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Scrutiny assessment ever green tool of harassment by tax authorities in spite of instructions of CBDT

Income Tax - Direct Tax Code - DTC - By: - CA DEV KUMAR KOTHARI - Dated:- 28-1-2016 Last Replied Date:- 29-1-2016 - Scrutiny assessment are source of harassment: Ground reality of working of income-tax department is that scrutiny assessment proceedings are big source of harassment. There seems hardly any change in attitude of most of Assessing Officers. This is evident from fact that major demands raised in scrutiny assessments get vacated in first and second appeal. There seems not much change .....

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which are already available to the AO on a click of mouse still continues and the AO asks assessee to furnish printed copy of return- ITR filed by assessee online, details of business, directors, partners, computation etc. which are already found in the ROI and other documents submitted by assessee. In requisitions , many documents and explanations are required which are not at all required, not applicable and cannot be asked in terms of instructions issued by CBDT. Tendency of unsettling settl .....

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ing provision has been made to deem subsidy, grant -in- aid, assistance etc. as income though such receipts are generally capital receipts, as per settled legal position. A capital receipt cannot be taxed as per the constitution of India. Still we find that learned Shri Arun Jaitely has made a deeming provision to treat subsidies etc. as income. Therefore, we find that even at ministerial level tendency of unsettling settled position still continue, though retrospective effect has been minimised .....

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specific items for which selection of case has been made for scrutiny. In case of unlimited scrutiny cases, or in cases where AO consider that case require deep inquiry to unearth tax evasion exceeding certain limits, then with approval of specified senior authorities more detailed enquiry can be made. Instructions are blatantly disobeyed by many AO: In ground reality , however, we find that instructions of CBDT regarding scope and procedure for limited, specific issue based scrutiny and in dept .....

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ee. Ad-hock, estimated additions and disallowances still continue: We find that Assessing Officers are still making ad-hock, estimated additions and disallowances without any material but just on guess, conjecture, and presumption and prejudice. This is not proper. On small additions and disallowances, many assessee do not go in for appeal due to high cost of litigation and to avoid loss of time which will be required if appeal is properly pursued, which is not possible for small sums. Re-assess .....

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