Minutes of the ‘All India Conference of DGIT (Inv.)/CCIT (Central)’ held on 10.5.2003 at Mumbai. - Income Tax - F. No. 286/29/2003-IT(Inv. II)

F. No. 286/29/2003-IT(Inv. II) Ministry of Finance Department of Revenue Central Board of Direct Taxes Date of Issue : 22.05.2003 To All Directors General of Income Tax (Inv.) and All Chief Commissioners of Income Tax Sir, Sub : Minutes of the All India Conference of DGIT (Inv.)/CCIT (Central) held on 10.5.2003 at Mumbai. Please find enclosed herewith the minutes of the All India Conference of the Directors General of Income Tax (Inv.) and Chief Commissioners of Income Tax (Central) held on 10th May, 2003 for necessary action at your end. Member (Inv.) has desired that the decisions taken should strictly implemented immediately. Wherever necessary, suitable instructions from the Board will follow shortly. Yours faithfully, Sd/- (SHARAT CHANDRA ) Director (Inv. II III) Encl. As above. An All India Conference of the Directors General of Income Tax (Inv.) and Chief Commissioners of Income Tax (Central) was convened by Member (Inv.), CBDT on 10.5.2003 at Aayakar Bhavan, Mumbai. Deliberations were mainly focused on following topics: 1. Search Seizure operations - Strategy and approach for F.Y.2003-04, 2. Improving quality of Search Seizure operations, Maintenance of record to provide MIS at various stages, 3. Reduction of arrear demand in Central Charges and disposal of appeals, 4. Redressal of grievances on account of unwarranted seizure and delay in payment of reward to informants, 5. Amendments brought by Finance Bill, 2003 with regard to Search seizure operations/ assessments. The Conference commenced with welcome address by Director General of Income Tax (lnv.), Mumbai. He stressed that deliberations in the Conference shall have to identify the key issues which will help in smooth functioning and result oriented functioning of Investigation Wing/ Central Charges. Member (lnv.) in his keynote address highlighted the achievements of Investigation Wing during F.Y. 2002-03 and appreciated the improvements in the quality of searches carried out during F.Y. 2002-03. He also observed that good performance of the Investigation Wing has been reflected in a large number of rewards to officers and staff sanctioned by the Board in search and seizure cases recently. He, however, expressed concern over large arrears in Central Charges (Approx. 50% of the total arrears). Following decisions were taken during deliberations in the Conference: (i) Posting in Investigation Wing should not be treated as a tenure posting and if the performance of any officer is not found satisfactory, he can be transferred any time out of Investigation Wing/Central Charges. [Action : All DGsIT(lnv.)/CCsIT(C)] (ii) Quality of assessments made in Central Circles are not up to the expectation and needs a lot of improvement. DGsIT(Inv.) and CCsIT(Centra)) should ensure that such tendency of making unwarranted additions on the part of the AO are curbed at the earliest. Therefore, it was decided that all DGlT(Inv.)/CClT (C) should review the assessment made in 2002-03 in Central Charges where additions made more than Rs.10 crore in metropolitan and Rs. 5 crore in non-metropolitan charges. Formal letters shall be issued by the Board in consultation with DGs. [Action : DGIT(lnv.)/CCIT(C), DS(Inv.I),CBDT] (iii) Member (lnv.) advised all DGIT (lnv.)/CCIT(C) to look into workload of CIT(A)(C) and redistributed the work. He desired that appeals in scam cases of 1992 at Mumbai should be disposed of by 31.5.2003. [Action : All DGsIT(Inv.)/CCsIT(C)] (iv) DGIT (lnv.) should play a pro-active role in selection of case for search. He should get involved in this exercise right from the inception. The final responsibility of selection of case for search rests with DG. [Action : All DGsIT(Inv.)/DIT(lnv.)] (v) If a DGIT (Inv.) wants to cover a premises for search in jurisdiction of other DGIT (Inv.), he shall normally and ordinarily inform and coordinate in advance with the other DGIT (Inv.) about the proposed search and the search warrant shall be signed by the DIT(Inv.) in whose jurisdiction that premises falls. [Action : All DGsIT)] (vi) Brief prepared for the guidance of authorised officers should be approved by DIT(Inv.). Instructions may be issued by the Board. [Action : DGIT (lnv.)/Director (Inv.II),CBDT] (vii) As regards the functioning of Air Intelligence units (AIU), the Member (Inv.) informed that a committee of three DGsIT (Inv.) of Delhi, Mumbai Chennai region would be constituted for studying the functioning of AIU and suggesting measures for strengthening and streamlining the same. [Action: Director (Inv. II), CBDT] (viii) In view of the amendments proposed by the Finance Bill, 2003 for not seizing stack-in-trade, emphasis should be shifted to collection of evidence for establishing concealment. [Action: All DGsIT (Inv.)] (xi) Income/ investment verification from IT records should invariably be made before effecting seizure of assets/valuables. If same is not possible on the first day of search, prohibition order u/s 132(3) can be passed and relevant evidences can be collected from assessee to determine the need for seizure. [Action: All DGsIT] (x) Regular books of accounts, documents like passport, Export documents, etc. should not be generally seized. [Action : All DGslT] (xi) There should be due application of mind while considering release of assets u/s 132B. It was also decided to examine as to whether Investigation Wing can also release the disclosed seized assets. [Action : All DGslT/CCslT(C)/Direclor (Inv. II),CBDT] (xii) There should not be any detailed investigation by DDIT (Inv.) as far as possible, during post search period. The case record/ Appraisal Report should be handed over to the Assessment Officer as early as possible within a period of 60 days after the search. The appraisal reports prepared by Investigation Wing should be brief and cover the relevant issues. [Action : All DGsIT (Inv.)] (xiii) Benefit of telescoping should be given to the extent of availability of evidence. Investigation wing should not quantify either concealment or telescoping, but they may suggest telescoping in appropriate cases. Telescoping has to be decided by the AO. Practice of joint meeting of the Investigation Wing and Central charges for resolving the difference on their perception with respect to the undisclosed income as prescribed by Board s Instruction dated 3.7.2002 shall continue. [Action : All DGsIT (lnv.)/CCslT (Central)] (xiv) The new procedure for assessment relating to search seizure cases does not prescribe statutory approval of assessment by Addl./joint CIT, therefore, it was considered to examine, at Board level whether administrative instructions for monitoring and approval of assessment by Addl./Joint CIT can be issued so that quality of assessment in such cases could be improved. [Action : Director (Inv. II), CBDT] (xv) The registers prescribed by the Board vide Instruction dated 3.7.2002 for monitoring details of search/seizure operation and assessment thereof should further include columns with regard to income as determined after CIT(A)/ITAT orders and details of recovery made during post-search assessments and also details of prosecution, if any, launched. Instruction to be issued by the Board. [Action : Director (Inv. II)] (xvi) Internal Audit System of Central Charges as prescribed by the Board in non-Metro charges is to be reviewed because internal audit work takes away a major chunk of time available to the officers of Central Charges. [Action : DS (Inv. I)] (xvii) In cases where no appeals have been filed, suo-moto u/s 264 of Income Tax Act, 1961 can also be resorted to set aside the assessments with high pitched additions and frivolous demand. [Action : All DGsIT (lnv.)/CCsIT (Central)] (xviii) One Inspector should be posted with each CIT(A) (Central). [Action : All DGsIT (Inv.), CCslT] (xix) As regards dossier report, especially in cases where there are no material changes, it was agreed in principle that a detailed dossier be sent only once and later on, only material changes can be reported. It was also decided to examine as to whether dossiers could be sent through e-mail. Matter will have to be taken up with DI (Recovery). [Action : DS (Inv. I), CBDT] (xx) It was agreed that no fresh PD accounts will be opened in the name of the CsIT. Here after PD account will be opened operated by DsIT (Inv.) Only. The proposal of PD A/c to be opened operated by DsIT only will be examined at the Board level. Legal position shall also be examined by the Board before issue of such instruction. [Action: Director (Inv. II), CBDT] (xxi) All the DGsIT will take necessary steps to identify seized assets held in the strong room under the control of DsIT (Inv.) In old cases (to start with more than 10 years old) and initiate proceedings to release or apply the same against outstanding demands as the case may be. [(Action: All DGsIT (Inv.)] (xxii) Many posts in Investigation Wing/Central Charges created during restructuring of the Department are not carrying special pay. Matter may be taken up with relevant desks of the Board. [Action: Director (Inv. II), CBDT] (xxiii) During F.Y.2002-03, a Committee was constituted under the Chairmanship of DGIT (Inv.), Jaipur to look into the sanctioned strength/working strength and deficiency of manpower in Investigation Wing/Central Charges. There is no progress on report submitted by that Committee. [Action: DS (Inv. I), CBDT] (xxiv) There should be frequent training of officers of the Investigation Wing by NADT and RTIs. Matter may be taken up with DG, NADT. [Action: Director (Inv. II), CBDT] (xxv) Member (Inv.) Stated that a Committee headed by DGIT (Inv.), Mumbai has been constituted for review of the guidelines for grant of reward to the informants. All suggestions in this regard should be sent to the said Committee. He further wanted the matter of reward to informants be given top priority and the pending cases to be cleared by 30th June, 2003. [Action: All DGsIT (Inv.)