Procedure for selection of corporate cases for scrutiy. - Income Tax - Instruction No. 09/2004

F. No. 225/76/2004-ITA-II F. No. 225/77/2004-ITA-II Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi September 20th, 2004 To. All the Cadre Controlling Chief Commissioner of Income Tax Subject : Procedure for Selection of cases for "Scrutiny" for Corporate and Non-Corporate Assessees. Sir/Madam, The Guidelines for selection of cases for scrutiny in respect of Corporate and Non-Corporate assessee are enclosed herewith. The Guidelines will be applicable for all the returns filed during the period 1.10.2003 to 31.3.2005. 2. The process of selection of cases for scrutiny for returns filed up to 31.3.2004 must be completed by 15th October, 2004. for returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within 3 months of the date of filing of the return. 3. These instructions may be brought to the notice of all the CCIT/DCIT in your region immediately : (J.P. Chandraker) JCIT OSD(ITA-II) Central Board of Direct Taxes INSTRUCTION NO. 9/2004 F. No. 225/76/2004-ITA-II Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, September 20, 2004 To The Cadre Controlling CCIT Sub : Procedure for Selection of cases for "Scrutiny" for CORPORATE assessees. Sir/Madam, In supercession of earlier Instructions on the above subject, the Board hereby lays down the following procedure for selection of returns/cases of Corporate Assessees for Scrutiny during the current financial year i.e., 2004-05. 2. The following categories of cases shall be compulsorily scrutinized : (a) All assessments pertaining to Search Seizure. (b) All assessments pertaining to survey conducted u/s. 133A. (c) All returns where deduction claimed under Chapter VIA of the I.T. Act is Rs 25 lakhs or above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad; and Rs 10 lakhs or above in other places. (d) All returns where refund claimed is Rs 50 lakhs or above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 20 lakhs and above in other places. (e) All cases wherein Addition/Disallowance has been sustained by the CIT (Appeal) in any of the three preceding year amounting to Rs. 10 lakhs and above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 5 lakhs or above in other places. (f) All Banks and Public Sector Undertaking. (g) All NSE-500 companies BSE - A group companies as on 31.08.2004 listed on Bombay Stock Exchange. (h) All cases of companies liable to pay tax under Section 115 B with book profit exceeding Rs. 50 lakh. (i) All cases where income exceeding Rs. 10 lakhs has been claimed as exempt. (j) Cases where value of International Transaction (as defined u/s. 92B of the I.T. Act) exceeds Rs. 5 crores. (k) All cases of non-residents where returns have been filed disclosing income less than that determined under Section 195 or 197, as the case may be. (l) All Non-Banking Financial Corporations (NBFCs)/Investment companies having or paid up capital of more than Rs. 10 crores. (m) All case of stockbrokers (including sub-broker) where gross brokerage disclosed Rs. 1 crore and above and income declared is less than 10% of gross brokerage. (n) All cases of stockbrokers (including sub-brokers) with claim of bad debts of Rs. 10 lakhs or more. (o) Cases of amalgamated companies claiming set off of loss u/s. 72A of the IT Act. (p) All case of deduction under sections 10A and/ or 10B of the Act with export turnover exceeding Rs. 10 crores. (q) All cases of contractors whose gross contract receipts exceed Rs. 5 crores and net income declared is less than 5% of gross contract receipts. 3. Cases not falling in the above categories and where the Assessing Officer is of the opinion that scrutiny is required for specific reasons, viz. cases of builders/contractors following project completion method to declare their income cases where there is prima facie evidence of dividend/bonus stripping etc. may be selected for scrutiny after recording the reasons in writing and with prior approval of CCIT concerned. 4. The process of selection of cases for scrutiny for returns filed up to 31/9/2004 must be completed by 15th October 2004. For returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within 3 months of the date of filing of the return. 5. All return filed in response to notice issued u/s. 148 of the IT Act will be selected for scrutiny. 6. In addition to the above, returns processed on AST will be slected through a computer Assisted Scrutiny System (CASS). The selection criteria will be determined by the Board and the process, which will be run by the Central System, will be completed in the first week of October 2004. Separate instructions in the regard will be issued by the Directorate of Income Tax (Systems.) 7. These instructions may as brought to the notice of all concerned. J P Chandraker JCIT, OSD (ITA-II) Central Board of Direct Taxes