INCOME TAX
INSTRUCTION NO. 8/2006
Dated: October 31, 2006
Subject: Certificate
for Lower Deduction or Non-deduction of Tax at Source under Section 197 of
Income Tax Act - Indiscriminate Issuance thereof - regarding.
I am directed to say that instances have been brought to the notice of the
Board that assessing officers are issuing certificates for lower deduction or
no-deduction of tax at source under section 197 (1) of the Income tax Act
indiscriminately and in contravention of the methodology and procedure laid
down in rules 28AA and 28AB of the Income Tax Rules. Such arbitrary issuance of
certificates under section 197 (1) not only adversely affects the collection of
tax at source but also seriously jeopardizes the chances of
disclosure/detection at a later stage of such incomes on which no tax has been
deducted or tax has been deducted at a very low rate.
2.
Accordingly, all assessing officers are directed to ensure that all
certificates under section 197 (1) are issued by them strictly as per the
manner prescribed under rule 28AA or rule 28AB, as the case may be. No
certificate under section 197(1) shall be issued under circumstances, which are
not covered by rule 28AA or rule 28AB, howsoever genuine and compelling such
circumstances may be. Moreover, the assessing officer shall obtain prior
administrative approval of the Range JCIT/Addl. CIT before issuing a
certificate under section 197(1). The JCIT/Addl. CIT shall satisfy himself of
the fact that the certificate is being issued strictly in accordance with rule
28AA/28AB before according his approval for issuance of the certificate. A
record of such certificate issued should be maintained in the office of the
assessing officer.
These instructions of the Board may kindly be brought to the notice of all
officers working in your charge for strict compliance.
F.No.275/37/2006-IT(B)
(Anand Jha)
Director (Budget)