INCOME TAX
Instruction No : 8
Date of Issue : 2.9.2004
Subject : Steps to secure recovery of demand in high demand cases - Regarding
It has been the experience in the past that on several occasions, the Assessing Officers create huge demands against assessees without obtaining the details of any known assets of the assessee. With the passage of time and in the absence of such details, no concrete action gets taken to recover this demand. As a result, Department is burdened with the responsibility to recover the huge arrears existing in its records, with little possibility of actual recovery in many cases. As on 1-4-2004, the arrears increased by 20% to Rs. 87,885 crore while the objective was to reduce arrears by 20% as compared to the preceding year.
2. The Board has, therefore, decided that in cases where demand of Rs. 5 lakh and above in big cities like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune and Bangalore and Rs. 1 lakh and above elsewhere, is likely to be created and it appears that the recovery, in full or in part, could become difficult, it shall be the responsibility of the Assessing Officer, during the assessment proceedings itself, to enquire into all assets of the assessee and place under provisional attachment, in terms of provisions of section 281B of the Income-tax Act, before the assessment is completed, the assets sufficient to cover the demand in question (or to the maximum extent, as the case may be). After completion of the assessment, if the provisional attachment cannot be continued till recovery, the same assets can be considered for attachment etc. under section 222/226. In each of these cases, the Assessing Officer shall mention in an Office Note to the Assessment Order in question, the efforts made to locate the assets of the assessee, the details of assets located, the details of assets placed under provisional attachment etc.
3. In search and seizure cases, huge demands are raised under block assessment and the recovery of the same is tedious and time-consuming. In this regard, it is extremely important for Assessing Officers in Central Charges to explore the possibility of invoking the provisions of section 281B. At the time of preparation of Appraisal Report, the DDIT(Inv.)/ADIT(Inv.) should take particular care in identifying the properties of the assessees which could be attached under this section and make a specific mention of the same in the Appraisal Report itself.
4. It shall be the responsibility of all Assessing Officers to follow the above procedure. If any demand becomes irrecoverable due to the failure of the Assessing Officer to follow these guidelines, he shall be held accountable for the loss caused to the Government, regardless of his subsequent posting.
5. While making a review of scrutiny assessments, the Commissioners of Income-tax and Chief Commissioners of Income-tax concerned shall specifically comment on this aspect.