Correctness of assessment not to be questioned.

436

In a claim under this part, it shall not be open to the assessee to question the correctness of any assessment, or other matter decided which has become final and conclusive, or ask for a review of the aforesaid assessment or matter; and the assessee shall not be entitled to any relief on such claim except refund of tax wrongly paid or paid in excess.

Explanation

Section Summary:

Section 436 of the new income tax law in India restricts the ability of an assessee (taxpayer) to challenge the correctness of an assessment or any related matter that has already been finalized and deemed conclusive. The taxpayer cannot request a review of such finalized assessments or matters. The only relief available to the taxpayer under this section is a refund of tax that was either wrongly paid or paid in excess.

Key Changes:

• Finality of Assessments: This section reinforces the principle that once an assessment or related matter has been finalized, it cannot be questioned or reviewed by the taxpayer. This is consistent with prior tax laws but is now explicitly stated in this section.
• Limited Relief: The taxpayer is only entitled to claim a refund for taxes that were incorrectly paid or paid in excess. No other relief or adjustments can be sought under this section.

Practical Implications:

• Taxpayer Rights: Taxpayers must ensure that all disputes or corrections related to their tax assessments are raised and resolved before the assessment becomes final. Once finalized, the scope for challenging the assessment is severely limited.
• Refund Claims: Taxpayers can still claim refunds for taxes paid in error or in excess, but they cannot use this section to reopen or revise other aspects of the assessment.
• Compliance Focus: Taxpayers and their advisors need to be diligent during the assessment process to avoid errors, as post-finalization remedies are restricted.

Critical Concepts:

• Final and Conclusive Assessment: This refers to an assessment that has been completed, and no further appeals, revisions, or challenges are pending. It is considered legally binding.
• Refund of Tax Wrongly Paid or in Excess: This refers to situations where the taxpayer has overpaid taxes due to errors in calculation, incorrect application of tax rates, or other mistakes. The taxpayer can claim a refund for such overpayments.

Compliance Steps:

1. Timely Disputes: Ensure that any disputes or corrections related to tax assessments are raised during the assessment process or through appropriate appeals before the assessment becomes final.
2. Accurate Filing: File tax returns accurately to minimize the risk of overpayments or errors that might require refund claims.
3. Documentation: Maintain proper documentation to support any refund claims for taxes paid in error or in excess.

Examples:

• Scenario 1: A taxpayer receives a finalized tax assessment notice indicating a tax liability of ₹1,00,000. The taxpayer believes there was an error in the calculation but did not raise the issue during the assessment process. Under Section 436, the taxpayer cannot now challenge the assessment but can claim a refund if they can prove that they overpaid taxes.
• Scenario 2: A taxpayer pays ₹50,000 in taxes but later realizes that due to a misinterpretation of tax provisions, they only owed ₹40,000. The taxpayer can file for a refund of the ₹10,000 overpayment under this section, but they cannot reopen the assessment to dispute other aspects of the tax calculation.

This section emphasizes the importance of resolving tax disputes proactively and limits post-finalization challenges, ensuring finality in tax assessments.