ASSESSMENT

(INCOME TAX ACT, 1961)

TABLE OF CONTENTS
INRODUCTION............................................................................................................................3

TYPES OF ASSESSMENT...........................................................................................................4

SUMMARY ASSESSMENT.....................................................................................................4

How Summary Assessment Works:..........................................................................................4

SCRUTINY ASSESSMENT......................................................................................................5

Why is Scrutiny Assessment Conducted?............................................................................6

The Scrutiny Process:................................................................................................................6

BEST JUDGEMENT ASSESSMENT......................................................................................8

When is Best Judgment Assessment invoked?.....................................................................8

The Assessment Process:........................................................................................................8

INCOME ESCAPING ASSESSMENT..................................................................................10

When is Income Escaping Assessment invoked?...............................................................10

The Reassessment Process:..................................................................................................11

ASSESSMENT IN CASE OF SEARCH AND REQUISITION...........................................12

Triggering Events and Scope:..............................................................................................12

Procedural Requirements:...................................................................................................13

Timeframe for Completion:.................................................................................................13

TYPES OF ITR FORM...............................................................................................................14

ITR-I (Sahaj): The Simplified Form for Salaried Individuals.............................................14

Who Can File:.......................................................................................................................14

Who Cannot File:.................................................................................................................14

Key Features:........................................................................................................................14
 ITR-2: For Individuals and HUFs with Non-Business Income............................................14

Who Can File:.......................................................................................................................14

Who Cannot File:.................................................................................................................14

Key Features:........................................................................................................................15

ITR-3: The Form for Business and Profession Income........................................................15

Who Can File:.......................................................................................................................15

Who Cannot File:.................................................................................................................15

Key Features:........................................................................................................................15

ITR-4 (Sugam): Simplified Filing for Small Businesses.......................................................15

Who Can File:.......................................................................................................................15

Who Cannot File:.................................................................................................................15

Key Features:........................................................................................................................15

ITR-5: For Entities Beyond Individuals and HUFs..............................................................16

Who Can File:.......................................................................................................................16

Who Cannot File:.................................................................................................................16

Key Features:........................................................................................................................16

ITR-6: For Companies (Excluding Charitable Trusts)........................................................16

Who Can File:.......................................................................................................................16

Who Cannot File:.................................................................................................................16

Key Features:........................................................................................................................16

7. ITR-7: For Trusts, Political Parties, and Other Specified Entities..................................16

Who Can File:.......................................................................................................................16

Who Cannot File:.................................................................................................................16

Key Features:........................................................................................................................17

CONCLUSION............................................................................................................................17
INRODUCTION
In the realm of income tax, assessment is a formal process conducted by the Income Tax
Department (ITD) to meticulously review a taxpayer's self-assessed return of income. This
rigorous examination seeks to verify the accuracy and completeness of the declared income,
allowable deductions, and ultimately, the taxpayer's final tax liability. The ITD scrutinizes the
information provided by the taxpayer, ensuring compliance with the provisions of the Indian
Income Tax Act.1

Through this evaluation procedure, the ITD seeks to uphold the tax system's integrity by
ensuring that taxpayers meet their responsibilities with accuracy and transparency. The outcome
of the assessment determines the taxpayer's final tax liability, which may result in an adjustment
to the initially self-assessed amount. This procedure is essential for maintaining fairness and
equality in the tax

system. The evaluation process includes a comprehensive examination of the. taxpayer's

submission, comparing the provided details with various data sources such as bank statements,
investment documents, and prior tax declarations. The ITD may also initiate investigations, seek
explanations, and call the taxpayer for face-to-face meetings to guarantee a comprehensive and
precise assessment.

Upon completion of the assessment, the ITD issues a formal communication, typically in the
form of an intimation or assessment order, detailing the taxpayer's assessed income, allowable
deductions, and the determined tax payable. This communication serves as a legally binding
determination of the taxpayer's tax liability for the relevant assessment year.

The evaluation procedure is crucial for the honesty of the Indian tax system, making sure that
taxpayers meet their legal duties and provide their equitable portion to the national treasury. It
upholds the principles of fairness, transparency, and accountability in tax administration.2

1
Institute of Chartered Accountants of India, Gandhidham Branch, Assessment Proceedings under IT Act, 1961,
available at: https://gandhidham-icai.org/Pdf/Study-material/Assessment-Proceedings-under-IT-Act-1961.pdf (last
visited on August 22, 2024).
TYPES OF ASSESSMENT
SUMMARY ASSESSMENT
The Indian Income Tax Act, 1961, employs a streamlined process called "summary assessment"
to efficiently handle a large volume of tax returns. This initial assessment stage, governed by
Section 143(1), focuses on identifying and rectifying apparent errors in the taxpayer's self-
assessed return without requiring their physical presence.3

How Summary Assessment Works:

Automated Adjustments: The Assessing Officer (AO) utilizes automated systems to identify
and correct any arithmetical errors, incorrect claims, or disallowed deductions that are readily
apparent from the submitted return. This ensures basic accuracy and consistency.

Limited Scrutiny: At this stage, the AO does not delve into a detailed examination of the
taxpayer's financial records or request additional documentation. The focus remains on
addressing surface-level discrepancies.

Intimation to Taxpayer: Following the automated adjustments, the AO issues a formal

intimation to the taxpayer, outlining the changes made to their return and the resulting tax
liability or refund.

Timely Completion: The summary assessment process is subject to a strict timeline, ensuring
a timely and efficient resolution of tax liabilities. This process must be finalized within a
specified timeframe, generally one year from the conclusion of the financial year in which the
taxpayer filed their return. This timeframe underscores the importance of promptness and
adherence to deadlines within the income tax system.

For Example, if a taxpayer claims a deduction under Section 80C that exceeds the permissible
limit, the AO will adjust the return accordingly. For instance, if the taxpayer claims a deduction

2
TaxGuru, “FAQs on Assessments under Income Tax Law”, TaxGuru, available at:
https://taxguru.in/income-tax/faqs-assessments-incometax-law.html#goog_rewarded (last visited on August 22,
2024).
3
ClearTax, “Income Tax Assessment”, ClearTax, available at: https://cleartax.in/s/income-tax-assessment (last
visited on August 22, 2024).
of under Section 80C, but the permissible limit is the AO will reduce the deduction to and
recalculate the tax liability.

In the landmark case of CIT v. Gujarat Electricity Board (2003) 4, the Supreme Court of India
clarified the nature of intimation under Section 143(1). The court held that the intimation sent to
the taxpayer under this section is not an assessment order.

Key Points from the Judgment:

Nature of Intimation:

The court emphasized that the intimation under Section 143(1) is merely a communication of the
adjustments made to the return. It does not constitute a formal assessment order.

No Final Determination:

The intimation does not involve a final determination of the taxpayer's income or tax liability. It
is a preliminary step to correct obvious errors in the return.

Scope of Adjustments:

The adjustments made under Section 143(1) are limited to arithmetical errors, incorrect claims,
and disallowances that are apparent from the return. The AO cannot make any substantive
changes or conduct a detailed scrutiny at this stage.

Legal Implications:

Since the intimation is not an assessment order, it does not have the same legal implications.
Taxpayers can challenge the adjustments made in the intimation through appropriate legal
channels.5

4
(2003)181CTR (SC) 28: 260ITR84 (SC): AIRONLINE 2002 SC 400: (2003) 129 TAXMAN 65: (2003) 181
CURTAXREP 28: (2003) 260 ITR 84.
5
Legal Bites, “Assessment Procedure Under the Income Tax Act”, Legal Bites, available at:
https://www.legalbites.in/categories/law-library/taxation/assessment-procedure-under-the-income-tax-act-940219
(last visited on August 22, 2024).
SCRUTINY ASSESSMENT
When a more comprehensive review of a taxpayer's financial information is required, the Income
Tax Department may initiate a scrutiny assessment. This in-depth examination, governed by
Section 143(3) of the Income Tax Act, 1961, delves deeper into the taxpayer's retur( compared to
the initial summary assessment.

This process is triggered when the Assessing Officer (AO) suspects discrepancies or requires
further clarification regarding the information provided in the return.

Why is Scrutiny Assessment Conducted?

The primary objective of scrutiny assessment is to ensure the accuracy and completeness of the
taxpayer's self-assessed return. The AO may initiate this process for various reasons, including:

High-Value Transactions: Returns involving substantial income or deductions may attract

scrutiny.

Unusual Claims: Claims that deviate significantly from the norm or lack proper substantiation
may raise red flags.

Random Selection: A percentage of returns are randomly selected for scrutiny to maintain
system integrity.

Information from Other Sources: Data received from banks, financial institutions, or
other government agencies may trigger a scrutiny assessment.6

The Scrutiny Process:

Notice Issuance: When the Income Tax Department determines that a taxpayer's return
warrants a more detailed review, the Assessing Officer (AO) initiates a scrutiny assessment. This
process commences with the issuance of a formal notice under Section 143(2) of the Income Tax
Act. This notice serves to inform the taxpayer that their return has been selected for scrutiny and
outlines the specific areas or transactions that require further examination.

6
TaxGuru, “Scope of Scrutiny Assessment: AIR Cases under Income Tax Act, 1961”, TaxGuru, available at:
https://taxguru.in/income-tax/scope-scrutiny-assessment-air-cases-income-tax-act-1961.html (last visited on August
22, 2024).
Information Gathering: The AO may request additional documents and information to
verify the claims made in the return. This could include bank statements, investment records,
invoices, receipts, and other relevant supporting evidence.

Opportunity for Hearing: The taxpayer is given an opportunity to present their case before
the AO, explain any discrepancies, and provide clarifications. This ensures a fair and transparent
assessment process.

Assessment Order: After carefully reviewing the information and considering the taxpayer's
explanations, the AO passes an assessment order under Section 143(3), determining the final tax
liability or refund due.

In the case of CIT v. Amitabh Bachchan (2016) 7, the Supreme Court of India upheld the AO's
decision to scrutinize the returns of the renowned actor, leading to the disallowance of certain
deductions.

Key Points from the Judgment:

Background:

Amitabh Bachchan had filed his income tax returns, claiming various deductions. The AO
selected his return for scrutiny under Section 143(3) and issued a notice under Section 143(2).

Scrutiny Process:

During the scrutiny assessment, the AO examined the deductions claimed by Bachchan and
found discrepancies. The AO disallowed certain deductions, leading to an increased tax liability.

Legal Challenge:

Bachchan challenged the AO's decision, arguing that the deductions were legitimate and should
not have been disallowed. The case eventually reached the Supreme Court.

Supreme Court's Decision:

The Supreme Court upheld the AO's decision, stating that the scrutiny assessment was conducted
in accordance with the law. The court emphasized the importance of verifying the authenticity of
claims made in the return to ensure accurate tax assessment.
7
AIR 2016 SC 2257
Implications:

This case highlights the significance of scrutiny assessments in maintaining the integrity of the
tax system. It underscores the AO's authority to verify claims and disallow deductions that are
not substantiated by proper documentation.8

BEST JUDGEMENT ASSESSMENT

In situations where a taxpayer neglects to fulfill their tax obligations or provides insufficient
information for a proper assessment, the Assessing Officer (AO) may resort to a Best Judgment
Assessment. This process, authorized under Section 144 of the Income Tax Act, 1961, empowers
the AO to make an informed estimation of the taxpayer's income and tax liability based on the
available information and their professional judgment.This process allows the AO to estimate the
taxpayer's income and determine the tax liability based on the best available information, even in
the absence of cooperation from the taxpayer.9

When is Best Judgment Assessment invoked?

This assessment method is triggered in specific circumstances where the taxpayer demonstrates a
lack of compliance, including:

Failure to File a Return: After receiving repeated reminders, if a taxpayer does not submit
their income tax return by the deadline, this constitutes a failure to file.

Non-Compliance with Notices: When a taxpayer ignores notices issued by the AO under
Sections 142(1), 142(2A), or 148, requesting information or clarification.

Non-Compliance with Special Audits: When a taxpayer neglects to comply with the
stipulations of a special audit mandated under Section 142(2A) of the Income Tax Act, the
Assessing Officer (AO) is empowered to initiate a Best Judgment Assessment. This provision
ensures that even in cases of non-cooperation or obstruction during a special audit, the tax

8
IndiaFilings, “Scrutiny Assessment Under Income Tax Section 143(3)”, IndiaFilings, available at:
https://www.indiafilings.com/learn/scrutiny-assessment-under-income-tax-section-1433/ (last visited on August 22,
2024).
9
Legal Tax Guru, “Best Judgment Assessment Under Section 144 of Income Tax Act, 1961”, Legal Tax Guru,
available at: https://www.legaltaxguru.com/best-judgment-assessment-under-section-144-of-income-tax-act-1961/
(last visited on August 22, 2024).
authorities can still determine the taxpayer's income and tax liability based on available
information and professional judgment.

The Assessment Process:

Information Gathering:

The AO diligently gathers all available information, including:

i. Previous years' returns filed by the taxpayer.

ii. Information obtained from third parties, such as banks, employers, and financial
institutions.
iii. Any other relevant material that can shed light on the taxpayer's income.10

Estimation and Assessment: Based on the gathered information, the AO makes a reasoned
estimate of the taxpayer's income. This assessment is guided by the principles of fairness,
objectivity, and adherence to legal precedents.

Documentation and Transparency: The AO meticulously documents the entire process,

including the reasons for invoking best judgment assessment, the information considered, and the
rationale behind the estimated income.

Opportunity for Rectification: While the assessment is made based on available

information, the taxpayer is usually given an opportunity to provide additional information or
clarify any discrepancies.

In the case of Kachwala Gems v. JCIT (2007)11, the Supreme Court of India upheld the AO's best
judgment assessment due to the taxpayer's failure to maintain proper accounts.

Key Points from the Judgment:

Background:

Kachwala Gems, a business entity, failed to maintain proper accounts and did not comply with
the notices issued by the AO. The AO conducted a best judgment assessment under Section 144,
estimating the income based on available information.
10
Legal Service India, “Best Judgement Assessment: An Adherence to the Principles of Natural Justice”, Legal
Service India, available at: https://www.legalserviceindia.com/legal/article-2396-best-judgement-assessment-an-
adherence-to-the-principles-of-natural-justice.html (last visited on August 22, 2024).
11
CIT (2006) 206 CTR 585
Assessment Process:

The AO used various sources of information, including market trends, industry standards, and
previous years' financial records, to estimate the income of Kachwala Gems. The assessment was
made in a fair and reasonable manner, considering all relevant material.

Legal Challenge:

Kachwala Gems challenged the assessment, arguing that the AO's estimation was arbitrary and
not based on concrete evidence. The case eventually reached the Supreme Court.

Supreme Court's Decision:

The Supreme Court upheld the AO's best judgment assessment, stating that the assessment was
conducted in accordance with the law and based on reasonable judgment. The court emphasized
that the AO's estimation was justified given the taxpayer's failure to maintain proper accounts
and comply with notices.

Implications:

This situation underscores the significance of keeping accurate records and adhering to tax
notifications. It also underscores the AO's authority to make a fair and reasonable assessment
based on available information when the taxpayer is non-compliant.12

INCOME ESCAPING ASSESSMENT

Income Escaping Assessment, governed by Section 147 of the Income Tax Act, 1961, acts as a
safety net to ensure that all taxable income is captured and taxed appropriately. This process
allows the Assessing Officer (AO) to reopen a previously assessed case if there are reasons to
believe that income has been omitted or incorrectly assessed.13
12
Navi, “Section 144 of Income Tax”, Navi, available at: https://navi.com/blog/section-144-of-income-tax/ (last
visited on August 22, 2024).
13
Taxmann, “Case Law Analysis on Income Escaping Assessment”, Taxmann, available at:
https://www.taxmann.com/post/blog/case-law-analysis-on-income-escaping-assessment/ (last visited on August 22,
When is Income Escaping Assessment invoked?
This mechanism comes into play when the AO has "reasons to believe" that income has escaped
assessment. This could be due to various reasons, including:

Undisclosed Income: The taxpayer may have failed to disclose certain income sources in
their original return.

Incorrect Claims: The taxpayer may have claimed deductions or exemptions they are not
eligible for.

New Information: New information may come to light after the original assessment,
revealing previously undisclosed income or inaccuracies in the original assessment.

The Reassessment Process:

Reasons to Believe: The AO must have concrete reasons to believe that income has escaped
assessment. This requires tangible evidence or information supporting the need for reassessment.

Notice Issuance: The AO issues a notice under Section 148, informing the taxpayer about the
reasons for reopening the assessment. This notice must clearly state the reasons for reassessment.

Opportunity to Respond: The taxpayer is given an opportunity to respond to the notice,

providing explanations or additional information to clarify the situation.

Assessment Order: After considering the taxpayer's response, the AO issues a revised
assessment order, determining the revised tax liability or refund due.

In the landmark case of GKN Driveshafts (India) Ltd. v. ITO (2003) 14, the Supreme Court of
India laid down the procedure for reassessment, emphasizing the need for the AO to provide
reasons for reopening the assessment.

Key Points from the Judgment:

Background:

GKN Driveshafts (India) Ltd. challenged the reassessment proceedings initiated by the AO,
arguing that the reasons for reopening the assessment were not provided.

2024).
14
(2003)179CTR(DEL)13
Procedure for Reassessment:

The Supreme Court held that when a notice under Section 148 is issued, the AO is required to
provide the reasons for reopening the assessment to the taxpayer. This ensures transparency and
allows the taxpayer to understand the basis for the reassessment.

Right to Object:

The taxpayer has the right to file objections to the reasons provided by the AO. The AO must
consider these objections and pass a speaking order, addressing the taxpayer's concerns before
proceeding with the reassessment.

Legal Implications:

The court emphasized that the reassessment process must be conducted in a fair and transparent
manner, ensuring that the taxpayer's rights are protected. The AO cannot proceed with
reassessment without providing valid reasons and addressing the taxpayer's objections.

Conclusion:

The Supreme Court's decision in this case established important procedural safeguards for
taxpayers, ensuring that reassessment proceedings are conducted in a just and transparent
manner.15

ASSESSMENT IN CASE OF SEARCH AND REQUISITION

Section 153A of the Income Tax Act, 1961, addresses situations where a search is conducted
under Section 132 or books of account, documents, or assets are requisitioned under Section
132A. This provision grants the Assessing Officer (AO) the authority to reassess the taxpayer's
total income for the six assessment years preceding the year of the search or requisition.

This measure allows the ITD to thoroughly investigate potential tax evasion or irregularities that
may have come to light during the search or requisition process. It underscores the department's
commitment to uncovering hidden income and ensuring that taxpayers fulfill their obligations
accurately.
15
Tax2Win, “Income Escaping Assessment”, Tax2Win, available at: https://tax2win.in/guide/income-escaping-
assessment (last visited on August 22, 2024).
Triggering Events and Scope:
The provisions of Section 153A of the Income Tax Act, 1961, come into play when a search
operation is conducted under Section 132 or a requisition is made under Section 132A. These
sections empower tax authorities to conduct searches and seize relevant materials, including
financial records, documents, and assets, to investigate potential tax evasion.

Section 153A grants the Assessing Officer (AO) the authority to reassess the taxpayer's total
income for the six assessment years preceding the year in which the search or requisition took
place. This broad scope of reassessment allows for a comprehensive review of the taxpayer's
financial history and ensures that any undisclosed income or assets uncovered during the search
are properly accounted for in the tax assessment.

Procedural Requirements:
The AO is obligated to issue a notice to the taxpayer, mandating the submission of returns for the
relevant assessment years. This notice serves as the formal commencement of the assessment
process under Section 153A.

The AO is required to consider any incriminating material unearthed during the search when
conducting the reassessment. This material forms the foundation for any adjustments to the
taxpayer's previously assessed income.

Timeframe for Completion:

The AO is bound by a statutory timeframe for completing the assessment under Section 153A.
Generally, this timeframe is two years from the end of the financial year in which the last
authorization for the search or requisition was executed.

In the case of CIT v. Kabul Chawla (2015) 16, the Delhi High Court addressed the scope of
assessment under Section 153A, particularly in situations where no incriminating material is
found during the search.

Key Points from the Judgment:

Background:

16
(2015) 065 (I) ITCL 0382
Kabul Chawla's case involved a search of his premises, leading the Assessing Officer (AO) to
initiate reassessment proceedings under Section 153A of the Income Tax Act. This provision
allows for reassessment of the taxpayer's income for the six years preceding the search.
However, Chawla contested the reassessment, asserting that the search yielded no incriminating
material to justify such action.

Court's Observations:

The Delhi High Court observed that the primary purpose of Section 153A is to assess or reassess
the total income of the taxpayer based on the incriminating material found during the search. If
no such material is found, the AO cannot reassess the income for the relevant years.

Legal Principle:

The court held that if no incriminating material is found during the search, the AO cannot
proceed with reassessment under Section 153A. The assessment for the relevant years should
remain as originally assessed.

Implications:

This judgment clarified that the scope of reassessment under Section 153A is limited to the
incriminating material found during the search. It protects taxpayers from arbitrary reassessment
in the absence of such material.
TYPES OF ITR FORM
ITR-I (Sahaj): The Simplified Form for Salaried Individuals
Who Can File: Individuals with income from salary, one house property, and other sources
(interest, etc.), with a total income up to lakh.17 18

Who Cannot File: Individuals who are directors in a company, have invested in unlisted equity
shares, or have income from more than one house property.

Key Features: This form is known for its simplicity and ease of use, making it ideal for salaried
individuals with straightforward financial situations.19

ITR-2: For Individuals and HUFs with Non-Business Income

Who Can File: Individuals and Hindu Undivided Families (HUFs) not having income from
business or profession.20 21

Who Cannot File: Individuals having income from business or profession.

Key Features: This form accommodates a wider range of income sources compared to ITR-I,
including capital gains and income from other sources.22

17
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
18
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
19
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007197.pdf (last visited on August 22,
2024).
20
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
21
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
22
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007198.pdf (last visited on August 22,
2024).
ITR-3: The Form for Business and Profession Income
Who Can File: Individuals and HUFs having income from a proprietary business or
profession.23 24

Who Cannot File: Individuals who do not have income from business or profession.

Key Features: This form is specifically designed to capture the complexities of business and
professional income, including details of profit and loss accounts.25

ITR-4 (Sugam): Simplified Filing for Small Businesses

Who Can File: Individuals, HUFs, and firms (other than LLP) having a total income up to lakh
and having income from business and profession computed under sections 44AD, 44ADA, or
44AE.26 27

Who Cannot File: Individuals who are directors in a company, have invested in unlisted equity
shares, or have income from more than one house property.

Key Features: This form offers a simplified filing process for small businesses with presumptive
taxation schemes, reducing the compliance burden.28

23
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
24
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
25
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007199.pdf (last visited on August 22,
2024).
26
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
27
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
28
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007200.pdf (last visited on August 22,
2024).
ITR-5: For Entities Beyond Individuals and HUFs
Who Can File: Persons other than individuals, HUFs, companies, and persons filing Form ITR-
7. This includes firms, LLPs, Association of Persons (AOPs), Body of Individuals (BOIs), and
others.29 30

Who Cannot File: Individuals, HUFs, companies, and persons required to file ITR-7.

Key Features: This form caters to a diverse range of entities, capturing their unique income
structures and tax obligations.31

ITR-6: For Companies (Excluding Charitable Trusts)

Who Can File: Companies other than those claiming exemption under section 11 (income from
property held for charitable or religious purposes).32 33

Who Cannot File: Companies claiming exemption under section 11.

Key Features: This form is specifically designed for companies, addressing their unique tax
obligations and reporting requirements.34

7. ITR-7: For Trusts, Political Parties, and Other Specified Entities

Who Can File: Persons including companies required to furnish returns under sections 139(4A),
139(4B), 139(4C), or 139(4D). This includes trusts, political parties, institutions, and others.35 36

29
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
30
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
31
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007201.pdf (last visited on August 22,
2024).
32
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
33
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
34
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007202.pdf (last visited on August 22,
2024).
35
Zoho, “Types of ITR Forms”, Zoho, available at: https://www.zoho.com/in/payroll/academy/taxes-and-
compliance/types-of-itr-forms.html (last visited on August 22, 2024).
Who Cannot File: Individuals, HUFs, firms, LLPs, and companies not covered under the
specified sections.

Key Features: This form caters to a specific set of entities with unique tax obligations, ensuring
comprehensive reporting of their financial activities.37

CONCLUSION
Understanding the assessment process under the Income Tax Act, 1961, is crucial for taxpayers
to ensure compliance and avoid penalties. Each type of assessment serves a specific purpose,
from preliminary checks to detailed scrutiny and reassessment. Additionally, selecting the correct
ITR form is essential for accurate reporting of income and computation of tax liability.

By staying informed about these processes and requirements, taxpayers can navigate the
complexities of the tax system more effectively.

36
Income Tax Department, Income Tax Returns, available at:
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns (last visited on August 22, 2024).
37
Income Tax Department, Rules for the Income Tax Act, 1961, available at:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007203.pdf (last visited on August 22,
2024).