What is Assessment under Section 144 of Income Tax Act, 1961? What is Judgment
Assessment? What is the time Limit to complete Judgment Assessment?.
Income Tax Assessment Under Section 144 of Income Tax Act
Assessment U/s 144 is an assessment carried out as per the best judgment of the
Assessing Officer on the basis of all relevant material he has gathered. This
assessment is carried out in cases where the taxpayer fails to comply with the
requirements specified in section 144.
Scope of assessment under section 144
As per section 144, the Assessing Officer is under an obligation to make an
assessment to the best of his judgment in the following cases:-
If the taxpayer fails to file the return required within the due date
prescribed under section 139(1) or a belated return under section 139(4) or a
revised return under section 139(5).
If the taxpayer fails to comply with all the terms of a notice issued under
Note: The Assessing Officer can issue notice under section 142(1) asking the
taxpayer to file the return of income if he has not filed the return of income
or to produce or cause to be produced such accounts or documents as he may
require and to furnish in writing and verified in the prescribed manner
information in such form and on such points or matters (including a statement of
all assets and liabilities of the taxpayer, whether included in the accounts or
not) as he may require.
If the taxpayer fails to comply with the directions issued under section
Note : Section 142(2A) deals with special audit. As per section 142(2A), if
the conditions justifying special audit as given in section 142(2A) are
satisfied, then the Assessing Officer will direct the taxpayer to get his
accounts audited from a chartered accountant nominated by the principal chief
commissioner or Chief Commissioner or Principal Commissioner or Commissioner and
to furnish a report of such audit in the prescribed form.
If after filing the return of income the taxpayer fails to comply with all
the terms of a notice issued under section 143(2), i.e., notice of scrutiny
If the assessing officer is not satisfied about the correctness or the
completeness of the accounts of the taxpayer or if no method of accounting has
been regularly employed by the taxpayer.
From the above criteria, it can be observed that best judgment assessment is
resorted to in cases where the return of income is not filed by the taxpayer or
if there is no cooperation by the taxpayer in terms of furnishing information /
explanation related to his tax assessment or if books of accounts of taxpayer
are not reliable or are incomplete.
Procedure of assessment under section 144
If the conditions given above calling for best judgment are satisfied, then
the Assessing Officer will serve a notice on the taxpayer to show cause why the
assessment should not be completed to the best of his judgment.
No notice as given above is required in a case where a notice under section
142(1) has been issued prior to the making of an assessment under section 144.
If the Assessing Officer is not satisfied by the arguments of the taxpayer
and he has reason to believe that the case demands a best judgment, then he will
proceed to carry out the assessment to the best of his knowledge.
If the criteria of the best judgment assessment are satisfied, then after
taking into account all relevant materials which the Assessing Officer has
gathered, and after giving the taxpayer an opportunity of being heard, the
Assessing Officer shall make the assessment of the total income or loss to the
best of his knowledge/judgment and determine the sum payable by the taxpayer on
the basis of such assessment.
Time-limit for Completion of Assessment u/s 144
As per section 153, assessment under section 144 shall be made
within a period of two years from the end of the relevant assessment