Scheme for improving quality of assessments - S. 144A - Income Tax - Instruction No. 06/2009

Scheme for improving quality of assessments - S. 144A Instruction No. 6/2009 [F.NO. 225/11/2006/ITA.II], dated 18-12-2009 For past sometime the Board has been concerned about the need for improving general quality of scrutiny assessments on a sustainable basis. In this connection, reference is invited to Board's instruction No. 2/2006 dated 27.04.2006 which required monitoring of scrutiny assessments by Range Heads under the powers available to them under section 144A of Income tax Act . Instructions have also been issued from time to time for strengthening the machinery for review of assessments and inspection of assessment charges. However, it is felt that there is significant scope for improving the quality of scrutiny system. The matter came up for discussion during 25th Annual Conference of Chief Commissioner of Income tax held in August 2009. A presentation was made by CCIT Chandigarh outlining a scheme for improving quality assessments implemented in NWR Region. After taking into account various suggestions, it was decided to devise a similar scheme with appropriate flexibility for country-wide implementation. 2. Accordingly, it has now been decided that the following scheme for improving quality of assessments shall be implemented from calendar year 2010 onwards, (i) At the beginning of each calendar year i.e. in the month of January, the Range Head in consultation with the concerned Assessing Officer would identify at least 5 pending time-barring assessment cases in respect of each Assessing Officer of his Range for monitoring These should normally include cases taken up for scrutiny with the permission of CCIT. The selection should be done jointly by the Range Head and the concerned Assessing Officer. Cases of PSUs and loss-making concerns should normally not be identified for this purpose. This exercise should also include those Ranges which are held as additional charge by a Range Head in January. (ii) The Range Head would issue directions u/s 144A in the identified cases for the guidance of the Assessing Officer regarding the course of investigation to enable him to complete these assessments in a proper manner. This should be done at the earliest available opportunity so as to allow the Assessing Officer to have sufficient time to complete the assessment proceedings. A copy of the directions issued by the Range Head would also be endorsed to the CIT. The Range Head should also monitor the subsequent developments in the assessment proceedings in these cases. (iii) On completion of the assessment the Assessing Officer shall send a copy of the assessment order to the Range Head and the CIT, (iv) In the event of a Range Head holding more than one Range the concerned CCIT may appropriately relax the requirement for Issue of directions under section 144A in respect of the cases of the Range(s) held as additional charge. (v) For the purpose of this instruction, a quality assessment would be one in which issues arising for consideration are clearly identified, investigation of basic facts in respect of these issues is carried out, adequate opportunity to rebut adverse evidence is given to the assessee, the rival evidence are suitably analysed and evaluated in the light of correct interpretation of law, and these efforts result in substantial addition to the returned Income, The benchmark for the quantum of addition to the returned income, which may qualify for being a quality assessment, may be decided by the concerned CCIT depending upon the potential of the given Range/Charge. Normally, this should not be less than Rs.5 lakh excluding additions on account of recurring issues. It is expected that the selected cases will meet the parameters for quality assessment (vi) As regards the remaining scrutiny assessments, it. is expected that 30% of assessments completed by the Range Head, 20% of the remaining scrutiny assessments completed by DC/ ACIT and 10% by ITOs will result in quality assessments. These benchmarks can be reviewed once the scheme has been in operation for some time, (vii) The parameters for determining whether an assessment is a quality assessment should be decided by the concerned Chief Commissioner in the light of the above and should be widely circulated at the beginning of the calendar year i.e. in the month of January of every year. (viii) At the end of the financial year, the data regarding assessments completed by Assessing Officers of the CCIT Region shall be got evaluated by the concerned CCIT in the month of next April according to the parameters decided earlier. The overall results will be tabulated in the enclosed proforma and circulated in the CCIT (CCA) Region for information. Separate performance ranking should be done for Range Heads in respect of cases completed by them u/s 143(3) out of the cases selected under Instruction 4 of 2007 dated 16.5.2007 , and those monitored by them under this instruction. (ix) CCITs may also devise methods for commending good performance of Assessing Officers in the area of quality assessments and reflecting the same in the annual appraisals. Important cases involving large successful additions may be reported to the Board in monthly D.O. letters. These can be also be sent to DIT (RSP PR) for inclusion in the Annual Report of good assessment cases. 3. These instructions may please be brought to the notice of all officers working in your Cadre Control region immediately for proper compliance. Proformae Performance Ranking of Assessing Officers CCIT CIT RANGE NAME OF THE ASSESSING OFFICER NO. OF ASSESSMENTS COMPLETED NO. OF QUALITY ASSESSMENTS OUT OF 2 1 2 3 4 5 6 Performance Rankings for Range Heads as Guides CCIT CIT RANGE NAME OF THE ADDL./JOINT CIT NO. OF CASES IN WHICH GUIDANCE GIVEN U/S 144A NO. OF QUALITY ASSESSMENTS OUT OF 2 1 2 3 4 5 6 MANAGEMENT OF SCRUTINY WORKLOAD INSTRUCTION NO. 4/2007 [F.NO. 225/6/2007-ITA-II], DATED 16-5-2007 Kindly refer to above 2. Considering the increasing gap between workload and disposal of scrutiny assessments, it has been decided to entrust the Range Heads with the responsibility of making assessments in top revenue potential cases of the Range to be selected on the basis of returned Income. 3. In this regard, targets for disposal of cases by the Range Heads are prescribed as under:- S. No. Charge Minimum number of cases to be disposed off per year 1. Corporate 20 2. Non-Corporate / Mixed / Salaries 30 However, the CCITs, considering the local circumstances and other factors, may assign more cases to the Addl. CITs. / Joint CITs. 4. It is hereby clarified that the above targets are not applicable to Central Ranges.