858/CBDT. - Income Tax - 858/CBDT

INSTRUCTION NO. 858/CBDT Dated : July 30, 1975 Section(s) Referred: 143 ,147 ,143(2) Statute: Income - Tax Act, 1961 When the Summary Assessment Scheme was introduced in 1971, post assessment sample scrutiny of cases summarily assessed was also laid down as an integral part of the scheme. It was laid down that 20 per cent of Category I cases 5 per cent of Cat. II cases and 2 per cent of the remaining cases completed under the summary procedure should be taken up for detailed scrutiny. The percentages specified were considered to be the minimum and Commissioners were given the discretion to get a large number of cases scrutinised depending upon manpower availability. 2. It has come to the notice of the Board that such scrutiny has not been carried out on a regular basis in any of the charges. It is essential that summary cases are subjected to sample scrutiny on a regular and systematic basis and, with this objective in view, it has been decided as under:- (a) Post-assessment sample scrutiny should be substituted by initial or preassessment scrutiny. (b) The selection of 20 per cent, 5 per cent and 2 per cent samples should be made by the Inspecting Asst. Commissioners and not left to the Income-tax Officers. The Inspecting Assistant Commissioners of Income-tax should prepare, in the early part of the financial year i.e. July and August, lists of cases for sample scrutiny according to the percentages already specified and should intimate the lists to the concerned Income-tax Officers. The cases for scrutiny, which are to be selected on a sampling basis, would also include cases from trades and/or professions in which, due to shortages and other factor high profits are earned. (c) A copy of these lists should also be forwarded by the Inspecting Asst. Commissioners of Income-tax to the Commissioners of Income-tax who should report to the Board by the end of August that the lists have been drawn up. (d) The Inspecting Asst. Commissioner of Income-tax would be responsible for the enforcement of the Summary Assessment Scheme in all its various aspects, including the pre-assessment scrutiny, of cases selected for that purpose. (e) In the monthly progress report for the month of September, the number of cases selected for scrutiny out of the summary assessment cases may be transferred from "Summary" cases to "scrutiny" cases with a foot note showing this adjustment. 3. If, during the course of scrutiny, the ITO comes across definite information indicating under-assessment of income of the earlier years, such assessments should be reopened u/s 143(2), wherever time is available, or u/s 147 as the facts and circumstances of the cases may warrant. For this purpose, mere routine additions and petty obvious inadmissibles detected during scrutiny should not be the basis for reopening past assessments. Completed assessments should be reopened only on substantial grounds and not on mere suspicions or surmises. In cases reopened u/s. 143(2) the time limit for completion of the assessments should be carefully borne in mind. 4. Necessary instructions may be issued to all the IACs and ITOs in your charge. Receipt of this letter may be acknowledged.