14 July 2024
Yes, assessment under section 143(3) of the Income Tax Act, 1961 can be initiated even if the taxpayer has filed their return adopting section 44AD. Here’s how it works:
### Section 44AD and Assessment under Section 143(3)
1. **Section 44AD Overview**: - Section 44AD provides a presumptive taxation scheme for certain eligible businesses where the income is presumed based on a percentage of total turnover or gross receipts. It simplifies the process of computing taxable income by allowing taxpayers to declare income at a prescribed rate without maintaining detailed books of accounts.
2. **Assessment under Section 143(3)**: - Section 143(3) deals with scrutiny assessments conducted by the Assessing Officer (AO). Even if a taxpayer has opted for presumptive taxation under section 44AD, the AO has the authority to scrutinize the return filed to verify the correctness and completeness of income declared. - The AO may initiate a scrutiny assessment under section 143(3) to: - Verify the turnover or gross receipts declared by the taxpayer. - Ensure compliance with provisions of section 44AD, including conditions and restrictions. - Examine any other aspect of the return to assess the correctness of income and deductions claimed.
3. **Possibility of Assessment under Section 143(3)**: - **Grounds for Scrutiny**: The AO may initiate a scrutiny assessment if there are discrepancies or if the AO believes that further inquiry is necessary based on information available or discrepancies noticed. - **Procedure**: The taxpayer will be required to provide necessary documents, information, and explanations as requested by the AO during the scrutiny process. - **Outcome**: After scrutiny, the AO will issue an assessment order determining the final taxable income and tax liability based on findings from the scrutiny.
### Conclusion
Assessment under section 143(3) is possible even if the taxpayer has opted for presumptive taxation under section 44AD. It allows the Assessing Officer to ensure that the income declared by the taxpayer is accurate and complies with the provisions of the Income Tax Act. Taxpayers should be prepared to provide all necessary information and cooperate during the assessment proceedings to facilitate a smooth assessment process.
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