Proceedings U/s. 144A & 144B of Income Tax Act, 1961- Procedural Instructions

XII/I/29-PROCEEDINGS UNDER SECTIONS 144-A AND 144-B OF THE INCOME-TAX ACT, 1961-PROCEDURAL INSTRUCTIONS REGARDING

The provisions of Sections 144-A and 144-B of the Income-tax Act have come into force with effect from 1^st January 1976. Instructions explaining the legal provisions contained in these sections have been issued already in Board’s Instruction No.907, dated the 24^th December 1975. The following further instructions are issued prescribing the work-procedures, the non-statutory forms of the letters to be issued and the registers to be maintained, and the proformae of the periodical statements to be furnished to the Board.

Action u / s 144 – A

2. Section 144 –A envisages three situations in which the IAC may issue directions for the guidance of the Income-tax Officer to enable him to complete a pending assessment :-

A. The Income-tax Officer may himself seek the IAC’s guidance.

B. The assessee may apply to the IAC requesting him to issue directions to the ITO.

C. The IAC may decide on his own that he should issue directions for the guidance of the ITO

3. The proceedings under this section being statutory in nature and the IAC’s directions being binding on the ITO, the record of these proceedings may be requisitioned by the appellate authorities for considering the correctness of the action taken by the ITO on the basis of the IAC’s directions. It will be necessary, therefore, to ensure that a correct and complete record of the proceedings is maintained by the ITO / IAC and the letters to be issued are drafted carefully.

4. No time limit for the disposal of the references by the IAC has been prescribed in the Act. Since, however, the Income-tax Officer should await the IAC’s directions before completing the assessment, the references will have to be disposed of by the IAC sufficiently in advance of the last date for completion of the assessment. Priority should be given to expeditious disposal of references in time-barring assessments. The Commissioners should keep a watch over the disposal of the individual cases involving time-barring assessments and the other cases pending for over six months

5. A register of references u / s 144-A will be maintained by the IAC in From A annexed. Entries should be made in this register immediately on receipt of the reference from the ITO/ assessee or on suo moto initiation by the IAC. A separate file should be commenced for each reference, in which the first order sheet entry will refer to the origin of the reference. In cases where the action is commenced by the IAC on his own, a short note stating the reason for the action should be recorded. The case number will be the serial number in col. 1 of the Form A Register

6. Where the ITO desires to seek the guidance of the IAC. He should make a reference to the IAC in Form B annexed, giving the factual and relevant background of the case and mentioning the points on which guidance is sought. A copy of the reference should be filed in the relevant assessment record and a suitable note recorded in the order-sheet.

7. In cases where a request for the issue of directions to the ITO is made by the assessee, the IAC should forward an intimation to the ITO along with a copy of the assessee’s letter. Similarly, where the reference is initiated by the IAC suo moto, the IAC should send an intimation to the ITO and forward a copy of his note recording the reasons for initiating the action. In these two types of cases also, the ITO should record suitable entries in the order-sheets for the assessment years concerned and await the IAC’s directions for completing the assessment.

8. The order-sheet in the IAC’s file should contain a complete record of the proceedings before him, commencing with the receipt/initiation of the reference and ending with the receipt of the directions by the ITO. The letters granting hearing to the assessee may be in Forms L,M and N annexed in the cases of the types A, B and C respectively mentioned in para. 2 above.

9. After the reference is disposed of, the IAC will record the necessary entries in a Register of Disposal of references u/s 144 – A which will be maintained in Form – X. The entries in cols. 1 to 6 will be made with reference to the information available in the IAC’s file; the remaining entries in cols. 7 to 17 will be made later on the basis of the particulars to be submitted by the ITO in Form C – 1 after completion of the relevant assessment (vide para. 10 below).

10. On receipt of the IAC’s directions, the ITO should record a note in the order-sheet and proceed to complete the assessment in accordance with law, keeping in view the binding nature of the IAC’s directions. A chronological record of the references should be maintained by the ITO in a Register of References u/s 144 –A in Form – C: the entries in this Register should be made contemporaneously as and when the corresponding action is taken. After completion of the assessment, the relevant particulars should be recorded in columns 7 to 12 of this Register and an intimation should be sent to the IAC in Form C – 1, furnishing the prescribed information in respect of the case. The IACs should ensure through periodical checks that the register is maintained properly and the individual intimations in completed assessments are sent expeditiously.

Action u/s 144 – B

11. The stage for commencing action under section 144 – B is reached when, after completion of the examination of accounts, the Income-tax Officer proceeds to compute the total income of the assessee and finds that the variation prejudicial to the assessee which he proposes to make in the income/loss returned by the assessee exceeds the prescribed limit of Rs. One lakh. Section 144 –B(1) requires that the ITO, in such cases, should forward to the assessee a draft of the proposed assessment order to enable the assessee to file his objections, if any, to the proposed additions. A time limit of seven days, which may be extended by the ITO on application by the assessee (not exceeding 15 days) has been prescribed for this.

12. The letters forwarding the draft assessment order to the assessee and the assessee’s objections to the IAC may be in Forms D & E annexed. The ITO should record suitable entries in his order-sheet at all stages of these proceedings.

13. A separate file for each reference should be opened by the IAC; the first order-sheet entry is this file will refer to the receipt of the reference from the ITO. A complete record of the further proceedings ending with the receipt of the directions by the ITO should be maintained in the file / order-sheet. The provision to Section 144 – B (4) requires that the IAC should give the assessee an opportunity of being heard before issuing directions prejudicial to the assesse. The letter granting hearing to the assessee in these cases my be in From G annexed.

14. A chronological record of the references under section 144 – B should be maintained by the ITO and the IAC in registers in the Forms P & Q annexed. IACs should aim at disposing of the references within a period of three months of their receipt. The CsIT should keep a watch over the disposal of the individual cases pending for a period of more than 3 months. Where the assessment involved will be getting barred by limitation in the current year itself, the IACs should note to dispose of the reference expeditiously since the time-limit for completion of the assessment in these cases is extended by a period not exceeding 180 days under Explanation 1(iv) to Section 153.

15. After the reference is disposed of, the IAC will record the necessary entries in the Register of Disposals under section 144 – B in form – Y. The entries in cols. 1 to 5,8 to 11 and 13 will be made on the basis of the information available in the IAC’s file. The remaining entries will be made after receipt of the particulars in Form P-1 from the ITO (vide para. 16 below).

16. On receipt of the IAC’s directions, the ITO will complete the assessment in accordance with law, keeping in view the binding nature of the IAC’s instructions. After completion of the assessment the ITO will record the relevant particulars in cols. 8 to 15 of the P-Register and forward to the IAC an intimation in Form P-1, furnishing the prescribed information in respect of the case. The IAC should ensure through periodical checks that the register is maintained properly by the ITO and the individual intimations in completed assessments are sent expeditiously.

17. Quarterly statements giving particulars of the receipt and disposal of the references under sections 144-A and 144-B will be submitted by the IACs to the CsIT in proformae R and S by the 10^th of the month following the last month of the Quarter. The CIT-I will forward to the Board the consolidated statements in the forms R and S for all the charges. The first statement for the period ending 31^st March 1976 may be sent by 15^th May 1976, the subsequent statements should be sent to reach the Board by the 20^th of the month following the last month of the Quarter.

18. The IACs and the ITOs may be instructed to record the relevant entries in the registers in respect of all references received / initiated after 1st January 1976.

FORM ‘A’

LAC’S REGISTER OF REFERENCES UNDER SECTION 144 – A

Sl. No.	Name of assessee	Asstt. Year	Type of Reference		Date of initiating action u/s 144 A**	Last Date for completion of the assessment	Date of IAC’s order u/s 144 A	Was the assessee given a hearing? If, yes, number of the hearings.	Sl. No. in Register of disposal	Remarks
	P. A. Number		A/B/C*				Receipt by ITO
1	2	3	4	5		6	7	8	9	10

 

 

 

 

 

 

Notes :

* Type -A : Reference by ITO.

* Type -B : Reference by the assessee.

* Type- C : Action initiated by the IAC.

** this will be the date of ITO’s / assessee’s letter of the IAC’s note originating action u/s 144 – A.

FORM “B”

PROFORMA OF REFERENCE U/S 144 – A BY ITO TO IAC

P. A. No._______________

TO

The Inspecting Assistant Commissioner,

Range_______________

 

Sir,

In the course of the assessment proceedings for the assessment year _____________ in the case of my assessee_______________ certain issues have arisen for consideration by me in respect of which I seek your guidance to enable me to complete the assessment. The particulars of the case and the points on which guidance is sought are given in the enclosure.

The records of the case are forwarded herewith.

Yours faithfully,

Sd/-

(Income-Tax Officer)

 

Date

Enclosure

1. Total income returned according to the latest return filed by the assessee.

2. last date for completion of the assessment.

3. brief history of the case.

4. Particulars of additions proposed to be made;

i. which have been agreed to by the assessee;

ii. which have been objected to by the assessee.

5. Points on which IAC’s guidance is sought.

FORM “C”

Sl. No.

Name of asessee

Asstt. Year

PA No.Type of reference

A/B/C*$Date of initiating action u/s 144 – ANo. & Date of IAC’s order

Receipt by ITODate of assess-ment orderDate of issue of intimation in Form – C-ITotal income assessedEffect of directions under section 144 – ARemarksVari –atio -n in inco-meTax Eff-ect

1

2

3

4

5

6

7

8

9

10

11

12

 

 

 

 

 

 

 

ITO’S REGISTER OF REFERENCES UNDER SECTION 144 – A

Notes:

* Type – A : Reference by ITO.

* Type – B : Reference by the assessee.

* Type – C : Action initiated by the IAC.

$This will be the date of ITO’s/assesses letter or the IAC’s note originating action u/s 144 – A.

FORM “CI”

 

INTIMATION TO I. A. C. ON COMPLETION OF ASSESSMENT

IN WHICH I. A.C. HAD ISSUED INSTRUCTION U/S 144 – A.

1. Name of assessee.

2. P. A. Number.

3. Assessment year.

4. No. & date of IAC’s directions u/s 144 – A.

5. Date of receipt by ITO.

6. Date of assessment order.

7. Total income assessed.

8. Effect of direction u/s. 144 – A:

(i) Variation in income.

(ii) Tax effect.

Date: Income-tax Officer

To

The Inspecting Asstt. Commissioner of Income-tax,

Range………………………

…………………………….

FORM ‘D’

PROFORMA OF ITO’s LETTER FORWARDING DRAFT

ASSESSMENT ORDER TO ASSESSEE

P. A. No.___________________

To

…………………….

…………………….

…………………….

Sir,

In the assessment to be made in your case for the assessment year………….the amount of the variation proposed to be made by me in the income/loss returned which is prejudicial to you exceeds the sum of Rs. one lakh.

As required under the provisions of Section 144 B(I) of the I. T. Act, 1961, I forward to you herewith the draft of the proposed order of assessment.

Your attention is invited to the provisions of Section 144 – B of the Act. Your objections, if any, to such variation proposed in the income / loss returned may be forwarded to me in duplicate to reach me within seven days of the receipt of this letter.

Yours faithfully,

Sd/-

(Income-tax Officer)

FORM ‘E’

PROFORMA OF ITO’s LETTER FORWARDING ASSESSEE’s OBJECTIONS u/s 144 – B TO THE LAC

P. A. No…………………..

To

The Inspecting Assistant Commissioner,

Range…………………

Sir,

In the course of the assessment proceedings for the assessment year…………… in the case of my assessee………………….a draft of the proposed order of assessment had been forwarded by me to the assessee, since the variation proposed in the income/loss returned which is prejudicial to him, exceeded Rs. one lakh. The assessee has forwarded to me his objections to such variation in the income/loss returned. I am forwarding herewith the draft of the proposed order of assessment and the assessee’s objections for action u/s 144 – B (4).

Yours faithfully

Sd/-

Date: (Income-Tax Officer)

FORM ‘G’

LETTER GRANTING HEARING TO THE ASSESSEE UNDER THE PROVISO TO SECTION 144 –B (4)

P. A. No…………………..

To

…………………………

…………………………

…………………………

Sir,

The Income-tax Officer………………….. has forwarded to me the draft of the order of assessment proposed to be passed by him in your case for the assessment year ……………. together with your objections to the variation proposed by him to the income/loss returned by you which is prejudicial to you. Before proceeding to issue the directions u/s 144 – B (4) to the ITO. I hereby give you an opportunity of being heard. You may, in this connection, appear before me in my office at……………….on ………………….at ………………. either in person or through an authorized representative. You may, if you so desire, submit also your written submissions, if any, to reach me on or before the aforesaid date

Yours faithfully,

Sd/-

Date : (Inspecting Assistant Commissioner)FORM ‘L’

LETTER GRANTING HEARING UNDER THE PROVISO TO SECTION 144- A (1)

(In cases where reference was initiated by the ITO)

P. A. No…………………..

To

…………………………

…………………………

…………………………

Sir,

The ITO …………………… has sought my guidance on certain issues arising for his consideration in the course of the assessment proceeding for the assessment year ………….. in your case. The issues under my consideration in which it is necessary to allow to you an opportunity of being heard under the proviso to section 144 – A(1) of the Act are mentioned below.

You may appear before me either personally or through an Authorised Representative on ……………….at………………..in my office at……………….for presenting your case on the issues under consideration. You may, if you so desire, forward your written submissions to reach me on or before the aforesaid date.

Yours faithfully,

Sd/-

 

Date: (Inspecting Assistant Commissioner)

 

Issues under consideration.

FORM ‘M’

LETTER GRANTING HEARING UNDER THE PROVISO

TO SECTION 144 – A(1)

(In cases where reference was initiated by assessee)

P. A. No…………………..

To

…………………………

…………………………

…………………………

Sir,

Please refer to your letter No…………………..dated…………………requesting me to consider the issues mentioned in your letter and to issue directions for the guidance of the ITO to enable him to complete your assessment for the assessment year…………………..

You may appear before me either personally or through an authorized Representative on……………….at……….…..in my office at………………..for presenting your case.

Yours faithfully,

 

Sd/-

Date: (Inspecting Assistant Commissioner)

FORM ‘N’

LETTER GRANTING HEARING UNDER THE PROVISO

TO SECTION 144 – A(1)

(In cases where reference was initiated suo moto by the IAC)

To

…………………………

…………………………

…………………………

Sir,

Whereas on examination of the record of the proceeding in which the assessment for the assessment year……………………is pending in your case, it appears to me necessary to issue directions for the guidance of the ITO………………….on the issues mentioned below to enable him to complete the assessment, I hereby request you to appear before me either personally or through an authorized representative on…………………..at……………..to present your case You may, if you so desire, submit your written representations to reach me on or before the aforesaid date.

Yours faithfully,

 

Sd/-

Date: (Inspecting Assistant Commissioner)

FORM ‘P’

ITO’S REGISTER OF REFERENCES UNDER SECTION 144 – B

Sl. No.	Name of assessee	Asstt.year	Date of Form ‘B’	Date of receipt of objection	Date of Form ‘E’	Date of I.A.C’s order	PART I
	P.A.Number		Its service on assessee		Its receipt by IAC.
1	2	3	4	5	6	7

Date of asstt. order	Date of intimation in Form –P	Total Income		Gross Tax on total income		Tax effect of IAC’s instructions (col. 12 minus col.13)	Remarks
		Proposed in draft order	Assessed	Proposed	Assessed
8	9	10	11	12	13	14	15

FORM ‘PI’

 

INTIMATION TO IAC ON COMPLETION OF ASSESSMENT

IN WHICH IAC HAD ISSUED INSTRUCTIONS U/S 144 – B

1. Name of the Assessee.

 

2. P.A. Number.

3. Assessment Year.

4. Date of IAC’s order.

5. Date of its receipt by ITO.

6. Total income:-

(i) Proposed in draft order.

(ii) Assessed.

7. Gross tax on total income:-

(i) Proposed.

(ii) Assessed.

8. Tax effect of IAC’s instructions:

Col. 7(1) minus 7(ii).

 

Date: Income-Tax Officer

FORM ‘Q’

INSPECTING ASSISTANT COMMISSIONER’S REGISTER OF REFERENCES UNDER SECTION 144 – B

Sl. No.	Name of the assessee	Assess-ment Year	Date of receipt of Form ‘E’ from ITO	Last –D for completion of assessment*	Date of IAC’s order	Serial Number in Register of disposal	Remarks
	P.A.Number				Its receipt by ITO
1	2	3	4	5	6	7	8

Note:

* Please record here the normal last date for completion of assessment without taking into account the

 

 

NOTES:

1. Type – A : Reference by the ITO.

Type – B : Reference by the assessee.

Type – C : Action initiated by the IAC.

2. Since in one case reference on more than one point may arise for consideration and the decision on each of these may fall in any of the 4 categories in Part B-II, it may be necessary to list the disposal of one case in more than one category. The total of the columns in Part – B II may therefore, exceed the total number of cases disposed of.

FORM ‘S’

 

C.I.T. Charge ________________

I.A.C. Range ________________ Quarter ending __________________

 

QUARTERLY REPORT OF REFERENCES U/S 144 – B

PART – A

 

1. No. of references pending on 1st April.

2. No. of references received from 1st April to the end of the quarter (including by transfer).

3. No. of references transferred to other Ranges from 1st April to the end of the quarter.

4. No. of references pending for disposal from 1st April to the end of the quarter (Col. 1 plus

Col. 2 minus Col. 3)

5. No. of references disposed of:

(i) during the quarter.

(ii) From 1st April to the end of the quarter.

6. No. of references pending for disposal at the end of the quarter.

PART – B

I. Analysis of pendency :

No. of references pending:

(a) Relating to time-barring assessments.

(b) Relating to other assessments and pending

(i) for less than 3 months.

(ii) for 3-6 months.

(iii) for more than 6 months.

II. Analysis of disposal from 1^st April to the end of the quarter (13 of Y-Register):

(a) No. of references in which additions proposed by ITO wholly confirmed.

(b) No. of references in which additions proposed by ITO wholly deleted.

(c) No. of references in which partial relief was allowed.

Date _______________ Inspecting Asstt. Commissioner

FORM ‘X’

 

LAC’S REGISTER OF DISPOSAL UNDER SECTION 144 – A

Sl. No.	Sl. No. in form ‘A’	Name of the assessee	Asstt. Year	Type of reference	Date of
		P.A.Number		A/B/C	Order u/s 144 – A	Asstt. order	Receipt of Form C-1
					Receipt by ITO
1	2	3	4	5	6	7	8

FORM X-Contd

 

lAC’S REGISTER OF DISPOSAL UNDER SECTION 144 – A Contd.

Issues/additions involved				Total income assessed by ITO	Effect of directions as per col. 8 form C-1		No. of hearings granted to the assessee	Remarks
Brief description	Amount proposed by ITO	Amount directed by IAC	Nature of direction N/R/C/G*		Amount of variation in income	Tax effect
9	10	11	12	13	14	15	16	17

NOTE:

* The nature of direction will be recorded as N, R, C or G in the following

manner :

N – Issue of direction u/s 144 – A not considered necessary

R – Additions proposed by ITO/apprehended by assessee reduced

wholly/partly.

C – Additions proposed by ITO/apprehended by assessee confirmed.

G – Guidance on line of investigation issued (vide Explanation to Sec. 144 – A)

Where more than one action is involved in a disposal of a reference, more than one alphabet may be recorded-

FORM ‘Y’

LAC’S REGISTER OF DISPOSAL UNDER SECTION 144 – B

 

Sl. No.	Sl. No. in Form ‘Q’	Name of assessee	Asstt. Year	Date of
		P.A. Number		Order u/s.144 –B Receipt by ITO	Asstt. Order.	Receipt of form P-I from ITO
1	2	3	4	5	6	7

FORMY – Contd.

lAC’S REGISTER OF DISPOSAL UNDER SECTION 144 – B

 

Particulars of objected additions			Total Income		Effect of Direction		Remarks
Description	Amount proposed by ITO	Amount directed by IAC	As per draft order	As per asstt. Order	Whether C/D/P*	Tax effect vide Col. 8 of form Pl..
8	9	10	11	12	13	14	15

NOTES:

* C – Wholly confirmed.

D – Wholly deleted.

P – Partial relief allowed.

F. No. 3/4/76-DOMS/428, dated 8^th April, 1976

FORM ‘R’

I.T.Charge___________________

A.C. Range__________________ Quarter ending__________________

QUARTERLY REPORT OF REFERENCES UNDER SECTION 144 – A

TYPE

A B C Total

PART – A

1. No. of references pending on 1^st April.

2. No. of references received from 1^st April to the end of the quarter (including by

transfer.)

3. No. of references transferred to other Ranges from 1^st April to the to the end of the

quarter.

4. No. of references for disposal from 1^st April to the end of the quarter (Col. 1 + Col. 2

–Col.3).

5. No. of references disposed of :

(i) during the quarter.

(ii) from 1^st April to the end of the quarter.

6. No. of references pending at the end of the quarter.

PART – B

I. Analysis of Pendency :

No of references pending for disposal at the end of the quarter.

(a) relating to time-barring assessments.

(b) Relating to other assessments;

(i) for less than 3 months.

(ii) For 3-6 months.

(iii) For more than 6 months.

Total

II. Analysis of the disposals from 1^st April to the end of the quarter (vide Col. 12 of X- Register):

No of references in which-

(1) No direction was considered necessary.

(2) The additions proposed by ITO/apprehended by assessee reduced.

(3) The additions proposed by ITO/apprehended by the assessee confirmed.

(4) Directions as to the lines on which the investigation should be were issued.