BY SPEED POST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, the November, 2014
The Chief Commissioner of Income-tax, Amritsar
Subject:- Advisory for conducting scrutiny assessment proceedings in the State of Jammu and Kashmir, in the aftermath of Floods – regarding.
It has come to the notice of the Board that due to recent devastation caused by the floods in the State of Jammu & Kashmir, the income-tax assessees of that State are facing difficulties in ensuring compliance either with the requirements under ongoing scrutiny assessment proceedings or with respect to notices u/s 143(2) of the Income Tax Act, 1961 (‘Act’) issued recently.
2 In such cases, where an assessee under scrutiny claims that he is unable to make certain compliances due to destruction of records, documents and books of accounts etc. in the floods, the Assessing Officer may ascertain from the district administration whether the area in which the business premises of the assessee concerned is located and where the books of accounts, documents etc. are claimed to had been kept was affected by the recent floods or not. If the difficulties conveyed by the assessees are found to be genuine and beyond his control making him unable to produce books of accounts etc., the pending assessments may be completed on the basis of materials available on record. The Assessing Officers are further advised to keep in mind the following points while finalizing assessments in such cases:-
i) In cases of non-production of books of accounts, documents, records etc. requisitioned u/s 143(2) / 142(1) of the Act, the Assessing Officer, even if invoking the provisions of section 144 of the Act, should avoid framing a high pitched assessment containing frivolous additions merely on account of non-production of relevant books of accounts, documents or records;
ii) Third party verifications. if necessary, should generally be made in cases where such third party is located outside the affected areas. Taking recourse to special audit u/s 142(2A) and conducting surveys u/s 133A of the Act should only be done in cases with substantial merit and with prior approval of CIT concerned;
iii) If a particular case has been completed under scrutiny during earlier years, the records concerned could be perused to understand the trend in business activity. If it is possible to draw any reasonable and convincing inference, the same may be utilized while finalizing the pending scrutiny assessment:
iv) Post-assessment action on recovery of outstanding demand should be decided by the Assessing Officer on a case to case basis and after taking into consideration the assessee’s financial condition in the aftermath of floods;
v) The Income-tax Authorities should expeditiously take all necessary steps with adequate sensitivity to resolve grievances and difficulties faced by the tax payers.
4. The above may be brought to the notice of all concerned for compliance. Affected tax payers may also be informed suitably through a Press Note to be issued by the CCIT, Amritsar.
(Riche Rastogi) Under Secretary (ITA,I1)