767/CBDT. - Income Tax - 767/CBDT

Instruction No: 767/CBDT Date of Issue: 4/10/1974 Section(s) Referred: 143(3) ,144 Statute: Income - Tax Act, 1961 Recently, a case has come to the notice of the Board where an addition of Rs. 5.64 lakhs was made by the I.T. Officer to the taxable income which was computed at Rs. 6 lakhs. The Appellate Asst. Commissioner allowed a reduction of Rs. 5.56 lakhs. This is not a solitary case of its type. It is illustrative of a widespread tendency on the part of the I.T. Officers to make unrealistic or over-pitched assessments, quite often ex-Parte, especially in Central/Special Circles, without (a) making requisite enquiries; (b) bringing on record sufficient evidence in support of the additions made; (c) confronting the assessee with the material collected by them; and (d) affording a reasonable opportunity to the assessee to rebut the said material and explain his case. Consequently, the assessments are either slashed in appeal or are set aside. The tendency to allow assessments in cases requiring intensive investigation to drag on till the end of the year and complete them when they are about to become barred by limitation, by making heavy additions of flimsy grounds is equally wide-spread. It is further noticed that in cases where assessments are made exparte, applications u/s 146 remain undisposed of for a long time. 2. Such over-pitched assessments have been the target of adverse criticism by, inter-alia, Parliamentary Committees. They throw up a host of problems like inflation of demands and generation of unnecessary unproductive work. 3. The necessity of curbing the tendency on the part of the I.T. Officers to make high-pitched assessments and raise heavy uncollectable demands has been emphasised by the Board from time to time. Despite these instructions, the tendency has not been checkmated. The Board, therefore, desire that you should once again impress upon the I.T. Officers in your charge to avoid making such type of assessments. You and your Inspecting Asst. Commissioners should periodically review the statistics regarding the number of ex-parte assessments made and demand raised therein as also statistics of applications u/s 146 lying undisposed of.