Scrutiny Criteria

Use of section 144A of the Income Tax Act 1961

Income Tax - Assessments under Income Tax Act 1961 are made U/S 143, 144, 147, 153. The criteria’s for selection of cases for scrutiny has been increased. While making the assessment the assessing officer has to appreciate all the facts properly. If there is any misinterpretation of facts it may result in injustice to the assessee. Some times when t...

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Instruction for ‘Limited Scrutiny’ under CASS are Retrospective

Income Tax - Most of the cases selected for Scrutiny are through Computer Aided Scrutiny Selection (CASS). Only a particular class of cases such as those involving Search, Survey and Reopening of Assessment etc. come under Compulsory Scrutiny. A small Number of cases are manually selected by the Assessing Officers where they consider the Income of a p...

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7 things to know about Income-tax ‘Scrutiny’

Income Tax - 1. What is Scrutiny? Once the assessee files his return of income, irrespective of whether it is filed within the due date or in pursuance to a notice requiring the assessee to file his return, the department can initiate scrutiny proceedings if it has reason to believe that income is escaping assessment, i.e. income is under stated of...

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Guidelines for Selection of Cases for Scrutiny for FY 2019-2020

Income Tax - CBDT has issued an Instruction by which it has laid down the procedure and criteria for compulsory manual selection of returns/cases requiring scrutiny during the financial-year 2019-20....

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Section 143(3) of Income Tax Act – Scrutiny Assessment –FAQ’s

Income Tax - Dear Readers, now these days Income Tax Department is very active in tax collection matters to achieve their targeted collection. Income Tax law mainly permits self-Assessment by assesse, related to their Income Tax Liability, however, from huge database of assesses limited numbers of returns are selected for scrutiny assessment. Now, Inc...

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Avoid lengthy questionnaires without due application of mind – CBDT to its Officers

Income Tax - Though less that 1% of returns filed are selected for scrutiny, this area of work has often drawn adversarial comments. Supervisory officers, have been directed to play a more pro-active role in monitoring and guiding assessments towards ensuring that high-pitched assessments without proper basis are not made and that lengthy questionnai...

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Income Tax Scrutiny Criteria for F.Y. 2011-12 / A.Y. 2012-13

Income Tax - 1. Where value of international transaction as defined u/s. 92B exceeds Rs.15 Crore. 2. Cases where there was addition of Rs.10 Lacs or more in earlier assessment year and question of law or fact is confirmed in appeal or pending before appellate authority. 3. Cases in which addition of Rs.10 Crore or more was made in earlier assessment y...

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Criteria / Guidelines for Income tax Scrutiny for A.Y. 2010-11 / F.Y. 2009-2010

Income Tax - Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing office...

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Cash transaction reports on 2G spectrum allocation issue under scrutiny

Income Tax - Investigating agencies probing alleged financial irregularities in the 2G spectrum allocation have now ordered scrutiny of all cash transaction reports related to the funding of payments by telecom players, banks and individuals involved ...

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Income Tax department strategy to meet FY 2009-2010 Budget target

Income Tax - The regular assessment tax (RAT) is one of best tools available to the Department to collect taxes. The collection from RAT not only showcases the effort of the Department to collect taxes but can also have a great deterrent effect on the tax evaders. During 2009-10, the Department has collected around Rs 31,242 crone from RAT which is ar...

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RTI -Income-tax department return scrutiny guidelines should be public – HC

Joginder Pal Gulati Vs The Officer On Special Duty (ITA II) Cum CPIO and ANR (Delhi High Court) - In so far as the impugned order is concerned, there is nothing stated in the operative part which would seem to indicate that the CIC has come to the conclusion which it has, is based on the fact that, the economic interest of the country, will get effected. The CIC, in the operative part has merely...

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Assessee cannot be declared as an assessee in default U/s. 201 of IT Act, 1961 for non-deduction of TDS

Bovis Lend Lease (India) Pvt. Ltd. (ITAT Bangalore) - Here we summarised the ruling of the Bangalore Income Tax Appellate Tribunal (ITAT) [2009-TIOL-666-ITAT-BANG] in the case of Bovis Lend Lease (India) Pvt. Ltd. (Taxpayer) on the taxability of payments towards reimbursement of cost forservices provided by a group entity. The ITAT held that such payme...

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Time limit prescribed for issuance of notice under section 143(2)(i) or 143(2)(ii) of IT Act

Bholanath R. Shukla Vs ITO (ITAT Mumbai) - 8. We have considered he submissions made by both the sides, material on record and orders of the authorities below. We find that the question, before US, is whether limited scrutiny proceedings and regular scrutiny proceedings are independent of each other or not and, therefore, notice issued for l...

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In cases of a group, coordinated investigation is a relevant ground for transfer of its case under section 127 of IT Act

Sahara India Commercial Corpn. Ltd. Vs CIT (Calcutta High Court) - Section 127 does not spell out under what facts and circumstances a transfer of a case can be made. However, in a case of inter-city transfer statute requires compliance of two requirements –first, to vie the assessee a reasonable opportunity of hearing, wherever it is possible to do so and second...

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Applicability of section 292B of IT Act in case return contains any mistake, defect or omission

Nicholas Applegate South East Asia Fund Limited Vs Assistant Director of Income Tax (ITAT Mumbai) - Nicholas Applegate South East Asia Fund Limited Vs Assistant Director of Income Tax (ITAT Mumbai) - The question of application of section 292B cannot be prejudged by finding that return, notice, etc. is not as per the requirement of the statute and is/are invalid; the finding that the return or not...

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Time for compulsory selection of returns for Scrutiny extended

F.No.225/126/2020/ITA-II - (30/09/2020) - CBDT extended the date for selection of cases for Compulsory Scrutiny on the basis of prescribed parameters, as communicated vide Board's letter dated 17.09.2020, from 30th September,2020 to 31st October,2020....

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Compulsory Complete Income Tax Scrutiny Guidelines during FY 2020-21

F.No.225/126/2020/ITA-II - (17/09/2020) - Keeping in view of the Faceless Assessment Scheme,2020 implemented by the Department and the difficulties being faced amid COVID-19 pandemic, the parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2020-21 and conduct of assessment proceedings in such cases are...

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Guidelines for scrutiny of invalid returns selected through CASS

F. No. 225/333/2019/ITA-11 - (29/11/2019) - It has been brought to the notice of Board that notices under section 143(2) of the Income-tax Act, 1961 ('Act') were generated in respect of certain invalid returns of the assessees filed for the Assessment Year 2017-18 through CASS Cycle 2018. As the scrutiny of such returns will pose a challenge ...

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Manual Income Tax complete Scrutiny criteria for F.Y. 2019-20

F.No.225/169/2019/ITA-11 - (05/09/2019) - The parameters for manual selection of returns for Complete Scrutiny during financial year 2019- 20 are as under.- (i) Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact:- (a) exceeding Rs. 25 lakhs in eight metro charges at Ahmedabad, Bengaluru, Chen...

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Complete time barring scrutiny assessments by 25.12.2018: CBDT

D.O. F.No. 225/410/2018/ITA.II - (29/11/2018) - Assessing Officers should be sensitized to that fact that they should stagger their E-assessment related workload so that all assessments get uploaded by 25th of December, 2018 and no ticket is raised after the said date....

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Recent Posts in "Scrutiny Criteria"

Time for compulsory selection of returns for Scrutiny extended

F.No.225/126/2020/ITA-II (30/09/2020)

CBDT extended the date for selection of cases for Compulsory Scrutiny on the basis of prescribed parameters, as communicated vide Board's letter dated 17.09.2020, from 30th September,2020 to 31st October,2020....

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Use of section 144A of the Income Tax Act 1961

Assessments under Income Tax Act 1961 are made U/S 143, 144, 147, 153. The criteria’s for selection of cases for scrutiny has been increased. While making the assessment the assessing officer has to appreciate all the facts properly. If there is any misinterpretation of facts it may result in injustice to the assessee. Some times when t...

Read More
Posted Under: Income Tax | ,

Compulsory Complete Income Tax Scrutiny Guidelines during FY 2020-21

F.No.225/126/2020/ITA-II (17/09/2020)

Keeping in view of the Faceless Assessment Scheme,2020 implemented by the Department and the difficulties being faced amid COVID-19 pandemic, the parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2020-21 and conduct of assessment proceedings in such cases are prescribed as under:...

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Instruction for ‘Limited Scrutiny’ under CASS are Retrospective

Most of the cases selected for Scrutiny are through Computer Aided Scrutiny Selection (CASS). Only a particular class of cases such as those involving Search, Survey and Reopening of Assessment etc. come under Compulsory Scrutiny. A small Number of cases are manually selected by the Assessing Officers where they consider the Income of a p...

Read More
Posted Under: Income Tax | ,

7 things to know about Income-tax ‘Scrutiny’

1. What is Scrutiny? Once the assessee files his return of income, irrespective of whether it is filed within the due date or in pursuance to a notice requiring the assessee to file his return, the department can initiate scrutiny proceedings if it has reason to believe that income is escaping assessment, i.e. income is under stated of...

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Posted Under: Income Tax | ,

Guidelines for Selection of Cases for Scrutiny for FY 2019-2020

Circular No. MIRSD/DPS III//Cir-11/07-SEBI (06/08/2007)

CBDT has issued an Instruction by which it has laid down the procedure and criteria for compulsory manual selection of returns/cases requiring scrutiny during the financial-year 2019-20....

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Posted Under: Income Tax |

Section 143(3) of Income Tax Act – Scrutiny Assessment –FAQ’s

Dear Readers, now these days Income Tax Department is very active in tax collection matters to achieve their targeted collection. Income Tax law mainly permits self-Assessment by assesse, related to their Income Tax Liability, however, from huge database of assesses limited numbers of returns are selected for scrutiny assessment. Now, Inc...

Read More
Posted Under: Income Tax |

Guidelines for scrutiny of invalid returns selected through CASS

F. No. 225/333/2019/ITA-11 (29/11/2019)

It has been brought to the notice of Board that notices under section 143(2) of the Income-tax Act, 1961 ('Act') were generated in respect of certain invalid returns of the assessees filed for the Assessment Year 2017-18 through CASS Cycle 2018. As the scrutiny of such returns will pose a challenge for the AO and is bad in law, I am direc...

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Manual Income Tax complete Scrutiny criteria for F.Y. 2019-20

F.No.225/169/2019/ITA-11 (05/09/2019)

The parameters for manual selection of returns for Complete Scrutiny during financial year 2019- 20 are as under.- (i) Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact:- (a) exceeding Rs. 25 lakhs in eight metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai a...

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Scrutiny Selection On The Basis Of AIR (SFT) Information

In the era of fast changing technology and data analytics, Income Tax Department too empowered itself with one of the most enabling data-sets which allowed itself to peep itself into the assessee’s deeper secrets by laying down the responsibility on Financial Institution like Banks, Registering authority empowered to register vehicles u...

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Posted Under: Income Tax |

Complete time barring scrutiny assessments by 25.12.2018: CBDT

D.O. F.No. 225/410/2018/ITA.II (29/11/2018)

Assessing Officers should be sensitized to that fact that they should stagger their E-assessment related workload so that all assessments get uploaded by 25th of December, 2018 and no ticket is raised after the said date....

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CBDT directives on scope of inquiry in cases selected for Limited Scrutiny

F. No. 225/402/2018/ITA.II (28/11/2018)

i. The Assessing Officer shall duly record the reasons for expanding the scope of 'Limited Scrutiny' to the extent mentioned in para 2 and 3, above; ii. The same shall be placed before the Pr. CIT/CIT concerned and upon his approval, further issue can be considered during the assessment proceeding;...

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Assessment of Defective Income Tax Return Selected For Scrutiny Under CASS- Procedure

F.No. System/ITBA/CASSlDefective returns/17 -18/ (12/12/2017)

During CASS Cycle 2016, some of the returns of income which earlier were treated as defective as per provision of section 139(9) of Income Tax Act, 1961 (‘Act’) either for the reason that the taxes as per the return were not paid or for any other reason specified therein were also selected for scrutiny....

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Unauthorized expansion of scope of limited scrutiny- CBDT suspends officers

F.No. DGIT(Vig.)/HQ/SI/2017-18 (30/11/2017)

It was found that no reasons had been recorded for expanding the scope of limited scrutiny, no approval was taken from the PCIT for conversion of the limited scrutiny case to a complete scrutiny case and the order sheet was maintained very perfunctorily. This gave rise to a very strong suspicion of mala fide intentions. The Officer concer...

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Income Tax Manual Scrutiny Criteria for financial year 2017-2018

Instruction No. 05/2017-Income Tax (07/07/2017)

CBDT hereby lays down the following procedure and criteria for compulsory manual selection of returns/cases requiring scrutiny during the financial-year 2017-2018:-...

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How Income Tax Base can be widened

Under the present system of limited scrutiny under CASS (Computer Aided Scrutiny Selection) Income Taxes Cases are selected for hearing under various parameters and assessments are made basing on the books of account and evidences produced. Further notices are sent to assessees basing on information collected from the Annual Information R...

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Posted Under: Income Tax |

Conversion of Limited Income Tax Scrutiny to Complete Scrutiny-Reg.

Instruction No. 5/2016 (14/07/2016)

Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possibility of under assessment of income if the case is not examined under 'Complete Scrutiny'. ...

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Income Tax manual /Compulsory scrutiny criteria F.Y. 2016-2017

Instruction No. 4/2016-Income Tax (13/07/2016)

CBDT lays down the following procedure and criteria for manual selection of returns/cases for compulsory scrutiny during the financial-year 2016-2017:- (i) Cases involving addition on a substantial and recurring question of law or fact in earlier assessment year(s), in excess of Rs. 25 lakhs in metro charges...

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CBDT Strategy to ensure Quality in Assessment Work for 2016-17

Framing of Quality Assessments is an essential part of any risk management strategy. Quality of Assessments is being used as one of the most important indicator to judge the performance of tax department. Therefore, it is imperative that various authorities in the hierarchy of Income-tax Department discharge their respective roles in the ...

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Posted Under: Income Tax |

Furnish details of limited scrutiny cases converted in complete scrutiny

F.No.225/269/2015-ITA-II (12/05/2016)

Pr. CCsIT/CCIT (Exemptions)/CCIT (Intl. Tax)/Pr. DGsIT/DGIT(Inv.) wise details of number of limited scrutiny cases converted into complete scrutiny, along with the actual assessed income in these cases (may be given in board tax bracket wise, for example Rs. 5-10 Lakh/Rs. 10-15 Lakh and so on....

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Manual Scrutiny Selection based on CPC Recommendations

AST INSTRUCTION NO.141 (22/03/2016)

The functionality for viewing such cases which are selected by AO under Manual Scrutiny on the basis of suggestions by CPC for A.Y. 2013-14 and for which order under section 143(3) of the Act has still not been passed, has been enabled in the ITD system and can be accessed by entering the following path in ITD System:...

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Issue Questionnaire with First Notice in scrutiny cases: CBDT

Instruction No. 19/2015 (29/12/2015)

Instruction No. 19/2015 Instances have come to the notice of the Board that in cases selected under scrutiny, while issuing the first notice, Assessing Officers do not convey the specific compliance requirements like production of accounts, furnishing of documents, information, evidences, submission of other requisite particulars etc...

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Clarification on Scope of scrutiny in cases selected through CASS

Instruction No. 20/2015 (29/12/2015)

The Central Board of Direct Taxes ('CBDT') , vide Instruction No. 7/2014 dated 26 09.2014 had clarified the extent of enquiry in certain category of cases specified therein , which are selected for scrutiny through CASS . Further clarifications have been sought regarding the scope and applicability of the aforesaid Instruction to cases be...

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Committees to Monitor unreasonable and High­ Pitched Scrutiny Assessment Orders

Instruction No. 17/2015 (09/11/2015)

Instruction No. 17/2015 Board has consistently been advising the field authorities to be fair, objective and rational while framing scrutiny assessment orders. Role of supervisory authorities in this regard, has also been highlighted by the Board from time to time. It has, however, been brought to the notice of Board that the tendency to ...

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Scrutiny assessments of assessees engaged in Mining business

Instruction No. 14/2015 (14/10/2015)

Instruction No. 14/2015 while scrutinizing the cases of entities engaged in the business of mining, the Annual Returns filed with IBM by the respective assessees should invariably be obtained and compared with the details submitted to the Income-tax Department so as to ascertain whether any suppression of production and discrepancy in sto...

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Detailed Manual Scrutiny of Service Tax Returns

With the introduction of the Point of Taxation Rules, 2011 and the advent of negative list-based comprehensive taxation of services in 2012, it becomes necessary that the guidelines for detailed scrutiny of returns needed a revision. In this background, the CBEC vide Circular 185/4/2015-Service Tax dated 30th June, 2015 has outlined the m...

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Posted Under: Income Tax |

Income Tax Scrutiny Criteria for Assessment Year 2016-17

Instruction No. 08/2015 (31/08/2015)

Compulsory manual selection of cases for scrutiny during the Financial Year 2015-2016- (a) Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority. Instruction No. 08/2015 ...

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Service Tax: Self Assessment To Selfish Scrutiny

CA Satish Sarda To keep a check on the system of Self Assessment under service tax , with effect from 1st August 2015 Department is coming out with a strong ‘return scrutiny ‘ system. It is going to be a two part system of Preliminary and Detailed Scrutiny. CBEC has recently issued one Circular No.185 […]...

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Posted Under: Income Tax |

Scrutiny of Service Tax Returns

The Board vide Circular No. 113/07/2009-ST had laid down the procedure for carrying out detailed scrutiny of Service Tax Returns (ST-3) and had circulated a return scrutiny manual for Service Tax. ...

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Posted Under: Income Tax |

CBEC issues guidelines for detailed scrutiny of Excise Returns

The Central Board of Excise and Customs (CBEC or the Board) vide Circular No. 185/4/2015-ST dated June 30, 2015 had laid down the procedure for carrying out detailed scrutiny of Service Tax Returns, to be followed by the Revenue with effect from August 1, 2015. Now, on similar line, the Board has now issued instructions/ guidelines on det...

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Guidelines for detailed scrutiny of Central Excise Returns

Circular No. 1004/11/2015-Central Excise (21/07/2015)

A returns scrutiny process consists of two parts viz. preliminary scrutiny and detailed scrutiny. While the preliminary scrutiny system covers all the returns filed online, detailed scrutiny system covers a few returns selected on the basis of identified risk parameters. ...

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CBEC issues guidelines for detailed manual scrutiny of ST-3 Returns w.e.f. August 1, 2015

CBEC vide Circular No. 113/07/2009-ST dated April 23, 2009 had laid down the procedure for carrying out detailed scrutiny of Service Tax Returns (ST-3 Returns) and had circulated a Return Scrutiny Manual for Service tax. ...

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Posted Under: Income Tax |

Detailed Manual Scrutiny of ST-3 returns with effect from 01.08.2015

Circular No. 185/4/2015-Service Tax (07/07/2015)

With the introduction of the Point of Taxation Rules, 2011, which shifted the liability of payment of service tax from receipt basis to accrual basis, and the advent of negative list-based comprehensive taxation of services in 2012, it was felt that the guidelines for detailed scrutiny of returns needed a revision. In this background, it ...

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CBDT issues further Guidelines on Income Tax Scrutiny & Appeals

Instruction No. 7 of 2014 dated 26.09.2014 clarifies that ordinarily in scrutiny cases selected on the basis of AIR/CIB/26AS information, the scrutiny shall be limited to that information. Wider scrutiny would be possible only with the sanction of Principal Commissioner of Income-tax/ Commissioner of Income-tax in specified cases and unde...

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Arye wah! Instructions to reduce hardship of taxpayer in Income Tax Scrutiny

CA Umesh Sharma Arjuna (Fictional Character): Krishna, recently on 7th November 2014, the Central Board of Direct Taxes has issued instructions for reducing hardship of taxpayers in Income tax scrutiny. But Krishna, what is this scrutiny? Krishna (Fictional Character): Arjuna, the taxpayer files his Income Tax Return. Income Tax Scrutiny ...

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Posted Under: Income Tax | ,

Avoid lengthy questionnaires without due application of mind – CBDT to its Officers

Though less that 1% of returns filed are selected for scrutiny, this area of work has often drawn adversarial comments. Supervisory officers, have been directed to play a more pro-active role in monitoring and guiding assessments towards ensuring that high-pitched assessments without proper basis are not made and that lengthy questionnai...

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Posted Under: Income Tax |

Scrutiny assessments in cases of fish farmers – CBDT Instructions

Instruction No. 8/2014 (27/10/2014)

Representations have been received by the Board from various quarters regarding difficulties being faced on account of surveys and income-tax scrutiny assessments by fish farmers, being involved in business and profession of running inland fresh water fish tanks specifically in cases where the books-of-accounts are not being maintained by...

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Limited Income Tax Scrutiny of cases selected under CASS – CBDT

instruction no. 7/2014 (26/09/2014)

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 in...

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Scrutiny of Income Tax Returns

Once we file a return of income tax to the tax authorities, it has to be assessed as a correct return unless it is a self assessment return under section 139 of Income Tax Act. The assessment of returned income involves verification and scrutiny of the details of income submitted. ...

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Income Tax Scrutiny Criteria- Financial Year 2014-15

Instruction No. 6/2014 (02/09/2014)

CBDT hereby lays down the following procedure and criteria for manual selection of returns/cases for scrutiny during the Financial-year 2014-2015:- a) Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before an ...

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Scrutiny on the basis of data in Annual Information Return (AIR)

CA. M. Lakshmanan As per notification F.No. 225/26/2006-ITA.II (Pt.) dated 8th September 2010 scope of enquiry in the scrutiny cases selected on the basis of information collected from AIR returns would be limited to the aspects of information received through AIR....

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Posted Under: Income Tax |

Late submission of ITR-V – Is it a tool to avoid scrutiny?

Advocate C. P. Chugh Every year date for submitting of ITR-V is extended beyond 30th Sep.  This year CBDT has extended the date for for receipt of ITR-Vs in CPC,  Bengaluru, for the cases of AY 2012-13 and 2011-12 received in e-filed in FY 2012-13 to 31St October 2013. Is it not a good tool […]...

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Posted Under: Income Tax |

Scrutiny Criteria for F.Y. 2013-14 / A.Y. 2014-15

The following categories of cases / returns shall be compulsorily scrutinized for F.Y. 2013-14 / A.Y. 14-15:- a) Cases where value of international transaction as defined u/s 92B of IT Act exceeds Rs. 15 crores. b) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs. 10 Crores or more w...

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RTI -Income-tax department return scrutiny guidelines should be public – HC

Joginder Pal Gulati Vs The Officer On Special Duty (ITA II) Cum CPIO and ANR (Delhi High Court)

In so far as the impugned order is concerned, there is nothing stated in the operative part which would seem to indicate that the CIC has come to the conclusion which it has, is based on the fact that, the economic interest of the country, will get effected. The CIC, in the operative part has merely recorded what has been conveyed to it v...

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Processing of return not necessary where scrutiny notice issued

Under the existing provisions, every return of income is to be processed under sub-section (1) of section 143 and refund, if any, due is to be issued to the taxpayer. Some returns of income are also selected for scrutiny which may lead to raising a demand for taxes although refunds may have been issued earlier at the time of processing. ...

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Posted Under: Income Tax |

Income Tax Scrutiny Criteria for F.Y. 2011-12 / A.Y. 2012-13

1. Where value of international transaction as defined u/s. 92B exceeds Rs.15 Crore. 2. Cases where there was addition of Rs.10 Lacs or more in earlier assessment year and question of law or fact is confirmed in appeal or pending before appellate authority. 3. Cases in which addition of Rs.10 Crore or more was made in earlier assessment y...

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Posted Under: Income Tax | ,

Criteria / Guidelines for Income tax Scrutiny for A.Y. 2010-11 / F.Y. 2009-2010

Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing office...

Read More
Posted Under: Income Tax | ,

Cash transaction reports on 2G spectrum allocation issue under scrutiny

Investigating agencies probing alleged financial irregularities in the 2G spectrum allocation have now ordered scrutiny of all cash transaction reports related to the funding of payments by telecom players, banks and individuals involved ...

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Posted Under: Income Tax |

Guidelines / Criteria For Income tax Scrutiny for Financial Year 2010-11 / Assessment Year 2011-12

F.No.225/93/2009/ITA.II (08/09/2010)

SELECTION CRITERIA APPLICABLE TO ALL RETURNS AT ALL STATIONS: a) Value of international transaction as defined u/s 92b exceeds Rs. 15 crores. b) Cases involving addition in an earlier assessment year in excess of Rs.10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before an ap...

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Income Tax department strategy to meet FY 2009-2010 Budget target

The regular assessment tax (RAT) is one of best tools available to the Department to collect taxes. The collection from RAT not only showcases the effort of the Department to collect taxes but can also have a great deterrent effect on the tax evaders. During 2009-10, the Department has collected around Rs 31,242 crone from RAT which is ar...

Read More
Posted Under: Income Tax | ,

Quality assessment Scheme: Move to improve the quality of Assessment

The Central Board of Direct Taxes recently framed a scheme for ensuring quality tax assessments by its officers across India. In the preface to the scheme (issued in December 2009), the CBDT has expressed its concerns on the need for improving the general quality of tax assessments conducted by its officers....

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Posted Under: Income Tax |

Income Tax scrutiny will be tougher, Department increasing the number of Assessing officers who will scrutinise the cases

Income tax evaders are being pushed into an increasingly tight corner – the I-T department is planning restructuring that will help assessing officers spend more time on an assessee than they do now. Currently in Mumbai, an assessing officer, the individual who actually detects tax evasion after going through the assessee’s files, scr...

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Posted Under: Income Tax |

Income tax department decided to take up fewer tax returns for scrutiny this year

If you’re worried about what questions your income tax officer will ask about your returns, you can relax a bit. The department has decided to take up fewer tax returns for scrutiny this year. The Central Board of Direct Taxes had issued an internal circular in December 2009, asking commissioners to select fewer cases for scrutiny....

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Posted Under: Income Tax |

Company Law Board – National Company Law Tribunal – An Analysis

We all know about the dispute resolution mechanism under the provisions of Companies Act, 1956. Till 2002 amendments to the Companies Act, 1956, significantly, the dispute resolution mechanism was vested with the Company Court and the Company Law Board. Company Court is nothing but High Court having jurisdiction to entertain certain compa...

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Posted Under: Income Tax |

Bonus stripping under the Income tax lens

After taxing investors for dividend stripping, the Income Tax (I-T) Department is gearing up to tax bonus stripping. Official sources say scrutiny of returns filed by companies, brokers and individuals active in the stock markets and in possession of shares revealed wide use of this mechanism to evade tax....

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Income tax department matching politicians poll affidavits with their Income Tax Return

The finance ministry has quietly initiated the process of opening up the income tax files of politicians belonging to all parties and tallying their income statements with the affidavits filed by them with the Election Commission during the 2009 parliamentary polls. Verification of the assets declared by the Lok Sabha candidates, many of...

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Posted Under: Income Tax |

IT department claimed Rs 30,000 crore from companies that violated MAT provisions

Income Tax department has claimed Rs 30,000 crore from companies that have violated provisions under the minimum alternate tax. Sources said the claim is not only for the current assessment year of 2009-10, wherein assessments are still going on, but also for previous four-five assessment years, which are under litigation either in courts...

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Posted Under: Income Tax |

CBDT devised scheme for improving quality of assessments

At the beginning of each calendar year i.e. in the month of January, the Range Head in consultation with the concerned Assessing Officer would identify at least 5 pending time-barring assessment cases in respect of each Assessing Officer of his Range for monitoring. These should normally include cases taken up for scrutiny with the permis...

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Posted Under: Income Tax |

Section 144A of the Income-tax Act, 1961 – Power of Joint Commissioner to issue directions in certain cases – Scheme for improving quality of assessments

Instruction No. 6/2009 (18/12/2009)

For past sometime the Board has been concerned about the need for improving general quality of scrutiny assessments on a sustainable basis. In this connection, reference is invited to Board's instruction No. 2/2006 dated 27.04.2006 which required monitoring of scrutiny assessments by Range Heads under the powers available to them under se...

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Assessee cannot be declared as an assessee in default U/s. 201 of IT Act, 1961 for non-deduction of TDS

Bovis Lend Lease (India) Pvt. Ltd. (ITAT Bangalore)

Here we summarised the ruling of the Bangalore Income Tax Appellate Tribunal (ITAT) [2009-TIOL-666-ITAT-BANG] in the case of Bovis Lend Lease (India) Pvt. Ltd. (Taxpayer) on the taxability of payments towards reimbursement of cost forservices provided by a group entity. The ITAT held that such payments ...

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MCA announced new parameters for scrutiny of companies, cash at bank vital parameter for scrutiny

he Ministry of Corporate Affairs (MCA) has worked out new parameters for scrutiny of companies. These are based on reports on the Satyam fraud investigation. In instructions to the Registrar of Companies (RoC), MCA has pointed to 'cash at bank' as a vital parameter for scrutiny. Till now, the auditor's certificate was sufficient....

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Posted Under: Income Tax |

Scrutiny Assessment under the Income-tax Act with Special reference to Annual Information Returns

The scrutiny of returns had been a regular measure to check tax evasion since long. The collection of information for the purpose of making enquiries in the course of such scrutiny assessments is as much important as the assessment proceedings itself. There are various provisions in the Income-tax Act, 1961 for the purpose of collecting i...

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Posted Under: Income Tax |

ICAI considering KYC norms to be followed by its members

ALL practicing chartered accountants in the country may now have to keep a close tab on their clients, as the accounting rule-maker , the Institute of Chartered Accountants of India (ICAI), is considering a proposal to devise a set of know your customer (KYC) norms to be followed by its members before taking up business....

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Posted Under: Income Tax |

Empanel with ROC for Technical Scrutiny of Balance Sheets, COP not required

Further, it may be noted that since technical scrutiny of balance sheet does not involve attestation function, accordingly any Chartered Accountant not holding certificate of practice is also eligible to apply for the subject panel. ...

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Posted Under: Income Tax |

Funds raised through initial public offers (IPO) will be under scanner for end-use

The Ministry of Corporate Affairs (MCA) has decided to conduct a quarterly scrutiny of the end-use of funds raised through initial public offers (IPO). To this end, the ministry has directed all Registrar of Companies (RoC) to coordinate with the stock exchanges to access the quarterly balance sheets of all companies that have come out wi...

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Posted Under: Income Tax |

ICAI – Announcement for panel for outsourcing of work of Technical Scrutiny of Balance Sheets

The Institute of Chartered Accountants of India while appreciating the initiative taken by the Ministry for ensuring good corporate governance and transparency for safeguarding the interest of the shareholders, creditors and the economy as a whole wishes to provide professional expertise of its members to the Registrar of Companies. For t...

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Posted Under: Income Tax |

CBDT ordered scrutiny of certain type of receipts, Companies deferring TDS transfers & others

The interest paid on delayed compensation to land owners by companies or entities engaged in the creation of Special Economic Zones, industrial parks and infrastructure developments,and payments by electricity distribution companies to transmission line owners,will now attract tax . The Central Board of Direct Taxes has also issued instru...

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Posted Under: Income Tax |

CBDT introduced software to provide automatic alerts for scrutiny assessment

The Central Board of Direct Taxes (CBDT) has introduced a new software programme, called ‘360 degree profiling’, which would provide automatic alerts for scrutiny assessment of an individual or a company to the income tax department, based on its investments and expenditure....

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Posted Under: Income Tax |

CBDT directed to re-opening of all cases under the search and seizure label and those claimed deduction u/s. 80IB, 80A

The Central Board of Direct Taxes ( CBDT) has directed re-opening of all cases under the search and seizure label, income-escaping assessments and deductions claimed from profits and gains on all eligible businesses....

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Posted Under: Income Tax |

CBDT instructed to scrutnise all companies which have taken relief under AS-11

The Central Board of Direct Taxes (CBDT) has advised its field formations to scrutinise all cases in which companies have amortised foreign exchange losses under the one-time discretion allowed by the government through an amendment to Accounting Standard 11 (AS-11)....

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Posted Under: Income Tax |

Assessment, Reassessment, Best Judgement Assessment and related provisions

The process of assessment is the most significant part of the Income Tax Act. The Act requires an assessee to comply with certain requirements for computing income in accordance with the various provisions, and pay tax on his income so computed. An assessment is the process whereby the department verifies whether the person has complied [...

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Posted Under: Income Tax |

Direct tax code propose to remove the difference between tax avoidance and tax evasion

In India, the law is settled that tax avoidance is legal and evasion is not. A taxpayer may create a device to arrange his commercial affairs to minimise his tax liability and its acceptance is based on operation of law. While revenue authorities are entitled to decipher the true meaning of a transaction, they cannot […]...

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Posted Under: Income Tax |

Dispute Resolution Panel, National Tax Code, Returns and assessment procedures, Appeal, revision and penal provisions in Direct Tax code

Self reporting of Tax Bases & Acknowledgment [Section 148 & 154] 1. Similar to the concept of filing return of income, taxpayers have been required to file ‘Return of Tax Bases’ (‘RTB’) 2. The RTBs have to be filed on or before: • 30th June – If the person is not a company and does […]...

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Posted Under: Income Tax |

I-T department started scrutinising returns of charitable trusts

In a move that could lead to some charitable trusts losing their registration, the income-tax (I-T) department has started scrutinizing the returns they had filed earlier, two officials said. This follows a government directive last year to these trusts to pay income tax on the revenue they earn from commercial activities. “Since no...

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Posted Under: Income Tax |

Government considering proposal to make tax audit reports mandatory for e-filing of income tax returns

The government is considering a proposal to make tax audit reports mandatory for e-filing of income tax returns. This follows a recommendation by the Income Tax (I-T) department after the Satyam accounting fraud issue broke in January following founder Ramalinga Raju’s confession. I-T officials said since the returns were e-filed, t...

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Posted Under: Income Tax |

Deemed dividend cannot be taxed in the hands of non-shareholder

Closely-held group companies that frequently borrow money from each other should make a mental note of a recent ruling by the income tax appellate tribunal (ITAT), a quasi-judicial tax authority. The tribunal has said that "deemed dividend cannot be taxed in the hands of non-shareholders. " In order to avoid paying dividend distribution t...

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Posted Under: Income Tax |

ICAI written CBDT on Undue hardship faced by assessees on account of delay of refund in scrutiny cases in respect of A.Y. 2007-08

As you are kindly aware, the Central Board of Direct Taxes has issued an Instruction no.12/2008 dated 5th September 2008 for clearing the large pendency of returns for the Assessment year 2007-08. We heartily appreciate the efforts being taken by the Central Board of Direct Taxes to meet up its target for speedier processing of returns....

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Posted Under: Income Tax |

Central Excise circular on manner of scrutiny of ER1, ER2 and ER3 returns and returns submitted by dealers

Circular No. 887/07/2009-Central Excise (11/05/2009)

These guidelines supersede the earlier instructions issued vide Circular No.818/15/2005- CX from F.No.224/1/2005- CX.6 dated 15th July, 2005 and Circular No.249/83/96- CX issued from F.No.206/1/96- CX.6 dated 11.10.96. These guidelines seek to explain the content of the Return Scrutiny Manual, which has been prepared and is now being cir...

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Service Tax – Access to registered premises – Empowerment of Officers thereof

Trade Notice No. 19/2009 (13/03/2009)

Trade Notice No. 19/2009 Rule 5 A was inserted in the Service Tax Rules, 1994 vide Service Tax (Sixth Amendment) Rules, 2007 (Notification No.45/2007 – ST dated 28.12.2007 refers). Attention is also drawn to the instructions issued by the Board vide F.No.137/26/2007-CX.4 dated 01.01.2008 in this regard...

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Return Scrutiny Manual for scrutiny of ST 3 returns – reg

Circular No.113/07/2009-ST (23/04/2009)

The Working Group on Central Excise and Service Tax re-engineering, constituted by the Board has prepared a Return Scrutiny Manual for Service Tax (RSMST). The said manual has been approved by the Board and a copy of the same is enclosed herewith. Circular No.113/07/2009-ST dated the 23rd April, 2009....

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Intimation under subsection (1) of section 143 deemed to be a notice of demand

Consequent to amendment in subsection (1) of section 143 of the Income Tax Act, 1961 with effect from 1st April, 2008, consequential amendment has been made in section 156 so as to provide that intimation under subsection (1) of section 143 shall be deemed to be a notice of demand for the purpose section 156. […]...

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Posted Under: Income Tax |

Correction of arithmetical mistakes and adjustment of incorrect claim in Income Tax Return filed can now be done

Correction of arithmetical mistakes and adjustment of incorrect claim under sub-section (1) of section 143 through Centralised Processing of Returns   Generally, tax administrations across countries adopt a two-stage procedure of assessment as part of risk management strategy. In the first stage, all tax returns are processed to correct ...

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Posted Under: Income Tax |

Time limit prescribed for issuance of notice under section 143(2)(i) or 143(2)(ii) of IT Act

Bholanath R. Shukla Vs ITO (ITAT Mumbai)

8. We have considered he submissions made by both the sides, material on record and orders of the authorities below. We find that the question, before US, is whether limited scrutiny proceedings and regular scrutiny proceedings are independent of each other or not and, therefore, notice issued for limited scrutiny into a regular scrutiny ...

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Companies will be bound to restate their financial statements if auditors raise objections

The era of qualified company accounts is about to close. Companies will have to restate their financial statements if auditors raise objections to any figure in annual accounts, if the government accepts a proposed recommendation of the Institute of Chartered Accountants of India (ICAI). Annual reports would contain financial statements t...

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Posted Under: Income Tax |

IT department widened the scope of the investigation of the tax liability on Vodafone-Essar

The income tax (I-T) department has widened the scope of the investigation of the tax liability on Vodafone-Essar, India’s fourth-largest mobile service provider, to other offshore transactions associated with Vodafone’s buyout of Hutchison Whampoa’s 67 per cent stake in an $11.08 billion deal in 2007. Sources close to t...

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Posted Under: Income Tax |

ICAI plan to scrutinise books of companies that have seen independent directors resign in the last two months

THE Institute of Chartered Accountants of India (ICAI), the regulatory body for the accounting profession, plans to scrutinise books of companies that have seen independent directors resign in the last two months, after the role of such directors came under intense scrutiny in the wake of the major financial fraud at Satyam Computer Servi...

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Posted Under: Income Tax |

In cases of a group, coordinated investigation is a relevant ground for transfer of its case under section 127 of IT Act

Sahara India Commercial Corpn. Ltd. Vs CIT (Calcutta High Court)

Section 127 does not spell out under what facts and circumstances a transfer of a case can be made. However, in a case of inter-city transfer statute requires compliance of two requirements –first, to vie the assessee a reasonable opportunity of hearing, wherever it is possible to do so and secondly, reasons with regard to transfer shou...

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Applicability of section 292B of IT Act in case return contains any mistake, defect or omission

Nicholas Applegate South East Asia Fund Limited Vs Assistant Director of Income Tax (ITAT Mumbai)3875/Mum/2005 (23/01/2009)

Nicholas Applegate South East Asia Fund Limited Vs Assistant Director of Income Tax (ITAT Mumbai) - The question of application of section 292B cannot be prejudged by finding that return, notice, etc. is not as per the requirement of the statute and is/are invalid; the finding that the return or notice etc. is invalid or to what extent it...

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Utilisation of Information Mentioned In Annual Information Return

INSTRUCTION NO. 01/2009 (12/02/2009)

AIRs pertaining to financial year 2007-08 (Assessment year 2008-09) and subsequent years should be utilized in the manner laid down in paragraphs 2 to 8 below....

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Satyam fraud will be investigated by Large I-T team

The Income-Tax department has mobilised a large number of staff members from its local offices for a comprehensive investigation into the fraud in Satyam Computers. A top official said the staff will join duty in a day or two following the IT Chief Commissioner’ s orders earlier this week. He said the investigations would not [&hell...

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Posted Under: Income Tax |

AP Police likely to arrests More in Satyam scam

Even as Sebi officials are quizzing Satyam Computer founder B Ramalinga Raju and his brother Rama Raju at the Chanchalguda jail here,  the Andhra Pradesh police are likely to make more arrests in the Rs 7,800 crore fraud involving the IT major. CID officials investigating the case have not ruled out more arrests in about […]...

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Posted Under: Income Tax |

Taxing times ahead as govt ups Income Tax Scrutiny

Faced with the prospect of missing the direct tax collection target because of the economic slowdown, the Income Tax (I-T) department has sharply increased fresh tax demands to Rs 1,24,000 crore from companies and individuals in the current fiscal, a 130 per cent increase over fresh demands raised last year. At this level, the demand [&he...

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Posted Under: Income Tax |

PROCEDURE FOR APPOINTMENT OF BRANCH STATUTORY AUDITORS IN PUBLIC SECTOR BANKS FOR THE YEAR 2008-09

The large PSBs having balance sheet size (assets + liabilities) of above Rs. 1 lac crore each to exercise managerial autonomy in regard to appointment of SBAs also from the year 2008-09 onwards.  Thus, State Bank of India, Allahabad Bank, Bank of India, Bank of Baroda, Canara Bank, Central Bank of India, Indian Overseas Bank, […]...

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Posted Under: Income Tax |

Revised Procedure For Selection of Cases For Scrutiny For A.Y. 2008-09

FOR NON-CORPORATE ASSESSEES In suppression of earlier instructions on the above subject the  Board hereby lays down the following procedure for selection of returns / cases of Non- Corporate Assessees for scrutiny during the current financial year i.e. 2007-08. 2. The following categories of cases shall be compulsorily  scrutinized; ...

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Posted Under: Income Tax |

E-returns – Income Tax dept discovers Rs 1,700 cr gap

During a verification of electronic returns, the department found that as many as 1,714 taxpayers under the self-assessment scheme (where tax-payers determine their tax liability and pay accordingly) had not paid their tax dues. In a few cases, the amount due was around Rs 100 crore (Rs 1 billion)....

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Posted Under: Income Tax |

Banks' accounts under scanner for deductions clamied

Concerned at the government's 'revenue loss' due to giving 'large deductions' while calculating the income tax payable by banks, tax authorities have decided to scan the accounts of lenders, including foreign banks, in minute detail....

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Posted Under: Income Tax |

Scrutiny of A.Y, 2008-09 Returns To Take Place in Current Fiscal

In a major departure from the usual practice, the Central Board of Direct Taxes (CBDT) has issued directions that scrutiny of the self-assessment returns filed by September 30, 2008 for the financial year 2007-08 will be taken up in the current fiscal....

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Posted Under: Income Tax |

CBDT Issues Instructions For Scrutiny Of FBT Returns

It has been decided that in all the Corporate cases selected for scrutiny as per the guidelines contained in the Action Plan document 2008-09 which have returned income of Rs.5 crore or more and where provisions of FBT apply, assessment order shall also be passed under section 115WE after scrutiny of all such cases....

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Posted Under: Income Tax |

Norms relaxed for scrutiny of company tax returns

In what could be a major relief to the corporate sector, the Central Board of Direct Taxes (CBDT) has decided not to scrutinize tax returns of more than 1,000 top companies provided no serious disputes are pending against them. The annual returns of tax complying companies would not be scrutinized this year. The decision has been taken by...

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Posted Under: Income Tax |

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