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Regular/Scrutiny Assessment - Section 143(2)/143(3) - Income Tax - Ready Reckoner - Income TaxExtract Regular/Scrutiny Assessment - Section 143(2)/143(3) Section 143(2): Notice of Scrutiny For making assessment u/s 143(3) , AO or any IT authority not below the rank of ITO is required to serve notice u/s 143(2) . Serve a notice on the assessee u/s 143(2) requiring him to attend his office or produce or cause to be produced any evidence on which the assessee may rely in support of the return on a date to be specified in the notice. However, no notice u/s 143(2) shall be served on the assessee after the expiry of 3 months from the end of the financial year in which the return is furnished. [Reduced to 3 months, by Finance Act, 2021 , w.e.f. AY 2021-22] For Example :- In case of individual return is filed on 25th July, 2022 for AY 2022-23, Notice u/s 143(2) can be issued by 30th June, 2023 (i.e., upto 3 months from the end of FY in which return is filed). Some important points based on Judicial Decisions :- Notice validly served upon assessee within prescribed time of 12 months from the end of FY in which return was furnished (6 months for AY 2020-21 3 months from AY 2021-22) is on revenue {CIT vs Lunar Diamonds (2006 ) } If assessee furnished revised return u/s 139(5) , a fresh notice must be served on the assessee. Where notice is served by affixture on last day after office hours shall not be regarded as valid notice. {CIT vs Vishnu Co. Pvt. Ltd.} Issuance of jurisdictional notice assessment order thereafter passed in name of non existing company i.e. amalgamating company having ceased to exist as a result of approved amalgamation scheme is a substantive illegality, has to be set aside. {PCIT vs Maruti Suzuki India Ltd. (2019) (SC)} Limitation for issue of notice has to be from the date of filing of original return. Therefore, in case of removing of defects within time prescribed in original return, date of removing defects shall not be considered as date of filing return for the purpose of serving notice hence, such notice will be invalid. {Atul Project India Pvt. Ltd. vs UOI} Notice deemed to be valid in certain circumstances ( Section 292BB ) Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - a) not served upon him; or b) not served upon him in time; or c) served upon him in an improper manner. however, nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. Consequences of failure to comply with notice u/s 143(2) The consequence of a default in complying with the notice u/s 143(2), may entail an ex parte , best judgment assessment u/s 144 . Such a default may also attract penalty u/s 271(1)(b) which has been fixed at ₹ 10,000. Section 143(3): Order of Scrutiny Assessment AO on the basis of material evidences furnished by assessee in response to notice u/s 143(2) or gathered by AO, AO shall determine the income or loss of Assessee, by way of passing an order along with determination of tax payable or refundable to assessee u/s 143(3). Any Institution to whom exemption under section 10(21)/ 10(22B)/ 10(23A)/ 10(23B)/ 10(23C) available, AO cannot himself disallow exemption on any contravention by such institution. He can under section 143(3) disallow the rescinded the notification withdrawing the exemption. The Assessing Officer shall inform the Government/ prescribed authority about the contraventions made by such institutions and the Government/ prescribed authority shall withdraw the exemption by rescinding the notification. Where the AO is satisfied that any Institution or trust referred u/s 10(23C) or 11 , has committed any specified violations as defined in section 12AB(4) , he shall send a reference to the PCIT/CIT to withdraw the approval or registration and no order making an assessment of the total income or loss shall be made by him without giving effect to the oder passed by the PCIT/CIT u/s 12AB .
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