CS Professional · Advanced Direct Tax Laws and Practice

Assessment: formula sheet

Full chapter guide

Key formulas

Adjustments allowed in processing: Section 270(1)(a): (i) arithmetical error; (ii) incorrect claim apparent from the return; (iii) inconsistency with a prescribed earlier-year return; (iv) loss disallowed if the earlier return was late; (v) audit-report disallowance or income not taken into account; (vi) Chapter VIII-C deduction disallowed if return is late; Only these adjustments are allowed in processing. Nothing else can be changed without a regular assessment.
Sum payable or refund: Tax + interest + fee − (TDS + TCS + advance tax + rebate or relief under Chapter IX + self-assessment tax + other amounts paid); Section 270(1)(c). A positive result is payable. A negative result is a refund, granted under clause (e).
Prior communication: Communication of proposed adjustment; if no response within 30 days of issue, make the adjustment and send the intimation; Section 270(2). A response received must be considered.
Time limit for intimation: Not after 9 months from the end of the financial year in which the return is made; Section 270(4).
Time limit for scrutiny notice: Notice under 270(8) not after 3 months from the end of the financial year in which the return is furnished; Section 270(9). Purpose: check understated income, excessive loss or under-payment of tax.
Incorrect claim apparent from the return: (i) inconsistent with another entry; (ii) required substantiating information not furnished; (iii) deduction exceeds a specified statutory limit; Section 270(5)(a). Learn all three limbs.
Acknowledgement as intimation: No sum payable or refundable and no adjustment made → acknowledgement is deemed to be the intimation; Section 270(5)(b).
Scope of the scheme: Section 273(1) applies to assessment, reassessment or recomputation under section 270(10), 271 or 279, in cases referred to in sub-section (2); Cases are those specified by the Board by area, persons, incomes or cases.
Centre and units: National Faceless Assessment Centre + assessment unit + verification unit + technical unit + review unit (section 273(3)); The Board sets them up and specifies their functions and jurisdiction.
Assessment unit's role: Written order on total income or loss + opportunity of being heard + sum payable or refund (section 273(4)(b)); It may also initiate penalty proceedings, if any.
Communication rule: All communications go through NaFAC; with assessee and with units exclusively by electronic mode (section 273(7)); Sub-section (8) exception: enquiry or verification by the verification unit in circumstances specified by the Board.
Transfer to jurisdictional officer: Section 273(12): transfer at any stage with prior approval of the Board; Done by the Principal Chief Commissioner or Principal Director General in charge of the Centre, if considered necessary.
Unit authorities: Section 273(6): Additional or Joint Commissioner or Director; Deputy or Assistant Commissioner or Director, or Income-tax Officer; other authority, staff or consultant as the Board considers necessary; Units refer to an Assessing Officer having powers assigned by the Board (sub-section (5)).
Meaning of faceless assessment: Proceedings conducted electronically in 'e-Proceeding' facility through the assessee's registered account in the designated portal (section 273(13)); The designated portal is designated by the Principal Chief Commissioner or Principal Director General in charge of the Centre.
Assessing Officer for sections 280 and 281: Section 279(3): an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit under section 273(3); Inserted by Act No. 4 of 2026, with effect from 1-4-2026.
Scope of faceless assessment: Section 273(1)-(2): assessment, reassessment or recomputation under section 270(10), 271 or 279, for cases specified by the Board; The Board decides the areas, persons, incomes or cases covered.
Units under section 273(3): NaFAC + assessment units + verification units + technical units + review units; The Board sets them up and specifies functions and jurisdiction. Each unit is an Assessing Officer with powers assigned by the Board (section 273(5)).
Who staffs the units: Section 273(6): Additional/Joint Commissioner or Director; Deputy/Assistant Commissioner or Director or Income-tax Officer; other authority, staff or consultant the Board considers necessary; Use this for 'authorities' questions.
Assessment order: Section 273(4)(b): written order + all relevant material + opportunity of being heard; The assessment unit may also initiate penalty proceedings and determine sum payable or refund.
Electronic communication: Section 273(7): via NaFAC; with assessee exclusively by electronic mode; Exception in section 273(8): enquiry or verification by the verification unit in circumstances the Board specifies.
Transfer to jurisdictional officer: Section 273(12): NaFAC head may transfer the case at any stage, with prior Board approval; Section 273(9)-(11) deal with references for section 268(5) and what follows.
Reassessment notices: Section 279(3): for sections 280 and 281, 'Assessing Officer' excludes NaFAC and any assessment unit under section 273(3); Inserted w.e.f. 1-4-2026. Show-cause notice and approval stages are handled by the jurisdictional Assessing Officer.
Appeal to Joint Commissioner (Appeals): Section 356(1): orders of an Assessing Officer below the rank of Joint Commissioner, including assessment, reassessment or recomputation under section 279; Under section 356(2), no appeal lies to the Joint Commissioner (Appeals) if the order is passed by or with prior approval of an authority above the rank of Deputy Commissioner.
Appeal to Commissioner (Appeals): Section 357: includes orders under section 279 or 283, penalty orders under Chapter XXI, and other listed orders; Section 357(e) excludes orders passed on Dispute Resolution Panel directions and orders referred to in section 274(12).
Powers on appeal against assessment: Section 360(1)(a): confirm, reduce, enhance or annul the assessment; For a penalty order, section 360(1)(d) lets the authority confirm, cancel or vary it.
Safeguard before enhancement: Section 360(2): reasonable opportunity of showing cause before enhancing assessment or penalty, or reducing refund; This is a mandatory natural-justice condition.
Hearing of the appeal: Section 359(2): appellant, in person or by an authorised representative, and the Assessing Officer have the right to be heard; Section 359(1) requires a notice of the day and place of hearing to both sides.
Appellate order: Section 359(4): in writing, stating points for determination, decision and reasons; Section 359(5): where possible, decide within one year from the end of the financial year in which the appeal is filed or transferred.
Identical question of law: Section 375: declaration that the question will not be raised if the final decision in the other case is applied; Applies where an identical question is pending before the High Court or Supreme Court for another tax year.

Quick revision

Faceless assessment under section 273 applies to areas, persons, incomes or cases specified by the Board.
The National Faceless Assessment Centre assigns the case to an assessment unit, intimates the assessee and serves notices.
The assessment unit analyses material, identifies issues, seeks clarification and determines any variation prejudicial to the assessee.
The verification unit does enquiry, cross verification, examination of books and witnesses, and recording of statements.
The technical unit gives legal, accounting, forensic, IT, valuation, transfer pricing and data analytics advice.
The review unit reviews proposed variations where the Centre considers it necessary.
Communication among units, and with the assessee, goes through the Centre; with the assessee it is exclusively electronic.
The assessment unit makes the assessment by a written order after hearing the assessee, and may initiate penalty proceedings.
The Centre's head may transfer a case to the jurisdictional Assessing Officer at any stage with the Board's prior approval.
Faceless assessment means e-Proceeding through the assessee's registered account on the designated portal.
Section 279(3): Assessing Officer for sections 280 and 281 excludes the Centre and assessment units.
Under section 359, the appellate order must be in writing, with points for determination, decision and reasons.

Common mistakes

Treating self-assessment as an assessment order made by the officer. Fix: Self-assessment is the tax you pay yourself before filing. It appears as a credit under section 270(1)(c)(v). The orders are the intimation and the regular assessment order.
Counting the nine-month and three-month limits from the date of filing the return. Fix: Both run from the end of the financial year in which the return is made or furnished. Mark 31 March first, then add the months.
Saying every assessment is faceless. Fix: State that it applies only to the areas, persons, incomes or cases specified by the Board.
Writing about regional faceless assessment centres as part of section 273. Fix: Section 273(3) names the National Faceless Assessment Centre and the four types of units. Stick to that text.
Saying the assessment unit directly writes to the assessee. Fix: Under section 273(7), communication goes through NaFAC, which forwards your response to the assessment unit.
Treating all assessments as faceless. Fix: Section 273(2) limits it to what the Board specifies. State this condition.
Saying every faceless assessment order goes to the Commissioner (Appeals) only. Fix: Mention both. Section 356 applies to orders of an officer below Joint Commissioner rank, subject to the section 356(2) bar.
Ignoring the section 356(2) bar. Fix: Always check who passed the order or approved it. Above Deputy Commissioner rank means no appeal to the Joint Commissioner (Appeals).

Exam tips

Quote section 270 sub-section numbers in your answer. Examiners reward the provision first, then the facts.
Memorise the six adjustment heads and the three limbs of incorrect claim. These are the commonest short-answer asks.
Always compute time limits from the end of the financial year, and show the date you reach.
In numerical questions, list credits one by one from section 270(1)(c). It earns method marks even if the final figure slips.
Define self-assessment, processing and regular assessment in one line each, then distinguish them by hearing, evidence and nature of order.
Write answers in the order provision, analysis, conclusion, and quote sub-section numbers such as 273(3), 273(7) and 273(12).
Use a short list for the four units and give one function for each. Examiners look for all four.
Always state that scope is fixed by the Board under sub-section (2). It is an easy mark.