Certificate issued to the assessee as this information is likely to be useful for assessment purposes. - Income Tax - 185/CBDT

INSTRUCTION NO 185/CBDT, Dated: June 27, 1970 Section(s) Referred: 230 Statute: Income - Tax Act, 1961 Instances have come to the notice of the Board where ITCCs have been issued by the ITOs to certain assessees who were prima facie not entitled to them. This was mainly due to the lack of proper knowledge about the scope and rationale of the certificates incorporated in the ITCCs form. The ITO is required to certify that the assessee mentioned in the certificate has been doing everything possible to pay the tax demands promptly and regularly and to facilitate the completion of the pending outstanding proceedings. Thus, an assessee who has filed writ petitions in the High Court with a view to either stay the recovery of tax or stop the ITO from proceedings with the assessment and obtains an injunction from the court, should not normally get the certificate. It has however, been noticed by the Board that in some instances, the assessees who had adopted dilatory tactics and obstructed the assessment proceedings by filing writ petitions etc., for the stay of the assessment proceedings, had nevertheless been granted the ITVC/ITCC by the ITO. 2. As the grant of the ITCC enables the assessee to obtain an import/export licence or to bid for and obtain contracts from various Ministries of the Government, it is necessary that utmost care should be exercised to see that the certificate is not issued to an assessee who is a noted refractory or against whom substantial taxes are outstanding. 3. It has accordingly been decided to introduce some changes in the Income-tax Verification Certificate/ITCC form wherein a specific certificate will hence forth be required to be given by the ITO. The exact import of the various clauses of the certificate is explained below:- i) The ITO has to be satisfied that the assessee has furnished complete information about all companies in which he is substantially interested, or firms or association of persons in which he is a partner or a member. Any omission or addition in this regard should be carefully noted with reference to the last certificate issued to the assessee as this information is likely to be useful for assessment purposes. ii) The ITO should ensure that the returns of income due from the assessees as well as from the concerns mentioned at (i) above, have been filed. The assessee should be asked to produce proof in support of his statement that such returns have actually been filed. iii) The ITO should satisfy himself that the assessee has paid all the tax demands due from him, other than those which have been stayed by a competent authority. It should be ensured that where instalments have been granted by the higher authorities, the assessee has in fact, paid all such instalments as have fallen due for payment till the date of the certificate. iv) The assessee has been co-operating with the Department in facilitating the completion of the pending assessments. If the assessee has filed writ petitions or obtained injunctions from the Courts, the CIT should decide whether in the circumstances of the case, the legal action taken by the assessee can be constructed as adoption of obstructionist tactis. If so, the certificate should not be granted to him. 4. These instructions should be carefully followed by the ITOs while dealing with application for ITVCs/ITCCs of the type mentioned in clause (iv) above and the ITO should seek the instructions of the CIT before taking a final decision.