INCOME TAX

INSTRUCTION NO. 1901/1992

 Dated: September 15, 1992

Section(s) Referred: 143 ,144

Statute: Income - Tax Act, 1961

In a recent judgment in the case of Kalyankumar Ray vs.CIT (191 ITR 634) the Supreme Court has observed that assessment is one integrated process involving not only the assessment of the total income, but also the determination of the tax. The Supreme Court has held that the determination of the tax is as crucial as the assessment of total income. It is only when both the assessment order and the tax computation sheet are signed by the assessing officer that the process of assessment is complete. In this context the Supreme Court has inter alia observed as under:-

"We should, however, like to observe that to avoid unnecessary controversies, the Department should, in future, adopt the salutary and useful practice of incorporating the entire tax calculations in ITNS 65 form itself or, in the alternative, make the ITNS 150 an annexure to form part of the assessment order, have it signed by the ITO and have it served on the assessee along with the ITNS 65. That will enable the assessee to have the full details necessary to enable him to file a proper appeal, if needed, against the order and demand. If these safeguards are not taken, there is a danger of the tax calculations being left entirely to the subordinate staff, the ITO contenting himself with a cursory glance there at. Though, largely, the tax calculations are only matters of details and arithmetics, there do arise sometimes difficult questions of interpretation of the provisions relating to tax rates, additional tax, interest and so on and the assessee should, in all fairness, have full details regarding the computation to enable him to take further steps in the matter.

We hope that the observations made by us would ensure, at least in future, that ITOs do not allow themselves to be indifferent to this part of the process of assessment or shirk the responsibility of verifying and authenticating the correctness of the tax computations resulting in the demand raised against the assessee."

2. Under Instruction No.1126-F.NO.220/14/77-ITA.II dated 17-12-1977 and NO.225/57/82-ITA.II dated 28-6-82 tax calculations have to be incorporated in the assessment order itself in case of companies. It has now been decided by the Board that henceforth in all cases of assessments and processing of returns u/s.143(1)(a) details of tax calculation shall be incorporated in the assessment order or in the intimation as the case may be.

3. In view of the observations of the Supreme Court quoted above, it should be ensured that the assessment order/the intimation contains sufficient details so as to give a clear idea to the assessee on the basis of the computation of tax, additional tax, interest, the details of prepaid taxes and the net amount payable/refundable.

4. The ITNS 150/150A should continue to be sent alongwith the assessment orders in accordance with the existing instructions.

5. These instructions may be brought to the notice of all the officers and members of staff working in your charge.