Income tax assessment is the procedure through which the Income Tax Department verifies and determines the actual tax liability of a taxpayer for a specific financial year. It involves reviewing the details furnished in the Income Tax Return (ITR) to ensure accuracy and compliance with tax laws.

What is an Income Tax Assessment Order?

An Income Tax Assessment Order is an official document issued by the Income Tax Department after examining your Income Tax Return (ITR) for a particular financial year. It confirms your final tax liability or refund for that period and serves as a summary report from the department.

The assessment order usually contains:

• Assessed Total Income: Total taxable income from all sources such as salary, business profits, capital gains, etc.
• Allowed Deductions & Exemptions: Details of deductions and exemptions approved by the department, along with specific amounts.
• Taxable Income: The net income remaining after deducting the permitted exemptions and deductions.
• Applicable Tax Rate: The tax rate applied based on your taxable income as per the relevant tax slabs.
• Tax Payable or Refund: The final amount either payable to the government or refundable to you, depending on whether tax paid (like TDS) was less or more than the actual liability.

What Is an Assessment Year in Income Tax?

In income tax, the Assessment Year (AY) is the 12-month period following the end of a financial year during which your income for that financial year is evaluated, and taxes are calculated and paid.

• Financial Year (FY): This is the period when you actually earn income — starting from 1st April and ending on 31st March of the next year. For example, the current financial year is 1 April 2024 to 31 March 2025.
• Assessment Year (AY): This is the year immediately after the financial year, when your income earned during the financial year is assessed and tax returns are filed. For the financial year 1 April 2024 to 31 March 2025, the corresponding assessment year will be 2025-26.

Types of Assessment in Income Tax

Self-Assessment (Section 140A)

You assess and pay your own tax liability before filing your income tax return.

• Calculate your total income earned during the year.
• Deduct all eligible exemptions and deductions.
• Compute the final tax payable.
• Pay any remaining tax due.
• File your Income Tax Return (ITR).

Summary Assessment (Section 143(1))

The Income Tax Department processes your return to check for arithmetical errors or discrepancies.

• Department automatically processes your ITR.
• Any mismatch or error is communicated via an intimation notice.
• No personal hearing or interaction is needed.
• Applicable to all individuals or businesses who have filed returns properly without discrepancies.

Regular Assessment

A detailed check of your ITR by the Assessing Officer (AO).

• AO may call you for hearings.
• You may need to provide proof of income, expenses, and deductions.
• Usually happens when the return has complexities or mismatches.

Scrutiny Assessment (Section 143(3))

A deeper assessment done when the AO suspects concealment or inaccuracies.

• Maintain proper and complete records.
• Be ready with supporting documents.
• Attend hearings when called.
• Cooperate fully with the AO.

Best Judgment Assessment (Section 144)

Done when the taxpayer fails to file returns or respond to notices.

• File accurate and complete ITR.
• Provide all required documents.
• Respond to all notices on time.
• If faced with it: Keep detailed records and explain any mismatches when questioned.

Income Escaping Assessment (Section 147)

Used when the AO believes some income was left unreported or hidden.

• AO issues a notice to reassess income.
• Taxpayer is required to explain and justify the income details again.

Documents Required for Income Tax Assessment

General Documents:

• PAN Card
• Aadhaar Card
• Bank Account Statements
• Form 26AS (Tax Credit Statement)
• Copies of previous years’ ITR (if applicable)

Income-Specific Documents:

For Salary Income:

• Form 16 issued by employer
• Salary Slips

For Business/Profession Income:

• Profit & Loss Account
• Balance Sheet
• Bank Statements
• GST Returns

For Capital Gains:

• Sale Deed and Purchase Deed
• Records of any cost of improvement

For House Property Income:

• Rent Agreement (if property is let out)
• Municipal Tax Receipts
• Interest Certificate on Home Loan

For Income from Other Sources:

• Interest Certificates from banks/post office
• Dividend Statements

When is the Income Tax Assessment Order Issued?

• Summary Assessment: Issued within 1-2 months after filing the Income Tax Return (ITR).
• Regular Assessment: Issued within 12 months from the end of the assessment year (generally by 31st March).
• Scrutiny Assessment: Issued within 24 months from the end of the relevant assessment year.
• Best Judgment Assessment: Issued within 9 months from the end of the financial year in which the assessment is conducted.

How Is an Income Tax Assessment Order Generated?

• Assessment Proceedings: The tax officer reviews the filed ITR and supporting documents and may seek additional information or clarification.
• Calculation of Tax Liability: The officer determines the total income, allows eligible deductions, and calculates the final tax payable.
• Drafting of Assessment Order: A detailed order is prepared stating the assessment findings, tax calculations, and any applicable penalties or interest.
• Issue of Assessment Order: The final order is issued to the taxpayer through the online portal or physical delivery.