Consequent to order passed by Allahabad High Court passing severe strictures and proposing to levy exemplary cost of Rs 50 lakhs in a writ challenging reopening of assessment on wrong facts,  CBDT today ( 22nd August, 2022 ) has issued instructions to all its officers that for initiating proceedings under Section 148/147 of the Act, any information available on data-base/portal of the Department should be verified before drawing any adverse inference against the taxpayers.  The instructions further states that *“It is not out of place to mention here that the information made available data uploaded by the reporting entities may not be fully accurate due to interalia, error of human nature technical nature, etc.”* This is an admission by the CBDT that the information uploaded and on the basis of which assessment have been or are proposed to be reopened by the assessing offer was /may not be correct.

Consequently CBDT has directed its officers to carry out due verification and also to give opportunity of being heard to the taxpayer before initiating proceedings under Section 148/147 of the Act.

Further the supervisory authorities have been advised to keep an effective supervision so as to ensure that all extant Instructions/Guidelines/Circulars/SOPs are duly followed by the Assessing Officers in their charge.

Full Text of the Instruction is as as follows:-

Confidential
For Departmental Circulation only

F.No.299/10/2022-Dir(lnv. I)/647

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

** *********************

Room No. 323, 3rd Floor
Dr. S P Mukherjee Civic Centre,
New Delhi – 110002
Dated: 22/08/2022

To,
All the Principal Chief Commissioners of Income Tax
All the Director Generals of Income Tax (Investigation)
All the Chief Commissioners of Income Tax (Central)
The Director General of Income Tax (I&CI)

Madam/Sir,

Sub: Instruction regarding uploading of data on functionalities/portal of the Income Tax Department-reg

Kindly refer to the subject cited above.

2. In this connection, I am directed to invite your kind attention towards Guidelines for issuance of notice u/ s 148 of the Income Tax Act, 1961 (herein after referred to as the Act) issued vide Board’s letter F.No.299/10/2022-Dir(lnv.III)/611 dated 01/08/2022 wherein,   inter-alia,   following   points   has been emphasized vide Para 2.1:-

vii. If the result of enquiry/information available suggests that the income chargeable to tax has escaped assessment, the AO shall provide an opportunity of being heard to the assessee by issuing a show cause notice u/s 148A(b) of the Act. The said notice shall provide between 7 to 30 days’ time to the assessee for submitting the reply. A template of show cause notice is enclosed at Annexure-Al

viii. If an assessee requests for a personal hearing, the same may be dealt with following the principle of natural Justice by giving a reasonable period for compliance of notice specifying the date of hearing.

xi. The AO has to consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b) of section 148A before passing the order u/s 148A(d).

xii. The AO shall mandatorily pass a speaking order u/s 148A(d) in all cases with the ‘prior approval of the specified authority’ ( Annexure- A2) for such order u/s. 148A (d), except in the cases covered in Para 2.1 (iii) above of these guidelines, irrespective of whether issuance of notice u/s 148 is being recommended or not.  ….”

3. Further it is re-emphesized that –

i. Before initiating proceedings under Section 148/147 of the Act, any information available on data-base/portal of the Income Tax Department shall be verified before drawing any adverse inference against the taxpayers. It is not out of place to mention here that the information made available/data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature technical nature, etc. Therefore, due verification may be carried out and opportunity of being heard be given to the taxpayer before initiating proceedings under Section 148/147 of the Act.

ii. The supervisory authorities are hereby advised to keep an effective supervision so as to ensure that all extant
Instructions/Guidelines/Circulars/SOPs are duly followed by the Assessing Officers in their charge.

4. In addition to above, it is also advised that all the information/reports which are being uploaded on any of the functionalities/portal of Directorate of Systems should be verified by the Officer uploading the said information/reports. Supervisory Authority as to ensure that all extant Instructions/Guidelines/Circulars/SOPs in this regard are duly followed by Officer uploading the said information/reports.

5. This issues with the approval of Chairman i/c Member (Inv.), CBDT.

Yours faithfully,
(Pavitra Kumar)
Under Secretary, Investigation-III,
CBDT, New Delhi.
Email: [email protected]

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