777/CBDT. - Income Tax - 777/CBDT

INSTRUCTION NO. 777/CBDT Dated : October 30, 1974 Section(s) Referred: 141 Statute: Income - Tax Act, 1961 In para 21(c) of the Report of the C AG for the year 1972-73, it is stated inter alia that "For the assessment years 1967-68 and 1969-70, the Department raised demands on completion of provisional assessment of an Indian company. The assessee did not pay the demand within the stipulated period, and became liable to levy of interest amounting to Rs.1,03,724. This interest was not levied". 2. Subsequent enquiries have shown that the provisional demand was actually paid by the company. However, Revenue Audit could not trace the payments made towards provisional assessment at the time the objections were raised, owing to the following irregularities:- (a) Neither the ITNS-150 nor the demand notices issued to the assessee on completion of regular assessment indicated any payments against the provisional tax demands; no credit for provisional tax payments was given. As a result, there was over demand of tax on completion of regular assessments. (b) Provisional tax payments were also not shown in the relevant columns of the demand and collection registers wherein entries were made on the completion of the regular assessments. Consequently, the net demand payable on regular assessments shown in the registers was also inflated. (c) The assessing ITO was not aware of the provisional tax payments when regular assessments were made by him. He does not seem to have made any enquiries from the ITO (Collection) or referred to the relevant registers for checking whether or not the assessee had made any payments against provisional tax demands). 3. Though section 141 relating to provisional assessment has been omitted by Taxation Laws (Amendment) Act, 1970 with effect from 1.4.71, the objections may equally apply to all the cases where owing to similar irregularities, pre-paid taxes are not given credit while making final assessment. 4. Several instructions have been issued to the effect that steps should be taken to ensure that all taxes paid should be properly given credit to the assessees concerned. This is possible only if proper entries are made in the registers and the papers showing the payment are properly kept in the files. In this connection attention is invited to Board's Instruction No.523 dated 12.3.73 from F.No.385/46/73-ITB, Shri S.R.Mehta's D.O.letters F.No.385/87/73-ITB dated 18.10.73 and F.No.385/4/74-ITB dated 11.1.74 in which it has been stressed that the taxes paid by the assessees should be properly adjusted. 5. You are again requested to impress upon the officers working in your charge to properly record the payments made by the assessees in the Demand Collection registers, keep the evidence of payment of tax on the record and avoid the irregularities pointed out by the Revenue Audit. The assessing Officers should be specifically asked to keep a close liaison with the ITOs collection.