Procedure and Management:
The Procedure and Management of income tax in India is governed by the Income Tax Act, 1961, and is administered by the Income Tax Department. The key aspects of the procedure and management include:
- Registration: Entities, including companies, are required to obtain a Permanent Account Number (PAN) from the Income Tax Department. PAN serves as a unique identifier for tax purposes.
- Filing of Returns: Companies are required to file their income tax returns annually, disclosing their income, deductions, and tax liability. The returns are filed in the prescribed form within the due date specified by the Income Tax Department.
- Payment of Taxes: Companies are responsible for paying their income tax liability within the specified due dates. The payment can be made through various modes, such as online payment, physical challan, or electronic modes specified by the tax authorities.
- Tax Audit: Companies meeting certain turnover or profit thresholds are required to get their accounts audited by a qualified chartered accountant. The tax audit report is submitted along with the income tax return.
- Assessments: The Income Tax Department conducts assessments to determine the correctness and completeness of the income tax returns filed by companies. The assessment can be carried out through various methods, including scrutiny assessments, limited scrutiny assessments, or best judgment assessments.
- Appeals and Dispute Resolution: In case of disagreement with the assessment order or any other tax-related decision, companies have the option to file appeals at various levels, starting from the Commissioner (Appeals) to the Income Tax Appellate Tribunal, High Court, and Supreme Court.
Search, Seizure, and Assessment:
The Income Tax Department has the power to conduct search and seizure operations in cases where there is suspicion of undisclosed income or assets. The search and seizure procedure involves the following steps:
- Authorization: The search operation can be initiated only after obtaining a valid warrant or authorization from the specified authority.
- Search and Seizure: During the search operation, tax authorities have the power to enter premises, seize books of accounts, documents, cash, jewelry, or any other assets that are believed to be related to undisclosed income. The search operation is carried out under strict supervision and procedures laid down by law.
- Statement Recording: The tax authorities may record statements of the concerned persons, including directors, key employees, or other individuals connected to the searched premises. These statements can be used as evidence during the assessment or legal proceedings.
- Assessment: After the search and seizure operation, the Income Tax Department proceeds with the assessment of the seized materials and the undisclosed income. The assessing officer examines the seized documents, reconciles the information with the income tax returns filed, and determines the tax liability.
If a company has paid excess tax or is eligible for a refund based on deductions or credits, it can claim a refund from the Income Tax Department. The refund procedure typically involves the following steps:
- Filing of Return: The company files its income tax return, providing details of the tax paid, deductions claimed, and any excess tax paid.
- Verification and Processing: The Income Tax Department verifies the return and processes the refund claim. This involves cross-checking the tax liability, deductions, and compliance with the applicable provisions.
- Refund Issuance: Once the refund claim is processed and approved, the Income Tax Department initiates the refund payment. The refund can be issued through direct credit to the company’s bank account or through a physical refund cheque.