TaxTMI 
TaxTMI 
Procedural Evolution in Tax Return Assessment : Clause 270 of the Income Tax Bill, 2025 Vs. Section 143 of Income-tax Act, 1961
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....e 270, its objectives, operational mechanics, and practical implications. It also undertakes a comparative evaluation with the existing Section 143 of the Income-tax Act, 1961 and the relevant point from Rule 12E of the Income-tax Rules, 1962, which prescribes the authority for issuing notices under the assessment procedure. The significance of this analysis is heightened by the central role that assessment procedures play in the administration of direct taxes, ensuring compliance, fairness, and transparency in the determination of tax liabilities. The evolution from Section 143 to Clause 270 signals an effort to align the statutory framework with advancements in technology, centralized processing, and the need for greater taxpayer engagem....
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....rors in the return. * Incorrect claims apparent from information in the return. * Disallowance of loss claimed if the return for the year of set-off was filed late. * Disallowance of expenditure or increase in income as indicated in the audit report but not considered in the return. * Disallowance of certain deductions if the return is filed late. * Computation of Tax, Interest, and Fee: Based on the adjusted total income. * Determination of Payable or Refundable Amount: After adjusting for TDS, TCS, advance tax, rebates, self-assessment tax, and other payments. * Intimation to the Assessee: The taxpayer is informed of the final computation, payable or refundable sum. * Refunds: Any refund due is to be granted. Sub-section ....
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..... Sub-section (9) restricts the issuance of such notices to within three months from the end of the financial year in which the return is furnished, promoting procedural certainty. Sub-section (10) details the procedure post-notice: the Assessing Officer, after considering evidence and materials, must make a written assessment order determining the total income or loss and the sum payable or refundable. 3. Special Provisions for Exempt Entities and Non-profits (Sub-sections 11, 12, 13, 14) Sub-sections (11) and (12) address entities such as research associations, institutions, and associations referred to in Schedule III. No assessment order can be made without giving effect to the relevant exemption provisions unless the Assessing Offi....
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....ake prima facie adjustments based on return data, reducing the scope for error or evasion. * Ability to select cases for scrutiny based on objective criteria within a defined time frame. * Clarity in handling exempt entities and non-profits, reducing litigation over withdrawal of approvals or exemptions. * Systemic Efficiency: * Centralized processing schemes promise faster, more accurate, and less discretionary processing. * Reduced interface between taxpayers and officers, minimizing corruption and subjectivity. Comparative Analysis with Section 143 of the Income-tax Act, 1961 1. Scope and Structure Both Clause 270 and Section 143 are the central provisions for assessment of returns. However, Clause 270 reorganizes and update....
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....essment Clause 270 of the Income Tax Bill, 2025 Section 143 of the Income-tax Act, 1961 * Notice for scrutiny if AO/prescribed authority considers it necessary (understatement of income, excessive loss, underpaid tax). * Assessee must attend or produce evidence. * Assessment order after considering all material and evidence. * Same grounds and procedure for scrutiny notice and assessment. * Similar post-notice procedure. 5. Special Entities and Non-profits Both provisions contain elaborate mechanisms for exempt entities, non-profits, research associations, etc. Clause 270 aligns closely with Section 143(3) provisos, but refers to Schedule III rather than specific clauses of Section 10. The process for withdrawal of approval,....
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....uthority Rule 12E specifies that the prescribed authority for issuing scrutiny notices u/s 143(2) is an Income-tax Officer (ITO) or above, authorized by the Central Board of Direct Taxes (CBDT). This ensures that only sufficiently senior and authorized officers may initiate scrutiny assessments, providing a measure of procedural safeguard. While Rule 12E is not directly referenced in Clause 270, the 2025 Bill's use of the phrase "the Assessing Officer or the prescribed income-tax authority" in sub-section (8) is consistent with the regulatory intent of Rule 12E. It is expected that a similar rule will be notified to clarify the rank and authorization of officers empowered to act under Clause 270. Practical Implications of the Compara....