Procedure for Selection of cases for "Scrutiny" for NON-CORPORATE Assessees - Income Tax - 10

Instruction No : 10 <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> Date of Issue : 20.9.2004 Subject ; Procedure for Selection of cases for "Scrutiny" for NON-CORPORATE Assessees In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure for selection of returns/cases of Non-Corporate Assessees for Scrutiny during the current financial year, i.e., 2004-05. 2. The following categories of cases/returns shall be compulsorily scrutinized:— ( a ) All assessments pertaining to search seizure. ( b ) All assessments pertaining to survey conducted under section 133A. ( c ) All returns where deduction claimed under Chapter VIA of the I.T. Act is Rs. 10 lakhs and above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad; and Rs. 5 lakhs and above in other places. ( d ) All returns where refund claimed is Rs. 10 lakhs or above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 5 lakhs and above in other places. ( e ) All cases wherein Addition/Disallowance has been sustained by the CIT (Appeals) in any of the three preceding years amounting to Rs. 5 lakhs and above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 1 lakh or above in other places. ( f ) All returns filed by local authorities assessable to income-tax. ( g ) All cases of banks and Non-banking Financial Institutions with deposits of Rs. 5 crores and above. ( h ) All cases where the proviso to section 143(3) is applicable. ( i ) All cases where exemption is claimed under section 11 of IT Act and the gross receipts exceed Rs. 5 crores. ( j ) All cases where income exceeding Rs. 2 lakhs has been claimed as exempt. ( k ) Cases where value of International Transaction (as defined under section 92B of the I.T. Act) exceeds Rs. 5 crores. ( l ) 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. ( m ) All cases of stock brokers (including sub-brokers) where gross brokerage disclosed are Rs. 50 lakhs and above and income declared is less than 10% of gross brokerage. ( n ) All cases of stock brokers (including sub-brokers) where there are claims of bad debts of Rs. 5 lakhs or more. ( o ) All cases of professionals with gross receipts of Rs. 50 lakhs or more and income declared is less than 20% of gross professional receipts. ( p ) All cases of deduction under sections 10A and/or 10B of the IT Act with export turnover exceeding Rs. 5 crores. ( q ) All cases of contractors whose gross contract receipts exceed Rs. 2 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 aproval of CCIT concerned. 4. 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. 5. All returns filed in response to notice issued under section 148 of the IT Act will be selected for scrutiny. 6. In addition to the above, returns processed on AST will be selected 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 this regard will be issued by the Directorate of Income-tax (Systems).