ASSESSMENT OF INCOME TAXINTRODUCTIONAssessment is the key area of procedural aspects of taxation. Taxation system in Pakistan is generally based on self-assessment of taxable income and tax liability thereon. Taxpayers compute their income and can file their returns declaring their computed income which is treated as income assessed by tax authorities, subject to certain conditions. However, tax authorities are empowered to select certain persons and conduct audit of selected persons.ASSESSMENT UNDER THE INCOME TAX ORDINANCE, 2001Assessment under the Income Tax Ordinance, 2001 is made on the basis of returns filed for a tax year. This is termed as Universal Self-Assessment Scheme (USAS) by the FBR, though no such words are used in the Ordinance.Ways of framing the assessmentVarious ways of framing the assessment under the Income Tax Ordinance, 2001 are as under:1. Normal assessment, usually referred to as assessment2. Best judgment assessment3. Provisional assessment4. Provisional assessment in certain cases1. NORMAL ASSESSMENTSection 120 of the Ordinance states that: If a taxpayer has furnished a complete return of income other than a revised return, the Commissioner shall be treated to have assessed the income and tax due thereon on the basis of return. Return shall be taken to be complete if it is in accordance with section 114(2) Return furnished shall be considered as an assessment order issued by the Commissioner to the taxpayer on the date it was furnished. However, in addition to above deemed assessment, the Commissioner has powers to conduct audit of income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly. Assessment in case of incomplete return If the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide certain information, particulars, statement or documents by the date specified in the notice in order to make the return a complete return. If a taxpayer fails to fully comply, by the due date, with the requirements of the notice the return furnished shall be treated as an invalid return as if it had not been furnished. However, if the taxpayer fully complies with the requirements of the notice, by the due date, the return furnished shall be treated to be complete on the day it was furnished. Such notice shall not be issued after expiry of one hundred and eight days from the end of the financial year is which return was furnished.

2. BEST JUDGMENT ASSESSMENT:i. This type of judgment is made where a person fails to: furnish a statement as required by a notice under sub-section (5) of section 115; or furnish a return as required under section 143 or section 144 (return to be filed by air carrier or shipping companies); or furnish the wealth statement as required under section 116; or produce before the commissioner, or any person employed by a firm of chartered accountants or a firm of cost and management accountants under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon,ii. Under any of the above cases, the Commissioner may, based on any available information or material and to the best of his judgment, make an assessment of the taxable income of the person and the tax due thereon.iii. Under such a case, the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.iv. As soon as possible after making a best judgment assessment, theCommissioner shall issue the assessment order to the taxpayer stating: the taxable income; the amount of tax due; the amount of tax paid, if any; and The time, place and manner of appealing against the assessment order.v. An assessment order under this section shall only be issued within five years from the end of the tax year to which it relates.3. PROVISIONAL ASSESSMENTi. Where in response to a notice under sub-section (3) or sub-section (4) of section 114 a person fails to furnish return of income for any tax year, the commissioner may, based on any available information or material and to the best of his judgment, make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income and the tax due thereon.ii. The provisional assessment order completed is treated as the final assessment order after the expiry of forty five days from the date of service of order of provisional assessment;iii. However, the provisional assessment shall not be treated as final order if:(i). In case of individual and AOP, the person files return of income along with wealth statement, wealth reconciliation statement and other documents u/s 116 (2A) for the relevant tax year during the said period of forty five days.(ii). In case of company the person files return of income electronically along with audited accounts for the relevant tax year during the said period of forty five daysiv. The provisional assessment order made u/s 122C is not appealable

4. PROVISIONAL ASSESSMENT IN CERTAIN CASES:i. This type of assessment is applicable in case where any concealed asset of a person is impounded by any agency of Federal or Provincial Government. In such a case, the Commissioner is empowered to make provisional assessment before making a best judgment assessment or amended assessmentii. Where any concealed asset is impounded, it shall be taken into account in the computation of taxable income and tax payable for the last completed tax year of the person during which the concealed asset was accounted for.iii. The Commissioner shall finalize the provisional order or provisional amended assessment order as soon as possible.iv. Concealed asset means any property or asset which, in the opinion of Commissioner, is acquired from any income chargeable to tax but could not be charged to tax.

Special Provisions With Respect To AssessmentFollowing are three provisions which are associated with framing of assessment order: Assessment in relation to disputed property Evidence of assessment Assessment in the case of persons about to leave Pakistan

ASSESSMENT --- GeneralBasically assessment is an estimation for an amount assessed while paying Income Tax. It is a compulsory contribution that is required for the support of a government. It is generally of the following types.1. Self-assessmentThe assesse is required to make a self assessment and pay the tax on the basis of the returns furnished. Any tax paid by the assessee under self assessment is deemed to have been paid towards regular assessment.2. Regular assessmentOn the basis of thereturn of income chargeable to tax furnished by the assessee an intimation shall be sent to the assessee informing him about the tax or interest payable or refundable to him.3. Income escaping assessment or re-assessmentIf the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year assess or reassess such income and also nay other income chargeable to tax which has escaped assessment and which comes to his notice in course of the proceedings or any other allowance, as the case may be.

4. Precautionary assessmentWhere it is not clear as to who has received the income, the assessing officer can commence proceedings against the persons to determine the question as to who is responsible to pay the tax.5. Best judgement assessmentIn a best judgement assessment the assessing officer should really base the assessment on his best judgement i.e. he must not act dishonestly or vindictively or capriciously. There are two types of judgement assessment :i. Compulsory best judgement assessment made by the assessing officer in cases of non-co-operation on the part of the assessee or when the assessee is in default as regards supplying informations.ii. Discretionary best judgementassessment is doen even in cases where the assessing officer is not satisfied about the correctness or the completeness of the accounts of the assessee or where no method of accounting has been regularly and consistently employed by the assessee Judgment is a process of reaching a judicial decision to the best of the reasons.