snapshot to remember the types of assessments:

Understanding Income Tax Notices

An income tax notice is just a formal way of the Income Tax Department saying:
“We need more details or clarification about your return of income.”

Common Reasons You May Get a Notice

Some usual triggers are:

• Mismatch between your ITR and Form 26AS / TDS / AIS
• High value transactions (like property, securities, foreign transfers) not reflected in your return
• Incorrect or inflated deductions claimed
• Delay in filing your income tax return
• Completely routine random selection for income tax scrutiny

So the moment a notice is issued, don’t panic.
First, read it calmly, understand why it was sent, and then respond within the specified time.

Must Read: How to File an Income Tax Return (ITR) in India

Scrutiny Notice: What to Expect

If your return is picked up for a deeper check, the income tax authorities will send a notice under Section 143(2).

Key Points to Remember

• The notice must be issued within 6 months from the end of the financial year in which the return is filed.
• It is sent electronically via the Income Tax Portal and also to your registered email ID.
• You’ll have to respond with details, explanations, and supporting documents usually in PDF format or by uploading them through your account.
• If you don’t respond, the AO can complete a best judgment assessment under Section 144.

Always double check:

• The Assessment Year
• The section mentioned
• The order or notice number

This ensures you’re replying to a genuine notice and not ignoring something important.

Faceless Assessment Scheme: A New Era

The Faceless Assessment Scheme, introduced by the Central Board of Direct Taxes (CBDT), has changed the way assessment in Income Tax works.

Key Features

• No physical interface: You don’t visit the tax office; everything happens online.
• Centralised selection of cases: The system automatically allocates cases to various units; local officers don’t choose you.
• Automated review: Many checks are done using data analytics, increasing transparency and reducing human bias.
• Electronic assessment orders: The final assessment order is issued digitally and can be downloaded from your e-filing account.

This is especially useful for taxpayers outside metro cities your case can be handled by any specialized unit across India, regardless of where you live.

Recommended: What Happens If You Don’t Disclose Foreign Income in Your ITR?

Assessment Procedure under the Faceless System

Here’s how a typical faceless assessment works:

• A notice is issued electronically and appears in your e-filing portal (and email).
• The taxpayer responds online, uploading documents and explanations.
• An Assessment Unit reviews the details you’ve submitted.
• If needed, a Verification Unit further cross checks information.
• A draft assessment order is prepared and reviewed by senior or higher authorities.
• Once finalized, the final assessment order is issued, digitally signed, and made available on the portal.

You can always download the order in PDF format and keep it for your records.

What to Do When You Receive a Notice from the Income Tax Department

If a notice pops up in your inbox or on the portal, here’s a simple approach:

• Stay calm. Not every notice is a problem many are just for intimation or small corrections.
• Read the notice fully. Note the section, reason, and deadline to respond.
• Check details: Make sure your name, PAN, assessment year, etc., are correct.
• Talk to a Chartered Accountant in Gurgoan or tax expert, especially if it’s a scrutiny or reassessment notice.
• Respond online through your e-filing account within the specified time.
• Save copies of:
• The notice
• Your reply
• All acknowledgements and uploads

Ignoring a notice can lead to penalties, tax demand, or in extreme cases, prosecution. It’s always better to reply, even if the reply is just to clarify or correct something small.

Tips to Handle Assessment in the Faceless Era

Handling income tax assessment under the faceless scheme becomes much easier if you follow a few practical habits. Here’s what every taxpayer should keep in mind:

1. Always file your returns before the due date

Missing the ITR due date can put you on the radar automatically. When you file your return on time:

• It shows the department that you take compliance seriously
• You avoid late fees, interest, and unnecessary follow-up questions

Timely filing is the first step to a smooth assessment experience.

2. Report all income sources correctly (no matter how small)

People commonly forget to declare:

• Bank FD/savings interest
• Freelancing or side gig income
• Small rental income
• Capital gains from shares or mutual funds
• Foreign income or dividends

In the faceless system, the Income Tax Department matches your data electronically with banks, brokers, and others. Even small mismatches can trigger an intimation or notice.

So it’s always safer to declare everything honestly rather than hope it won’t be noticed.

3. Reconcile Form 26AS, AIS & TDS with your ITR

Before you hit “Submit” on your ITR, always cross-check:

• Form 26AS (TDS and tax credits)
• Annual Information Statement (AIS)
• Taxpayer Information Summary (TIS)

These reports show what information the department already has about you.

If your ITR doesn’t match these values for example, you forgot some interest income the system will flag it, and you might get a scrutiny notice or adjustment.

Reconciliation simply means:
Your income, TDS, and deductions should match the information in these forms.

4. Keep all documents and proofs for at least 6 years

During assessment, the officer may ask to see:

• Investment proofs (LIC, ELSS, tax saving mutual funds, etc.)
• Expense bills and rent receipts
• Bank statements
• Loan agreements
• Business invoices and ledgers

Under the Income Tax Act, you’re expected to keep such records safely for at least six years from the end of the financial year.

Why six years?
Because in some situations, assessments or reassessments for past years can be reopened especially where income is suspected to have been hidden.

5. Respond to any notice promptly and accurately

If you receive a tax notice:

• Don’t ignore it
• Read it end-to-end note the section, assessment year, and exact reason
• Gather all supporting documents that justify your position
• Submit a clear, factual reply within the timeline mentioned in the notice
• If you’re unsure about wording or documents, take help from a CA

In the faceless era, everything you submit is recorded and time stamped. A well drafted, timely reply can close the matter quickly, while silence or vague answers can turn a small issue into a big problem.

In short:
Be disciplined with your ITR filing, keep your documents organised, avoid mismatches, and always respond on time. If you do this, even a scrutiny assessment can be handled calmly and smoothly.

Read This: ⁠Disclosures and Penalties of Foreign Assets in Income Tax Return

Final Assessment and Appeal

Once the review is completed, the Assessing Officer issues a final assessment order telling you:

• How much tax liability you finally have, or
• Whether you’re eligible for a refund

If you don’t agree with what’s in the assessment order maybe you feel a deduction was wrongly denied or income was misinterpreted you’re not stuck.

You can appeal the order to the Commissioner (Appeals) within 3 months from the end of the month in which you receive the order.

This appeal right ensures every assessee has a fair chance to contest mistakes and is treated justly under the Income Tax system in India.

Conclusion

The income tax assessment procedure in India is meant to ensure fairness, accuracy, and compliance not to scare honest taxpayers. While getting a tax notice or scrutiny notice can feel overwhelming at first, understanding the process and your options gives you back control.

In the faceless assessment era, three things matter most:

• Filing on time
• Declaring income correctly
• And seeking professional guidance from a Chartered Accountant when needed

💼 At DSRV India, our tax experts regularly help clients handle Income Tax Assessments, respond to notices, and manage scrutiny assessments under the new digital framework with ease and confidence.