828/CBDT. - Income Tax - 828/CBDT

INSTRUCTION NO. 828/CBDT Date : Febuary 24, 1975 Section(s) Referred: 147 ,154 ,263 Statute: Income - Tax Act, 1961 Instances have come to the notice of the Board of cases where, for lack of prompt action on the part of the ITOs, rectification/remedial action involving substantial issues of principle and/or substantial revenue got barred by limitation. It has further been observed that in taking remedial proceedings, action under section 154 of the IT Act is resorted to in a routine fashion and such action frequently been struck down by appellate authorities on the ground that the issue involved was capable of a second view. This has left the Department with no further remedy to retrieve the loss of revenue. 2. After careful consideration, the Board have decided to introduce a system of selective control in relation to audit objections. In regard to audit objections involving revenue of Rs.25,000 or more in Income-tax/Corporation Tax cases and Rs.5,000 or more in other Direct Taxes cases, the Commissioners would be personally responsible for careful examination of such objections and issue of instructions to ITOs on the most appropriate remedial action to be taken within a month of the receipt of the local Audit Report. In regard to audit objections involving revenue between Rs.10,000 and Rs.25,000 in Income-tax/Corporation Tax cases and between Rs.1,000 and Rs.5,000 in other direct taxes cases, the Commissioners should ensure that the Range Inspecting Assistant Commissioners issue similar instructions to the ITOs within the said period of a month. Further, the choice of such remedial action whether under section 154 or 147 or section 263, should be carefully considered so that the interest of revenue is well protected and the chances of such remedial action being sustained in appeal are bright. The present system of routine re-course to section 154 should be given up. 3. In this context, attention is invited to the earlier standing instructions of the Board that even in arguable, Commissioners should ensure that the Department's options are kept open so that there is no loss of revenue for failure to take timely remedial action, if and when an audit objection is finally accepted. It has been noticed that these standing instructions are not strictly observed in all cases. The Board would once again reiterate these instructions. Failure to take appropriate remedial action in time would be viewed seriously in future. 4. Receipt of these instructions may be acknowledged.