Central Board of Direr Taxes vide instruction no. 7/2014 dated 26.09.2014, by virtue of its powers under section 119 of the Act, in suppression of earlier instructions/ guidelines  on this subject, hereby directs that tile cases selected for scrutiny during the Financial Year 2014-2015 under CASS, on the basis of Either AIR data or CIB information or for non reconciliation with 26AS Data, the scope of enquiry should be limited to verification of these particular aspects only.  Therefore, in such cases,  an Assessing Officer shall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected few scrutiny.

Related Instruction is as follows :-

Instruction No. 7/2014

Government of India
Ministry of Finance
Department of Revenue (CBDT)

Room No. 143E, North-Block,  New-Delhi
Dated the 26 th of September 2014

To,
All Pr. Chief-Commissioners  of Income-tax/Chief-Commissioners of Income-tax
All Pr. Directors-General of Income-tax/Directors-General of Income-tax

Sir/Madam,

Subject: – Scope of enquiry in cases selected for scrutiny during the Financial Year 2014-2015 on basis of AIR/CIB/26AS mis-match-regarding-

It has come to the notice of the Board that during the scrutiny assessment proceedings some of the AOs are routinely calling for information which is not relevant, for enquiry into the issues to be considered. This has been causing undue harassment to the taxpayers and has also drawn adverse criticism from several quarters.  Further, feedback and analysis of such orders indicates that many times the core issues, which formed the basis of selection of the case for scrutiny were not examined properly. Such instances primarily occurred in cases selected for scrutiny under Computer Aided Scrutiny Selection (‘CASS’)  for verification of specific information obtained from third party sources  which apparently did not match with the details submitted by the tax payer in the return of income.

2. Therefore, for proper administration of the lncome-tax Act, 1961 (‘Act’), Central Board of Direct Taxes, by virtue of its powers under section 119 of the Act, in supersession of earlier instructions/ guidelines on this subject, ere by directs that the cases selected for scrutiny during the Financial Year 2014-20 5 under CASS, on the basis of either AIR data or CIB information or for non re-conciliation with 26AS data, the scope of enquiry should be limited to verification these particular aspects only. Therefore, in such cases, an Assessing Officer s   hall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected for scrutiny.

3. The reason(s) for selection of cases under CASS are displayed to the Assessing Officer  in AST  application  and  notice  u/s  143(2), after  generation from  AST, is issued to the taxpayer  with the  remark  “Selected under  Computer Aided Scrutiny Selection {CASS)”. The functionality in AST  is being modified suitably to flag the reasons for scrutiny selection in AIR/CIB/26AS cases. This functionality is expected to be operationalised by 15 th October, 2014. Further, the Assessing Officer while issuing notice under section 142(1) of the Act which is enclosed with the first questionnaire would proceed to verify only the specific aspects requiring examination/verification. In such cases, all efforts would be mad to ensure that assessment proceedings are completed expeditiously in minimum possible number of hearings without unnecessarily dragging the case till the time-barring date.

4. In case, during the course of assessment proceedings it is found that there is potential escapement  of income exceeding Rs. 10 lakhs (for  non-metro charges, the monetary limit shall be Rs. 5 lakhs) on any other issue(s) apart from the AIR/CIB/26AS information based on which the case was selected under CASS requiring substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr. CIT/DIT concerned. However, such an approval shall be accorded by the Pr. CIT/DIT in writing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored by the Jt. CIT/Addl. CIT concerned.

  1. The contents of this Instruction should be immediately hi-ought to the notice of all concerned for strict compliance.
  2. Hindi version to follow

(Rohit Garg)
Deputy Secretary to the Government of India

Download Official Copy of the Notification from the following links :-

https://taxguru.in/wp-content/uploads/2014/09/Inst-7-2014-1.jpg

https://taxguru.in/wp-content/uploads/2014/09/Inst-7-2014-2.jpg

More Under Income Tax

Posted Under

9 responses to “Limited Income Tax Scrutiny of cases selected under CASS – CBDT”

  1. VN AGARWAL says:

    Office bearers of Associations like FICCI/Chambers of Commerce do not put such questions from FM during meetings organised on account of fear that concerned Minister would be annoyed from them. When Parliamentary Committee had recommended that Stay must be given to assessee if he is assessed for more than double of his returned income then why not Act has been amended?

  2. Rajendran says:

    Is there any such instructions for cases selected under CASS during the FY 2015-16??

  3. Sushil Sharma says:

    I have received limited scrutiny under CASS for AY 2014-15 in one of our files whereas that particular file was scrutinized for previous three assessment years continuously.

    As such, I could not understand the parameters being adopted by the department for selecting the same file for scrutiny again and again continuously.

    This is nothing but the another method of harassment for tax payers who are sincerely filing their ITRs every year well with in stipulated date.

  4. Ghanshyam Jaju says:

    Sir my minor grand daugther Minor is resident of Jodhpur (Rajasthan) and applied for PAN giving the Local address of Jodhpur (Rajasthan) PAN Card was also delevered at Jodhpur (Rajasthan) at given address. In PAN Advice letter the Income Tax PAN Service has stated the jurisdiction of ITO Ward 1(1)Rajkot in Gujrat and stted that Income Tax Return are to be submitted with ITO ward 1(1) Rajkot. Rajkot is about 800 K M from Jodhpur. I request Income Tax PAN service to change the Jurisdiction but hey asked me to contact local office Local office says that they have nothing to do in the matter Please guide me how should I get changed the jurisdiction

  5. B S K RAO says:

    Adv.S.Prakash Sir, It is clear that all your efforts in the above matter reflected in the above action of CBDT. Hats off Sir.

  6. unnikrishnan v says:

    Is it w.r.to FY 2014-15 or AY 2014-15?

  7. Rajesh says:

    Welcome move by CBDT. AO should be required to mention reasons for selection in scrutiny notice only, otherwise Notice should be deemed to be invalid.

    AOs do not apply their mind and follow instructions of their senior who are directed to create paper liability to meet inflated Tax target.”In one of recent ITAT order, Hon.Bench has noted that AO did not apply their mind”.
    Assessee is harassed in various ways. Now a days few AOs, during the scrutiny proceedings, are issuing summons under section 131 for normal verification like interest on loans paid by assessee. parties are investigated on oath like criminals. All concerned parties are called at same time same day.They are not only inquired for affairs pertaining to assessee in scrutiny but also party’s other income and affairs are questioned and detailed information are called for such other transactions not pertaining to assessee in scrutiny. CBDT should call information on it and enquiry in to it.
    Officers make additions on unjustified grounds which subsequently in 2nd appeal (ITAT) are dismissed absolutely. Even after ITAT orders in favour of assessees in various cases, officer still continue to make additions in similar type of cases and tell assessee to file appeals.
    after the additions made, harassment continues in form of recovery of taxes and penalty and assessee are forced to deposit / taxes. In 1st Appeal or 2nd Appeal (which takes at least 3-4 years), order comes in favour of assessee but Department pays only 6% interest on refund of taxes paid but interest charged on arrears is 15%. This huge difference in interest is another blow to the assessee.
    Example : For 08-09, AO reopens case and makes an addition of Rs.20 lacs without any base.
    Income tax : 6 Lacs
    Interst : 5 lacs
    penalty 6 lacs.
    Assessee up to 1st appeal is made to pay 25% of tax and interst (2.75 Lacs)
    Assessee up to 2nd appeal is made to pay 50% of tax and intaerst (2.75 lacs more) plus swoed of penalty also hangs on assessee if AO’s demand is not taken care of.
    The ITAT issues verdict in favour of assessee after 5 years. assessee will get app Rs. 1.3 Lac interest at 6% on refund. Assessee’s cost of funds at 15% (compounded) will be Rs.3.75 Lacs. Add to it legal costs of app 75K which makes it 4.5 lacs. A net loss of Rs.3.2 Lacs + mental stress and value of time wasted.
    So There should not be more than 3% difference in interest rate charged by department and paid by department otherwise assessee will be made vulnerable to officers’s mercy because assessee will have to bear huge loss on account of interest cost.

  8. sudarshana says:

    Large number of cases are pending in the IT Dept due to non matching of TDS with 26AS form. One of the reason for this is banks, particularly SBI, while dealing with the pensioners income, has clubbed the pension with the deposit interest income instead of dealing pension as salary and TDS under different ‘head’. The circular is a welcome step and helps in clearing most of the cases.

  9. Goutam Murarka says:

    CBDT has only power to issue the instruction. Who care for his instruction if the same is not being implemented properly on ground.

    What happened to their instruction regarding old demand raised without verification. All ground officer still enjoying air of AC in their cabin and taxpayer is visiting them and submitting their rectification request again and again.

    Please stop all these nonsenses. Why are you not punishing those AO who had crossing their limits.

Leave a Reply

Your email address will not be published. Required fields are marked *