773/CBDT. - Income Tax - 773/CBDT

Instruction No: 773/CBDT Date of Issue: 22/10/1974 Section(s) Referred: 5(2) of SurTax Act Despite Board's repeated instructions to complete the Surtax Assessments immediately after the completion of the corresponding IT Assessment, the pendency of such assessments has not shown any appreciable reduction, so much so that such pendency was taken note of by the Public Accounts Committee and it has very adversely commented upon this aspect of the working of the Income-tax Department. Para 6.7 of the 128th Report of the Public Accounts Committee dealing with the inordinate delay in the disposal of Surtax assessments is given below: " In this case neither the assessee filed voluntarily a Surtax return nor the ITO called fro it and no action was taken to assess the company for two years till Audit pointed out. The explanations for this lapse on the part of the ITO is admittedly unsatisfactory. The Committee had already pointed out in paragraph 6.7 of their 88th Report (Fifth Lok Sabha) that the ITOs had tended to give sur-tax assessment a low priority. They had also stressed that surtax assessments should be taken up along with the connected assessments of income tax of the companies. Government should ensured that this recommendation is implemented in letter and spirit'. 2. with a view to implementing the recommendation of the PAC in letter and spirit as desired by it, it would be necessary for the Commissioners of Income-tax to take steps to curb the wide spread tendency amongst the ITOs to give low priority to initiation and completion of Surtax proceedings. As on 1.4.74, 3283 Surtax assessments were pending and the disposal during the period April to June has been only 114 thereby leaving a balance of 3169 cases as on 1.7.74. Out of the pendency of 3169 cases, in 449 cases the corresponding IT Assessment had already been completed. CIT must personally discuss the reasons for the overall pendency of Surtax assessments with particular emphasis to the cases where corresponding income-tax assessments have been completed with the Inspecting Assistant Commissioners of Income-tax who in turn should have discussions with the concerned ITOs for chalking out a programme for speedy disposal of such pendencies. 3. While formulating the programme for reduction of pendency and avoidance of laxity in this regard on the part of the ITOs, following directions may kindly be given:- (i) As a matter of practice the ITOs incharge of company circles must examine the applicability of the provisions of Surtax Act as soon as the returns of income are received. Wherever found necessary notices under section 5(2) of the Surtax Act must be issued within one month of the receipt of the returns of income. (ii) Applicability of provisions of Surtax Act should be once again examined in those cases where notices under section 5(2) of the Surtax Act had not been issued at the time of receipt of the returns of income but in which substantial additions are made to income disclosed in the return of income. Notices under section 5(2) should be issued immediately if the provisions are found applicable on the basis of the assessed income. (iii) Proceedings for completion of regular Surtax assessments should be taken up along with the income-tax proceedings so that the Surtax assessments are also finalised immediately after the IT assessments are completed. The fact that additions made in the income-tax assessments are being disputed in appeal should not be a ground for not finalising the Surtax assessments. The time lag between the date of completion of Surtax assessments should ordinarily not exceed a month unless there are special reasons justifying the delay. (iv) Applicability of the provisions relating to the imposition of penalty under the Surtax Act should be examined carefully while finalising the Surtax assessment. If any defaults are noticed in the course of assessment proceedings, the penalty notices must be issued along with the assessment order.