Section 115WF and 115WG of Income Tax Act 1961: Best Judgment Assessment and Escaped Assessment of Fringe Benefits

Sections 115WF and 115WG of the Income Tax Act, 1961 dealt with assessment of fringe benefits under the Fringe Benefit Tax provisions. These provisions explain the procedure where an employer fails to comply with statutory requirements or where taxable fringe benefits escape assessment.

Section 115WF of Income Tax Act 1961 - Best Judgment Assessment

Section 115WF provides for best judgment assessment of fringe benefits by the Assessing Officer where the employer fails to furnish the required return, fails to comply with notices, or does not comply with statutory requirements.

The Assessing Officer is required to consider all relevant material gathered and provide an opportunity of being heard before completing the assessment to the best of his judgment.

Conditions for Best Judgment Assessment

• Failure to furnish the required return of fringe benefits.
• Failure to comply with notice issued under the relevant provisions.
• Failure to comply with notice issued during assessment proceedings.

Section 115WG of Income Tax Act 1961 - Fringe Benefits Escaping Assessment

Section 115WG provides that where the Assessing Officer has reason to believe that taxable fringe benefits have escaped assessment for any assessment year, the officer may assess or reassess such escaped fringe benefits subject to the provisions of applicable limitation and assessment sections.

Cases Deemed as Escaped Assessment

For the purpose of Section 115WG, fringe benefits are deemed to have escaped assessment in cases including:

• No return of fringe benefits has been furnished by the assessee.
• A return has been furnished but taxable fringe benefits have been understated.
• An assessment has been completed but taxable fringe benefits have been under-assessed.

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