INCOME TAX

Revised procedure for inspection

INSTRUCTION NO. 16/2008

DATED 4-11-2008

The existing system of Inspections was introduced in 2002 subsequent to restructuring of Income tax Department. This system was introduced on an assumption that in post-restructuring scenario, Range would form the basic unit for assessment work. Its focus was on inspection of functioning of a Range in two selected fortnights and it included inspection of a few selected assessments made by the Assessing Officers. However, the concept of Range as an assessment unit could not be implemented in its entirety due to various constraints. Therefore, the system of Inspection could not fulfil its desired objectives. Board had, therefore appointed a committee under Sri K. Vasudevan, DGIT (Systems) to examine the current system of Inspections and Reviews and to recommend changes so as to bring it in tune with the current structure and work practices of the Department. The report of the Committee has since been examined by Board and it has been decided to revamp the existing system of Inspections and Reviews.

2. Under the revised procedure, inspections will involve an annual comprehensive inspection of the concerned office. The Inspecting Officer will examine and comment on the overall functioning of the office in the light of various Government Instructions in general and CBDT Instructions in particular. However, it will not be necessary to give comments on select assessment orders as part of inspection, as this will be done during Review of the assessments, instructions in respect of which are being issued separately.

3. Under the new system Inspection of following offices will be done:—

i. Assessing Officers: Inspection of the office of DCIT/ACIT and that of the Additional CsIT/JCsIT will be carried out by the concerned Administrative Commissioner. The offices of ITOs and TROs working in a Range will be inspected by the concerned Range head i.e. the Additional Commissioner or Joint Commissioner.

ii. Range Office: The Inspection of the Range office headed by an Additional Commissioner or Joint Commissioner will be carried out by the concerned Administrative Commissioner.

iii. CIT(Appeals): Inspection of the office of CIT(Appeals) will be carried out by the concerned Chief Commissioner of Income tax.

iv. CIT (Audit), CIT(TDS), CIT(CO): Inspection of these offices will be carried out by the concerned Chief commissioner of Income tax.

v. ITO(Hqrs.), ITO (Judicial), DDO: Inspection of these offices will be carried out by the concerned Controlling Officers.

4. During these Inspections the work done in the preceding financial year will be examined by the Inspecting Officer in a comprehensive manner with a view to bring out the strengths and weaknesses of the work practices being followed in that office with a view to strengthen the administrative machinery. The Inspecting Officer will also highlight achievements and shortcomings of the concerned officers in the key areas of their work. These Inspections should be conducted with reference to the prescribed proforma containing a set of questions covering various areas of work being conducted in that office. The Inspecting officer should examine the records and other material needed to answer these questions and give a balanced narrative answer to the same. He may also give separate comments on any other issue of importance that comes to his notice.

5. The new system of Inspections and Reviews will replace the existing system with effect from the date of issue of this Instruction. Revised proformae for inspection of the offices of Assessing Officer, Range Office and CIT(Appeals) are enclosed. The inspection of the offices of CIT(Audit), CIT(TDS), CIT(CO.), ITO(Hq.), ITO (Judicial) and D.D.O, would be done from next year. Detailed proformae for these will be issued separately.

6. The Inspecting Officers may plan the Inspection work so that Inspection of at least one office is carried out in every quarter and the entire Inspection work is completed by the end of the financial year. In the Action Plan for 2008-09, it was stated that targets for Inspections and Reviews will be laid down separately. Considering that one half of the year is already over these may be taken as under:—

Inspecting Officer	Offices to be inspected in F. Y. 2008-09
Chief Commissioner	All CIT(Appeals) working in his Region
Commissioner	One Range head and two DCsIT / ACsIT of his charge
Additional / Joint Commissioner	Two Income Tax Officers of the Range

Where an Inspecting officer is holding an additional charge, he will also be responsible for conducting Inspections in respect of the additional charge also. The progress of the Review work may be reported in the monthly D.O. letters. All inspection reports should be sent to the DIT (I.T.), New Delhi by 15th of April of the following financial year. This Instruction may kindly be brought to the notice of all officers working in your Region.

[F. NO. 225/143/2008/ITA.II]

INSPECTION REPORT

[To be used for inspection of CIT (Appeals)]

1. GENERAL INFORMATION

1. Office under inspection :

2. Brief description of jurisdiction :

3. Period covered by last inspection :

4. Period covered by present inspection :

5. Particulars of Officers working in the Charge during the period under inspection:

Name

Period

6. Name and designation of the Controlling Officer :

2. DETAILS OF INSPECTION WORK

2.1 Maintenance of registers

S.N.	Name of the register	Whether complete in all respects	Quality of maintenance of registers	Remarks
l	Inward Register
2	Appeal Register
3	Disposal Register
4	Dispatch Register
5	Penalty Register

2.2 MAINTENANCE OF RECORDS

Comments on this part of the work should include - condition of records, linking of papers e.g. appeal memos, report of AOs, Notices,

No. of High demand appeals

No. of old appeals

Disposed after more than 6 months

Pending for more than 6 months

2.3.4 Observance of procedural requirements in disposal of appeals

(i) Has proper opportunity been given to the AO/ appellant?

(ii) Has requirements of Rule 46A been observed, before admitting new evidence? If not give a list of cases where this has not been done.

(iii) Has proper control been maintained on grant of adjournments?

(iv) Have the appeal orders passed/issued within 7 days of last hearing? If not the number of cases where such delays are of over 15 days.

Delay	15-30 days	1-3 months	over 3 months
No. of appeal orders

2.3.5 Framing of quality appeal orders

Please identify any ten orders in high demand appeal at random and state whether—

(i) The issues arising for consideration have been properly identified in the appeal orders.

(ii) The arguments of both parties have been properly discussed and rival evidences analysed.

(iii) Proper reasons have been given in support of the findings recorded.

INSPECTION REPORT

(To be used for inspection of Ranges]

1. GENERAL INFORMATION

1. Office under inspection :

2. Brief description of jurisdiction :

3. Period covered by last, inspection :

4. Period covered by present inspection :

5. Particulars of Officers working in the Range during the period under inspection :

Name	Designation	Duration for which posted

6. Name and designation of me Controlling Officer :

7. Region of the CCIT :

2. DETAILS OF INSPECTION

2.1 Maintenance of registers

S. N.	Name of the register	Whether complete in all respects	Quality of maintenance of registers	Remarks
1	Inward Register
2	Register of references u/s 144A
3	Register of references for approval of refunds
4	Stay Petitions
5	Penalty Register

time, and meaningful comments are offered for proper decision making

iii. Whether proper control has been exercised to ensure that further appeals filed in time in cases where the appeal orders are not accepted?

(List out appellate orders received during any one month and give following information)

S. N.	PAN	Name	Date of receipt of appellate order	Date of forwarding scrutiny report	Date of filing further appeal	Reasons for delay, If any

2.3.5 Grievance Redressal

i. Has a register been maintained in respect of the grievance petitions received by the officer?

ii. Whether timely steps been taken to redress the grievances?

iii. Were any cases noticed in which grievances remained pending without any action for a long period?

iv. List out all the petitions pending for more than three months received from other authorities and received directly—

S.N.	PAN	Name	Nature of Grievance	Date(s) of receipt	Date of final Report

2.4 STEPS TAKEN BY THE OFFICER TO ACHIEVE NET COLLECTIONS

i. Please give particulars of budget target and net collection of the Range for last 3 years.

ii. Please give comments as to whether the officer has properly monitored advance tax collections in top 100 cases of the Range?

iii. Has the officer taken effective steps to monitor recovery of net collective arrear demand? Please give particulars of net collectible

3. OBSERVATIONS OF THE INSPECTING OFFICER

3.1 Survey cases

Whether a register maintained for survey cases? Has proper record been maintained in respect of surveys conducted in the Range?

Has the officer been taking steps to ensure the recovery of any amounts surrendered during the surveys?

Has timely steps been taken to complete the assessments in survey cases?

3.2 Tax evasion petitions

Has any record in the form of a control register/folder been kept in respect of the tax evasion petitions received?

Whether all petitions received till date are found entered in the register?

Whether follow up action found has been taken on the evasion petitions entered in the register?

3.3 Other matters - Give comments on—

Handling of establishment matters.

Adequacy of resources and facilities with particular emphasis on quality.

Over-all environment of the office.

4. COMMENTS OF THE OFFICER BEING INSPECTED ON THE OBSERVATIONS OF INSPECTING OFFICER

INSPECTION REPORT

(To be used for inspection of Assessing Officers/Units)

1. GENERAL INFORMATION

1. Office under inspection :

2. Brief description of jurisdiction :

3. Period covered by last inspection :

4. Period covered by present inspection :

5. Particulars of Officers holding the post during the period under inspection :

Name	Designation	Duration for which posted

6. Name and designation of the Controlling Officer :

7. Name of CIT Charge and Region of the CCIT :

2. DETAILS OF INSPECTION WORK

2.1 Maintenance of registers

S. N.	Name of the register	Whether complete in all respects	Quality of maintenance of registers	Remarks
1	Blue Book
2	Demand & Collection Registers (arrear & current)
3	Appeals Register
4	Rectification register
5	Audit registers

iv. Are entries for cases reopened u/s 147 or under section 263 reflected in the above register or a separate register/list is maintained for that purpose.

2.3.4 Scrutiny assessments

i. Number of scrutiny assessments completed

ii. Net current demand raised in scrutiny assessments

iii. Number of cases where additions of over Rs. 25 lakh (Rs. 1 Crore in Metro Regions) made

iv. Whether large income cases have been completed after giving proper show cause notices

v. Whether demand notices have been served expeditiously

(List out scrutiny cases completed in December and give following information)

S. N.	PAN	Name	Date of order	Date of service	Reasons for delay, if any

2.3.3 Rectifications

i. Is a rectification register maintained for entering the applications received? Does it give a fair picture of the pending applications and applications that have been disposed of and the time taken for the disposal in a case?

ii. Have the rectification applications been disposed of in reasonable time?

(List out rectification applications received in the fortnight specified by the Directorate]

S.N.	PAN	Name	Date of receipt of application	Date(s) of rectification order/ service	Reasons for delay, if any

2.3.4 Follow up of Appellate Orders

i. Has the officer taken effective steps to ensure recovery of net collectible arrear demand? Please give particulars of net collectible arrear demand at the beginning and end of the year and cash collections made out of it.

ii. Please give comments whether arrear dossier cases and of top 50 arrear demand cases have been properly and effectively monitored?

iii. Is the current D & CR register maintained in an orderly manner and entries of all assessments completed entered therein?

iv. Please give comments on the steps taken by the officer to ensure collection out of current demand, including any steps taken to enforce collection or secure current demand.

v. Has a register for stay of demand petitions been kept and does it reflect timely disposal of such stay petitions?

vi. Whether any record of provisional attachments made u/s 281B kept by the officer. Has the officer been taking steps to make provisional attachment in high demand cases after completing the assessments?

2.5 AUDIT

2.5.1 Receipt Audit

i. Are registers for major receipt and internal audit objections properly maintained?

ii. Have the replies to audit paras been sent in a timely manner?

iii. Whether remedial action has been taken in the cases inspected?

(List out major receipt audit objections with tax effect of Rs. 1 crore and above and give following particulars)

S.N.	PAN	Name	Date of receipt	Date(s) of reply	Remedial action taken / Revenue effect

2.5.2 Internal Audit

5. COUNTER COMMENTS OF THE INSPECTING OFFICER

The Inspecting Officer should list out remedial /follow up actions taken in respect of the deficiencies/shortcomings noted in the inspection

6. OVERALL COMMENTS OF THE REVIEWING OFFICER