INCOME TAX

Instruction No. 07/2014

Government of India

Ministry of Finance

Department of Revenue (CBDT)

Room No. 143E, North-Block, New-Delhi

Dated the 26^th of September, 2014

To

All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners of Income-tax

All Pr. Directors-General of Income-tax/Directors-General of Income-tax

Sir/Madam

Subject: - Scope of enquiry in cases selected for scrutiny during the Financial Year 2014-2015 on basis of AIR/CIB /26AS mis-match-regarding.

It has come to the notice of the Board that during the scrutiny assessment proceedings some of the AOs are routinely calling for information which is not relevant, for enquiry into the issues to be considered. This has been causing undue harassment to the taxpayers and has also drawn adverse criticism from several quarters. Further, feedback and analysis of such orders indicates that many times the core issues, which formed the basis of selection of the case for scrutiny were not examined properly. Such instances primarily occurred in cases selected for scrutiny under Computer Aided Scrutiny Selection ('CASS') for verification of specific information obtained from third party sources which apparently did not match with the details submitted by the taxpayer in the return of-income.

2. Therefore, for proper administration of the Income-tax Act, 1961 ('Act') Central Board of Direct Taxes, by virtue of its powers under section 119 of the Act, in supersession of earlier instructions/guidelines on this subject, hereby directs that the cases selected for scrutiny during the Financial Year 2014-20(15 under CASS, on the basis of either AIR data or CIB information or for non re-conciliation with 26AS data the scope of enquiry should be limited to verification of these particular aspects only. Therefore, in such cases, an Assessing Officer hall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected for scrutiny.

3. The reason(s) for selection of cases under CASS are displayed to the Assessing Officer in AST application and notice u/s 143(2), after generation from AST, is issued to the taxpayer with the remark 'Selected under Computer Aided Scrutiny Selection (CASS)". The functionality in AST is being modified suitably to flag the reasons for scrutiny selection in AIR/CIB/26AS cases. This functionality is expected to be operationalised by 15^th October, 2014. Further, the Asses ng Officer while issuing notice under section 142(1) of the Act  which is enclosed with the first questionnaire would proceed to verify only the specific aspects requiring examination/verification. In such cases, all efforts would be made to ensure that assessment proceedings are completed expeditiously in minimum possible number of hearings without unnecessarily dragging the case till the time-barring date.

4. In case, during the course of assessment proceedings it is found that there is potential escapement of income exceeding ₹ 10 lakhs (for non - metro charges, the monetary limit shall be ₹ 5 lakhs) on any other issue(s) apart from the AIR/CIB/26AS information based on which the case was elected under CASS requiring substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr. CIT/DIT concerned. However, such an approval shall be accorded by the Pr. CIT/DIT in writing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored by the Jt.CIT/Addl.CIT concerned.

5. The contents of this Instruction should be immediately brought to the notice of all concerned for strict compliance.

6. Hindi version to follow.

(Rohit Garg)

Deputy Secretary to the Government of India

(F. No. 225/229/2014-ITA.II)

Copy to:

1. Chairman and all Members of CBDT

2. All Officers and Technical Sections of CBDT

3. Director of Income tax (Inv.)/IT & Audit/Vigilance/Inv./RSP&PR/ Recovery

4. Director of Income tax (O&MS), New Delhi

5. ITCC Division of CBDT (3 copies)

6. Database Cell for uploading on IRS Officers website

7. Guard File

(Rohit Garg)

Deputy Secretary to the Government of India