Assessment (ITO, 1984)

Assessment

1. PROVISIONAL ASSESSMENT (SEC.81)

The D.C.T. is empowered under section 81 of I. T. Ordinance, 1984 to make provisional assessment in a summery manner-

i. On the basis of return and statements, where return has been filed (after allowing depreciation as per 3rd Schedule and also after setting off any loss carried forward if any); or

ii. On the basis of last assessed income, where no return has been filed.

As the name indicates that it is not final, just an assessment done provisionally to collect tax before regular assessment. There shall be no right of appeal against provisional assessment. Rather all penal measures can be enforced to recover tax as per provisional assessment.

2. ASSESSMENT ON THE BASIS OF CURRECT RETURN (SEC.82)

Where in the opinion of the D.C.T. normal return or revised return submitted by the assessee is correct and complete in all respect he shall assess total income on the basis of that return and communicate the assessment order within 30 days from the date of such assessment. The following are the restrictions to do assessment under this section:

i. Return must be filed within the prescribed time;

ii. Tax as per return shall be paid before submission of return;

iii. Such return does not show any loss.

iv Such return does not show lesser income than the last assessed income,

v. Assessment on the basis of such return does not result in refund.

3. UNIVERSAL SELF-ASSESSMENT (SEC, 82BB)

Universal self assessment system has been introduced in our country from the assessment year 2007-2008. Every assessee (including company) is eligible to submit return under this system.

In this system assessee has to tick the box |universal self assessment! at the top of the return form. DCT will issue a receipt of such return and that receipt will mean that assessment is complete. It is hassle free in the sense that assessment has been done on the basis of return and without any physical presence. Meanwhile, due to this simplicity, it becomes very popular method of submitting return. But it should be kept in mind that return must be correct and complete.

Procedure to submit return under universal self assessment system:

The procedure is very simple. Assessee has to prepare his return either by himself or with the help of other and then it is to be signed and verified. Assessee has to tick the box [universal self assessment at the top of the return form and after paying tax (if applicable) submit the return. However, the assessee should keep in mind the following:

• Such return must be submitted within the last date of submission of return or within the extended time allowed by the DCT.
• Tax as per return (if any) is to be paid before submission of return.
• Assessee will get an opportunity to submit amended return against notice u/s 82BB(3) relating to any adjustment in respect of any arithmetical error in the return or incorrect tax or rebate computation
• After filing return under universal self assessment scheme if any assessee finds that unintentionally tax has been computed/paid short, then he may file an amended return within 180 days from the date of filing return attaching a written statement about the mistake and a proof of tax paid along with interest @ 2% p.m. which was computed/paid short.
• No question is to be raised by the DCT as to the source of initial capital investment in case of new assessee showing new business if at least 20% of initial capital is shown as income. Initial capital formed in such way is not transferable from that business within the year or within 5 years from the end of the assessment year in any manner. Conditions are:

1. Income must be shown more than tax exemption ceiling.
2. Income not less than 20% of initial capital.
3. Tax to be paid at regular tax rate along with any other applicable amount.
4. To be mentioned at the top of the return that return is submitted u/s 82BB(11).
5. The minimum amount of capital maintained in the business at the end of the income year and 4 subsequent income years shall be equal to the initial capital
6. Any amount of shortfall of the capital in any income year shall be deemed to be income from business of that year.

Tax Audit:

The return submitted at this system may, afterwards, be selected by the NBR or its subordinate authority (if so authorized by the Board) for audit. The Board will determine the manner of such selection. If return filed under universal self-assessment scheme showing at least 15% higher income than the income assessed or shown in the immediate preceding assessment year, then it shall not be selected for tax audit by the NBR. In calculating 15% higher income, the income from the sources that are common between previous year and current year should also be considered. But the conditions are:

1. Return is to be accompanied by proper evidences in support of tax free income (if any).
2. Return is to be accompanied by bank statement in support of taking loan (if any) exceeding taka 5 lac.
3. Return does not show any receipt of gift
4. Return does not show any income on which reduced tax rate is applicable.
5. Return does not show any refund

If the return is selected for audit, then DCT will proceed to make fresh assessment by issuing notice under section 83(1) for hearing and he will make assessment within 2 years from the end of the assessment year. Otherwise it will be barred by time limitation. Assessment can be done under section 83(2) or under section 84 as the situation permits. If a revised return is filed against notice of audit and the DCT is satisfied that the findings of audit has duly been reflected in the revised return and tax and any other applicable amount has been fully paid, then he may accept the revised return and issue a letter of acceptance to the assessee.

Re-open the universal self assessment under section 93:

If any concealment has been detected in the return submitted by the assessee under universal self-assessment scheme, then the DCT may re-open the case within the stipulated time mentioned at section 93 of ITO, 1984 and proceed to assess further.Time limit to reopen a case has been reduced from 6 years to 5 years through Finance Act, 2017 with the condition that only CT can extend one year more in certain circumstances.

4. Minimum Tax (SEC. 82C)

The following 28 heads of deduction shall be deemed to be the minimum tax:

1. Contract, supply, manufacture, process, conversion, printing, packaging & binding (sec 52+Rule 16)
2. Royalties (section 52A)
3. C&F agency commission (section 52AAA)
4. Band roll in case of Handmade cigarette (section 52B)
5. Compensation against acquisition of property (section 52C)
6. Interest on all type of savings instruments (section 52D)
7. Travel agent (section-53JJ)
8. Rental power (section 52N)
9. Salary of foreign technicians serving in a diamond cutting industry (section-52 0)
10. International gateway service(IGS)on international phone call (section 52R)
11. Import [other than raw-material import] (section 53+Rule 17A)
12. Shipping Agency commission(section 53AA)
13. Manpower export (section 53B+Rule 17C)
14. Export (section 53BB + 53BBBB)
15. Shareholder of Stock Exchange (section-53BBB)
16. Public auction (section 53C+Rule 17D)
17. Non-resident courier (section 53CCC)
18. Export cash subsidy (section 53DDD)
19. Distributorship commission (section 53E)
20. Foreign buyer's agent (section 53EE)
21. Bank interest of Public University, MPO enlisted institution, ICAB, 1CMAB, 1CSB and all funds [Sec. 53F]
22. Real Estate and Land Development business (section-53FF)
23. Insurance commission (section 53G)
24. Surveyor of General Insurance (section-53GG)
25. Sale of property (section-53H)
26. Capital gain from transfer of shares by sponsor shareholders (section 53M)
27. Transfer of share of shareholder of stock exchange (section 53N)
28. Income from lottery (section 55)

Section 82C completely re-drafted through Finance Act, 2016. Any tax deducted or collected at source from the above 28 heads shall be the minimum tax. Books of accounts shall be maintained in the regular manner in accordance with the provision of section 35. Income shall be determined in regular manner and tax shall be calculated by using regular tax rate. If tax so calculated is higher than the minimum tax then the higher amount shall be payable on such income.

However income and tax shall be computed in the following manner from the 5 sources out of the above 28 sources:

Sl.	Sources of income	Section	Amount that will be taken as income	Tax rate to be applied
1	Compensation against land acquisition	52C	Total amount of compensation from land acquisition	2% or 1% depending on the location
2	Interest on savings instruments	52D	Gross interest	5%
3	Export cash subsidy	53DDD	Actual gross cash subsidy	3%
4	Bank interest of certain organization and Fund.	53F(l)(c) + 53F(2)	Gross bank interest	10% and 5%
5	Transfer of property	53H	Deed value	Applicable rate of source tax and as per rule made there under.

Where the assessee has income from regular source in addition to income from sources for which minimum tax is applicable then regular tax shall be calculated on the income from regular source and the total tax liability shall be the aggregate of the minimum tax and regular tax.

Minimum tax shall not be refunded, nor shall be adjusted against refund due for earlier year or years or refund due for the assessment year from any source. Where any surcharge, additional interest, additional amount etc. is payable, it shall be payable in addition to minimum tax. Where the regular tax is higher than the minimum tax regular tax shall be payable.

5. SPOT ASSESSMENT (SEC.82D)

Where an assessee, not being a company, who has not previously been assessed but carrying on business or profession in any shopping centre or commercial market or having a small establishment, the D.C.T may fix tax payable by him at the rate prescribed at Rule-38B and the receipt obtained for payment of such tax shall be deemed to be an assessment order.

6. ASSESSMENT AFTER HEARING (SEC.83)

When the D.C.T. is not satisfied without requiring the physical presence of the assessee who filed the return or the production of evidences then he will issue notice u/s 83(1) fixing a date and time for hearing.

After hearing and considering the evidences produced and if necessary considering such other evidences by issuing another notice u/s 83(2) the D.C.T. will make assessment u/s 83(2) within 30 days from the last hearing and communicate the assessment order within another 30 days from the date of assessment.

Thus section 83(1) deals with notice of hearing and section 83(2) deals with both requisition notice and assessment.

7. ASSESSMENT ON THE BASIS OF REPORT OF NBR APPOINTED CHARTERED ACCOUNTANT (SEC.83AAA):

When NBR has reasonable cause to believe that a return submitted by any company assessee is incorrect or incomplete, then the Board may appoint a chartered accountant to examine the books of accounts of that company. He will then exercise the powers and functions of a DCT only relating to section 79 and other than clause (f) of section 113.After examination of the books of accounts he will submit report to the Board and the Board will then forward the report to the DCT for consideration. After receiving the report DCT will proceed to assess the income of the company by issuing notice u/s 83(1)

8. BEST JUDGMENT ASSESSMENT (SEC, 84)

Where any assessee fails to file return required by a notice u/s 77/93 and has not filed a return or revised return u/s 78 or to comply with the requirements of notices u/s 79, 80 or 83(1), the D.C.T. shall assess income to the best of his judgment.

9. ASSESSMENT OF BUS, TRUCK, MINIBUS ETC,

Deviating from the normal assessment procedure, owner of bus/mini bus, truck/truck Lorries, coaster, taxi cab etc. will pay tax on at the fixed rate prescribed at SRO No 160-law/2014 dated 26/06/2014.

10. ASSESSMENT OF PARTNERSHIP FIRM (SEC.85,86 and 87)

Like other category of assessee, DCT will assess the income of the partnership firm and determine the tax payable thereon by the firm. He will also apportion the total income of the firm (arrived before tax) between the partners. (Section-85).

If DCT found at the time of assessment of a firm that a change has occurred in the constitution of the firm, the assessment shall be made on the re-constituted firm but the conditions are:

1. Income will be apportioned between those partners who were partners during the income year.
2. When tax assessed on any partner is not recoverable from him it will be recovered from the re-constituted firm. . (Section-86)

If it is found at the time of assessment of a firm that a new firm has been constituted to succeed the previous firm DCT will make 2 assessments one for the predecessor firm and the other for the successor firm. (Section-87)

11. ASSESSMENT IN CASE OF SUCCESSION TO BUSINESS OTHERWISE THAN ON DEATH (SEC.88)

Where any person carrying on business or profession has been succeeded otherwise than by death by another person the predecessor shall be assessed for the period up to the date of succession and the successor shall be assessed for the period after the date of succession. Provided that-

Where the predecessor can not be found the assessment shall be made on the successor;

Where tax is not recoverable from the predecessor it is to be recovered from the successor who shall be entitled to recover it from the predecessor.

12. ASSESSMENT IN CASE OF DISCONTINUED BUSINESS (SEC.89)

When any business or profession is discontinued, a notice of such discontinuance must be given to the D.C.T. within 15 days of such discontinuance of the business or profession accompanied by a return of total income for the broken period. If the person discontinuing such business or profession fails to give such notice, the D.C.T. may impose penalty a sum not exceeding the amount of tax subsequently assessed on him.

13. ASSESSMENT IN CASE OF PERSONS LEAVING BANGLADESH (SEC. 91)

Whenever any person is leaving Bangladesh and has no intention to come back, the D.C.T. may proceed to assess him for all the completed income years for which his assessments remain pending as well as for the broken period up to the probable date of his departure from Bangladesh.

Here is deviation from the usual practice as the assessment of the broken period may be completed before the commencement of the relevant assessment year. One important thing to note here is that, the assessee is entitled under the law to get at least seven days.

14. ASSESSMENT OF A DECEASED PERSON (SEC. 92)

Whenever any person dies, his executor, administrator or other legal representative is liable under the law to pay out of the estate of the deceased any tax which was payable by him and any other tax liability which might be payable in consequence of any assessment made after his death. Liability of the legal representative is limited to the extent to which decreased estate is capable of meeting the liability.

Legal representative shall be deemed to be an assessee for this purpose, provided a notice is given to him as per section 92(2).

15. ESCAPED PAYMENT (SEC. 93)

The following situations shall be deemed to have escaped payment:

• The income or any part of income has escaped assessment
• The income has been under assessed
• Excessive loss, relief, deduction or allowance in the return has been claimed

• Tax liability has been shown or computed lower by

1. Concealment/misreporting of any income
2. Concealment/misreporting of any assets
3. Concealment/misreporting of any expenditure
4. Concealment/misreporting of any particulars at IT10B or IT10BB

• Income has been under assessed or has been assessed at a lower rate than due tax rate
• Taxable income has been shown as tax exempted income.
• Excessive depreciation allowance or any other allowance has been claimed
• Tax has been paid or computed lower than due amount by reason of lower tax base

Preconditions:

i) Section 93 can be initiated by the DCT if he has reason to believe that any sum
payable by an assessee has escaped payment.

ii) Before initiating the proceeding under section 93 previous approval in writing
from the IJCT is to be taken, except in a case where a return has not been filed
u/s 75/77

iii) Notice under section 93 can be issued

• At any time where no return was filed and no assessment was made
• within 6 years from the end of the assessment year in case where no return was filed but assessment was completed
• Within 5 years from the end of the assessment year in other cases. Provided that only Commissioner of Taxes can extend one year more if assessee did not make full disclosure of his particulars in the return or statement or in other particulars submitted with the return or in the assessment proceedings.

16. ASSESSMENT IN THE CASE OF MINORS, LUNATICS, IDIOTS, BENEFICIARIES OF ANY TRUST. (SEC. 95)

Minors, lunatics and idiots are assessable to tax as beneficiaries through their guardians and trustees in the same way and to the same extent as it would have been livable and recoverable from such beneficiaries of full age or sound mind in direct receipt of any income profits and gains. In the like manner, the beneficiaries of any property managed by a Trust, Court of Words, receiver or manager will be brought to tax through the Trustees, Court of Words, receivers or manager.

17. ASSESSMENT OF NON-RESIDENT SHIPPING BUSINESS (SEC. 102)

If any Ship calls on any port in Bangladesh, the aggregate of the receipt arising from the carriage of passenger, livestock, mail or goods shipped at the port since the last arrival of the ship or at any port outside Bangladesh for which amount is received or deemed to be received in Bangladesh shall be treated as income received in Bangladesh and in this case tax rate will be 8% (usually tax rate is 4% in case where there is a double taxation avoidance agreement with the country the ship is originated).

18. ASSESSMENT OF NON-RESIDENT AIRLINES (SEC. 103A)

If any foreign aircraft calls on any airport in Bangladesh, the aggregate of the receipts arising from the carriage of passengers, livestock, mail or goods loaded at the said airport into that aircraft shall be deemed to be income received in Bangladesh and in this case tax rate will be 3% (usually no tax in case where there is a double taxation avoidance agreement with the country the aircraft is originated).