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Assessment 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, 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 assessment

Various ways of framing the assessment under the Income Tax Ordinance,
2001 are as under:
1. Normal assessment, usually referred to as assessment
2. Best judgment assessment
3. Provisional assessment
4. Provisional assessment in certain cases
Section 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
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

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.
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,
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, the
Commissioner 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
An assessment order under this section shall only be issued within five years
from the end of the tax year to which it relates.
i. 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
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;



However, the provisional assessment shall not be treated as final order

(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 days
The provisional assessment order made u/s 122C is not appealable


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 assessment
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.
The Commissioner shall finalize the provisional order or provisional
amended assessment order as soon as possible.
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 Assessment
Following 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 --- General

Basically 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
The 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 assessment
On 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-assessment
If 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 assessment
Where 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 assessment
In 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 :
Compulsory best judgement assessment made by the assessing officer in cases of non-cooperation on the part of the assessee or when the assessee is in default as regards supplying
Discretionary best judgement assessment 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.