Regarding assessment u/s 143(1). - Income Tax - 426/CBDT

INSTRUCTION NO. 426/CBDT Dated: June 14, 1972 Section(s) Referred: 143(1) Statute: Income - Tax Act, 1961 Reference is invited to Instruction No. 289 F. No. 385/32/71-IT(B) dated 30-4-1971 and Instruction No. 349 F.No. 244/3/71-A PAC dated 3-12-1971, regarding summary assessments. 2. The Cs. I.T. Conference held in April/May 1972 reviewed the working of the summary assessment scheme and considered its role in future; a copy of the minutes of the Conference discussions is being forwarded separately. In light of the Conference discussions the Board have modified the above-noted existing instructions on the following lines; (i) Existing Para 2(ii) of Instruction No. 289 runs: "All Category I assessments, excepting in the city charges of Bombay and Calcutta where only category-I cases with returned/assessed income of Rs. 50,000/- and above in either the current year or in any one of the last two years, should be selected for detailed scrutiny". The Board desire that the present limits for Bombay and Calcutta city charges involving category-I cases with returned/assessed income of Rs. 50,000/- and above should continue. For the other charges the present limit of category-I assessments may be relaxed to the extent that the Commissioners of Income-tax concerned may prescribe for their respective charges a limit involving category I cases with returned/assessed income of Rs. 25,000/- to Rs. 50,000/- the specific limit may be placed anywhere between this indicated bracket. Necessary instructions may be issued and intimation sent to the Board. (ii) Existing para 2(iv) of Instruction No. 289 runs: "First year's assessment in cases involving income from sources other than salaries over Rs. 500/- (including direct refund cases)". The above para may be treated as substituted by the following: "First year's assessment in cases (including direct refund cases) involving income (from sources other than salaries) over Rs. 2000/- except where there is information that investment of over Rs. 25,000/- is involved". (iii) Existing para 2(v) of Instruction No. 349 runs : "Salary cases in which there is a wide difference between the value of perquisites shown in the return and that determined in the assessment for the earlier years whether such cases can be disposed of under the summary assessment scheme. Under the existing Instructions where the difference is "substantial" between the value of perquisites declared by an assessee and that determined by the Department the case is to be taken out of the summary assessment scheme. But what constitutes "substantial" difference for the purpose was not defined. To clarify the position it has been decided that a difference of Rs. 1000/- and above between the perquisites declared in the latest return and the perquisites determined in the completed assessments for earlier year should be treated as "substantial". (iv) Whether the assessments of the firm and partners should be made by the same ITO. It is not considered necessary that the assessments of the partners and the firm should be made by the same ITO. Where both the firm's case as well the partner's cases fall in the non-scrutiny category by the application of the tests as at(i) and (ii) above the cases would remain with the same ITO. Where, however, the partners' cases are in the non-scrutiny category, the latter will necessarily be with an experienced ITO dealing with scrutiny cases while the partners cases would be with the ITO dealing with nonscrutiny cases. Where, however, the ITO assessing the firm considers that the case of any one or more of the partners should be assigned to him in the interest of better coordination and proper scrutiny of the firm's assessment, the partners case may also be specifically assigned to him. In that event, the partners case would be treated as scrutiny case, notwithstanding the circumstances that by the application of the monetary test, it falls in the non-scrutiny category. 3. The Board desire that at the beginning of the year, scrutiny cases should be segregated from the non-scrutiny cases and list of such cases prepared. In the new return forms to be put in vogue soon, space will be provided for recording of office endorsement after routine check up of accompanying documents formally complete particulars and details and thereafter such returns pertaining to Summary Assessment cases should be so embossed and they should remain in the custody of the I.T.O. or the Supervisor/Head Clerk to avoid loss of accompanying documents. The returns thus in safe custody may be processed for assessment in convenient batches, as may be necessary. If on scrutiny of a return received in a summary assessment case it is found that the return presents features which would call for scrutiny, the ITO should approach his IAC for the transfer of the case to the scrutiny sector. 4. It has also been decided that the Commissioners should determine the percentage of non-scrutiny cases in which notices u/s 139(2) have to be issued for the year and such percentage should relatively be small. Sufficient publicity should be given regarding summary assessment procedure for the benefit of small assessees and the DI(RS P) is being asked to insert suitable hand-outs in news-papers in this regard including regional language newspapers which reach the bulk of small assessees. It should be the aim to cover by summary assessment procedure about 75 per cent of the cases and if possible even more. As far as feasible, there should be segregation of circles dealing with scrutiny and non-scrutiny cases.