Assessing Reassessment–A Detailed Analysis on the Merits of Scrutiny

Abstract

My paper is based on decoding the Reassessment procedure and analysing with greater objectivity the meaning of many subjective terms within sections 178 and 179 of the Income tax Act. These sections give the A.O powers to conduct reassessment on the assessee after the ITR has been filed and submitted by the assessee.

Reassessment has been an old yet prominent procedure under the Income Tax Law. Reassessment and Scrutiny are undertaken by the A.O against the assessee only after the Income Tax Returns have been filed by the assessee and later the A.O. discovers “suppression of material facts”. This paper discusses what counts as “suppression” and what classifies as “material facts and how relevant it must be”. The A.O. thereby needs to discharge the burden of explaining why he believes material facts were suppressed and the grounds on which such “reason to believe is based”. The assessee on the other hand must prove that there was “full disclosure of material facts” and that the A.O. is action upon an unjustified change of mind. Through this paper I shall be elaborating upon the merits of reassessment and the challenges faced by both the parties. The Paper is divided into 5 parts sequentially which prove a valid reassessment. Firstly, whether the notice of scrutiny has been validly served upon the assessee. Secondly, whether the assessee suppressed material for facts. Third and Fourth, are the merits on which the A.O. bases his reason to believe as opposed to a mere change of mind and Fifth, whether the sanctioning power of the authority can be mechanical or not. 

 Throughout my paper I shall analyse these five sub-points and challenges faced by both the parties during the process