Revised procedure for working of CIB. - Income Tax - 1943/1997

INSTRUCTION NO. 1943/1997 Dated: August 22, 1997 Subject : Revised procedure for working of CIB in the Income Tax Department. After reviewing the working of all the schemes introduced hitherto, obtaining a feed-back from the field formations and keeping in mind the twin objectives of widening of the tax base and preventing evasion of tax, the following scheme for working of CIB will be introduced with effect from 1.9.97 onwards. For the success of this scheme, both the investigation and the assessment wings will have to coalesce their efforts and supplement each other. The salient features of the scheme are as under : i) Computer will be used for processing CIB data at all the CIB units in the country. ii) CIB unit functioning under DGIT(Inv) will collect information from the source heads codified by the Board. The threshhold-limit for a code will be determined by the DGIT(Inv). In Annexure-I certain monetary limits have been mentioned. These are only indicative. In these cases DGIT(Inv) may increase the limits keeping in view the local conditions. iii) The work of CIB shall be limited to collection, collation and dissemination of information only. No query letters will be issued by the CIB units. iv) The sorted CIB data will be transmitted, annually, to the jurisdictional range Addl./DCITs through the concerned CITs. v) The assessing officers will carry out the work of verification by issuing notices under Section 133(6) of the I.T. Act. vi) The Investigation Wing may utilise the stored data of CIB unit for the purposes of developing cases for investigation and search. vii) There will be a reporting system under which the DGITs(Inv) will give quarterly report of the utilisation of CIB information. 2. The scheme is discussed in detail below : i) The CIB unit functioning under DGIT(Inv) will gather information from the sources codified and listed in Annexe-I on a regular basis. ii) The information collected will be current information. For instance, information in respect of transactions undertaken during financial year 1997-98 will be collected in the financial year 1997-98 itself. The CIB unit may organise its work of collection of information in such a manner that at one instance information from one source is collected for the preceding month or the preceding quarter depending upon the volume of information. However, the information in respect of the last months of 1997-98 may be collected in the first quarter of 1998-99. iii) As and when the information is gathered, it would be fed in the computers. The software should provide the fields for capturing the details contained in the format given in Annexe-II. 3. After the collection of information in respect of a financial year is completed, all the data for the whole year will be processed by the computer in order to sort them address-wise and range-wise; all the addresses in a range and all the persons within an address will be arranged alphabetically. In this way all the transactions undertaken at a particular address by a person during a year will be grouped at one place and the information of all the transactions undertaken by all the persons with that address, say the members of one family, will also be available at that place which will help co-ordinated investigation. 4. The data is suggested to be arranged address-wise because in most places the jurisdiction of the ranges are territorial and the concerned ranges can be identified on the basis of the address. But in certain cases, say in company ranges at some places, the jurisdiction of the ranges is alphabetical. In such cases, instead of arranging the information address-wise, the persons can be arranged alphabetically. 5. A complete consolidated bound set containing the information for the range for the whole financial year grouped in the manner outlined in paras 3 and 4 will be sent by the CIB unit to the range Addl./DCITs through the concerned CITs between the 1st September and the 15th September of the following year. (In the illustration given in para 11(ii), it would be September, 1998.) 6. The range Addl./Dy.CIT will first identify the assessing Officers under him having jurisdiction over the persons mentioned in the compilation and distribute the relevant data among them for verification. 7. The system will have some obvious limitations. Information in respect of persons assessed in salary ranges, professional ranges, Central charges, Exemption Directorate and Special ranges etc. Where the jurisdiction is neither territorial nor alphabetical, cannot be passed on to their ranges. In all such cases, the Addl./DY. Commissioner having the territorial jurisdiction has to ascertain the appropriate assessing officer/range and pass on the information to him under intimation to the CIB unit to correct their records. 8. The procedure in the foregoing paras has been suggested on the assumption that, in the absence of a perfect PAN system, it is easier to identify a range and it would be difficult to identify the concerned assessing officer. In places where the jurisdiction is clearly defined so that the assessing officer can be quickly identified at the first instance, they can make appropriate modification to the procedure. The chief objective which should be kept in view is to ultimately pass on the information to the concerned assessing officer who will be responsible for the verification of the CIB information. 9. The assessing officer will use the data in the following manner : (i) If the return has been filed and the proceedings are pending he may send a notice under Section 133(6) to the assessee requiring him to confirm and furnish further details of the transactions and explain the source of investment/expenditure. If no proceedings are pending notice under section 133(6) can be issued only with the prior approval of the Commissioner of Income-tax. If the assessee does not reply or does not reply satisfactorily, he may select the case for scrutiny as per the guidelines for selection of cases for scrutiny. (ii) If the return has not been filed and no proceedings are pending he may, simply send a notice under section 133(6), with the prior approval of CIT to the person requiring him to confirm and furnish further details of the transactions and explain the source of investment and the expenditure and also give his assessment particulars. If the proceedings are pending prior approval of CIT is not necessary for issue of notice under section 133(6). On the basis of the response of the person, the assessing officer may decide to issue a notice u/s. 142(1)(i) calling for the return and, thereafter, decide to select the case for scrutiny. In case, the assessing officer does not consider it to be a fit case for issuing notice under section 142(1)(i), the proceedings may be filed. 10. The range Addl./Dy. CIT will maintain a record of the action taken on the information received and the results achieved. 11. The DGIT(Inv.) will be overall responsible for reporting to the Board the ultimate use of the informations. He will interact with the Commissioners and Chief Commissioners and collect the information about the results of verification of CIB information from the CITs and send a quarterly report, starting from the quarter ending December, to the Board about : *(i) the number of informations distributed in the year. (ii) the number of informations verified till the quarter-end. (iii) the number of informations resulting in detecting new assessee. (iv) the number of new assessees detected. (v) the number of information resulting in selection of cases for scrutiny. (vi) the number of cases selected for scrutiny. (vii) the number of informations satisfactorily explained by the assessee. (viii) the number of informations remaining unverified. 12. The DGT must ensure that computer is used for processing CIB information. 13. This revised procedure for the working of the CIB unit supersedes all the earlier guidelines issued by the Board on this subject. F. No. 415/2/97--IT(Inv. I) (SUMAN SHARMA) UNDER SECRETARY, IT(INV.I) *Here adjustment has to be made about the number of informations transferred out to or received from other regions. Note: (iii) may be different from (iv) and (v) may be different from (vi) because one person may have a number of transactions. ANNEXURE I CENTRAL INFORMATION BRANCH Sources of information : Code S. No. Code Source Items (1) (2) (3) (4) 1 002 Central Excise Department New Registrations, excise payments including fines penalties. 2 002 Customs Department Confiscation of goods, duty paid including fines and penalties. 3 003 Registrar of Companies New Registration, Certificate of commencement of business. 4 004 Telephone Deptt./MTNL Telephone Bills 5 005 Enforcement Directorate Confiscation, fine penalties, cases for FERA violation. 6 006 State Trading Corporation Sale of imported cars. 7 007 Income-tax Department i) All TDS returns filed to cross check with payees returns. ii) Appropriate Authority- transfer of immovable property-name of transferors transferees. 8 008 Sales Tax Department New Registration, Sales tax paid including penalty. 9 009 RTO Registration of 4 wheeled vehicles--name, address, vehicle particulars. 10 010 Electricity Boards /Undertakings Electricity bills above Rs.20,000/- 11 011 Land Acquisition Compensation paid for Authority acquisition of land. 12 012 Lottery Commission/ State Government Payment of winnings from lotteries, commission paid to agents. 13 013 Directorate of Industries Registration of new industries. 14 014 State Excise Department New registration, excise payments including fines penalties. 15 015 Registrar of Property Transfer of immovable property. 16 016 Housing Building Authority /Housing Board Names, address of allottees, details of transaction. 17 017 Local Authorities Public Place contracts approval of building plan, new shops, bars, restaurants, cinema houses, clubs etc. 18 018 Banks Cash transaction of Rs. 1 lakh and above and declaration of assets for loan and OD facilities. 19 019 Registrar to Issue of shares and debentures. Name and address of Investors of Rs. 20,000 and above. 20 020 Public sector Undertakings /Financial Institutions, credit, societies, Nidhis, credit card operators. Deposits and investment in Bonds, deposits credit card payment - Rs. 50,000 and above. 21 021 Insurance Companies. Insurance claims - Rs. 1 lakh and above. Premia - Rs. 10, 000 and above. 22 022 Export Promotion Council/DGFT Names and addresses of exporters and details of exports. 23 023 Telephone Directory/Yellow Pages/Journals Trade Nursing homes, clinics, Gyms, interior decorators, study circles, coaching classes, guest houses. 24 024 Turf Club Names and addresses of race course owners, trainers, jockeys, bookies, race winners and purchase or sale of house. 25 025 Hotels/Clubs/Caterers. Expenditure incurred at these places above Rs. 10,000/- 26 026 Builders contractors/ Housing co-operative societies. Names addresses of persons who have entered into agreement for purchase and details of transaction--Rs. 1 lakh and above. 27 027 Chit Fund Companies/ Committees Investment made--Rs. 10, 000/-- and above. 28 028 Air Travel Agents Package tours, travel within India, all travel abroad. 29 029 Transport Agencies Names and addresses of Consignors and consignees. 30 030 Professional/Institutes/ Bodies Names addresses of Doctors, Lawyers, Chartered Accountants, Cost Accountants, Architects, Engineers etc. 31 031 Advertising Agencies, Newspapers, T. V.channels etc. Advertisement expenditure including those political parties--Rs. 10, 000/- and above. 32 032 Stock Exchanges Names and addresses of the investors and persons who have entered into share transactions--Rs. 20,000 and above. Holders of Stock Exchange Card, list of brokers and sub-brokers details of payment. 33 033 Mutual Funds Names and address of investors --Rs. 20, 000 and above. 34 034 Cellular Phone Service Co./ Providers Cellular Phone Subscribers. 35 035 Immigration/Authority/IB Foreign Travel 36 036 R. B. I. Persons seeking permission to remit foreign exchange. 37 037 Post Office Deposits above--Rs. 20, 000 Purchase of Kisan Vikas Patra--Rs. 20, 000. ANNEXE II DATA ENTRY FIELDS 1. SOURCE CODE ....................................... 2. NAME OF THE PERSON ....................................... 3. PAN/GIR NO. ....................................... 4. ADDRESS HOUSE/BUILDING/PREMISES NO. ....................................... LOCALITY/ STREET/ROAD ....................................... CITY/TOWN/VILLAGE ....................................... POST OFFICE ....................................... DISTRICT ....................................... STATE ....................................... PINCODE ....................................... *5. RANGE ADDL./DCIT ....................................... 6. DATE OF TRANSACTION ....................................... 7. AMOUNT INVOLVED ....................................... 8. TRANSACTION DETAILS ....................................... (INCLUDING THE NAME OF THE SOURCE FROM WHOM THE DATA HAS BEEN COLLECTED) *Range Addl/DCITs may be identified at the data entry stage if possible. Otherwise the range can be identified after collection of entire date address-wise.