On 10th June, 2021, CBDT issued Guidelines prescribing framework for Compulsory Selection of returns for Complete Scrutiny during the Financial Year 2021- 22 to all PCC/CC/Pr.DG/DG of Income Tax.
Study of these guidelines may help taxpayer analyze, as to under which category it falls. Framework is categorized as under:
1. Cases related to survey u/s 133A of the income-tax Act, 1961(Act)
2. Cases related to Search and Seizure
3. Cases where notices u/s 142(1) of the Act, calling for return, have been issued
4. Cases where notices u/s 148 of the Act for reassessment have been issued
5. Cases related to registration/approval under various sections of the Act, such as 12Ain relation to trust, 35(1)(ii)/(iia)/(iii) in relation to expenditure on scientic research, 10(23C), etc.
6. Cases selected for Compulsory scrutiny by the International Taxation and Central Circle charges
| S. N. | Type of Case | Parameter for Compulsory Scrutiny | Who will conduct Assessment Proceedings |
| 1 | Cases related to survey u/s 133A of the Income-tax Act, 1961(Act)
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Cases pertaining to Survey under section 133A of the Act are subject to compulsory Scrutiny, excluding the following Cases
· Where books of accounts, documents, etc. were not impounded and · returned income other than any disclosure made during the Survey, is not less than returned income of preceding assessment year (Exclusion is available only if assessee has not retracted from disclosure made during the Survey)
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(i) Case selected with Impounded Material
After the issue of notice u/s 143(2) of the Act by the Jurisdictional A.O for compulsory selection, cases shall have to be transferred to Central Charges u/s 127 of the Act within 15 days of issue of notice u/s 143(2) of the Act.
(ii) Case selected without Impounded Material After the issue of notice u/s 143(2) of the Act by the Jurisdictional A.O. for compulsory selection, assessment proceedings will be conducted by National Faceless Assessment Centre (NaFAC).
The Assessing Officer shall upload the Survey Report in the ITBA at the time of issue of notice u/s 143(2) of the Act. |
| 2 | Cases related to Search and Seizure
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Assessments in Search and Seizure cases to be made under section(s) 153A, 153C read with section 143(3) of the Act and also for return filed for assessment year relevant to previous year in which the Search was conducted under section 132 or requisition was made under section 132A of the Act. | If cases are falling u/s 153C and not under central charge
The Jurisdictional A.O. is required to issue notice u/s · 143(2) in cases where return is furnished u/s 153C or · 142(1) calling for information in cases where no return is furnished u/s 153C. Such cases shall be transferred to Central Charges u/s 127 of the Act within 15 days of issue of notice u/s 143(2) /142(1) of the Act.
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| 3 | Cases where notices u/s 142(1) of the Act, calling for return, have been issued
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(i) Cases where no return has been furnished in response to a notice u/s 142(1) of the Act. | These cases will be taken up for compulsory scrutiny by National Faceless Assessment center (NFAC). |
| (ii) Cases where return has been furnished in response to notice u/s 142(1) of the Act and where notice u/s 142(1) of the Act was issued due to the information contained in The Non-filers Monitoring System (NMS)/AIR information /information received from Directorate of Intelligence and crime Investigation | These cases will not be taken up for compulsory scrutiny and the selection of such cases for scrutiny will be through Computer Aided Scrutiny Selection cycle. | ||
| (iii) Cases where return has been furnished in response to notice u/s 142(1) of the Act and where notice u/s 142(1) of the Act was issued due to the specific information received from Law Enforcement Agencies, including the Investigation Wing; lntelligence/Regulatory Authority/Agency; Audit Objection; etc. | After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NFAC. | ||
| 4 | Cases where notices u/s 148 of the Act for reassessment have been issued
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(i) Cases where no return has been furnished in response to notice u/s 148 of the Act. | In such cases, Jurisdictional Assessing shall issue notice u/s 142(1) of the Act, calling for information regarding the issues on the basis of which notice u/s 148 was issued, subsequent to which, assessment proceedings in such cases will be conducted by NFAC. |
| (ii) Cases where return is furnished in response to notice u/s 148 of the Act | After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NFAC. | ||
| 5 | Cases related to registration/approval under various sections of the Act, such as 12A, 35(1)(ii)/(iia)/(iii) research, 10(23C), etc.
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Cases where registration/approval under various sections of the Act, such as section 12A, 35(1)(ii)/(iia)/(iii), 10(23C), etc. have not been granted or have been cancelled/ withdrawn by the Competent Authority, yet the assessee has been found to be claiming tax-exemption/ deduction in the return.
However, where such orders of withdrawal of registration/approval have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause. |
After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NFAC. |
| 6 | Cases selected for Compulsory scrutiny by the International Taxation and Central Circle charges | Cases selected for Compulsory by the International Taxation and Central Circle charges | Without prejudice to the above, following the above prescribed guidelines, shall, as earlier, continue to be handled by the same charges. |
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CA Nisha Patel | Partner in PramodKumar Dad & Associates
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