Processing of assessment. - Income Tax - 349/CBDT

INSTRUCTION NO. 349/CBDT Dated: December 3, 1971 Section(s) Referred: 143(1) ,143(2) Statute: Income - Tax Act, 1961 Reference is invited to Boards Instruction No.289(F.No.385/32/71-ITB), dated the 30th April 1971 on the subject. 2. At the Commissioners conference held in August 1971 some common technical problems faced by ITOs in disposing of cases under the amended provisions of sections 143(1) and (2) of the I.T.Act,1961 operative from 1-4-71 were discussed. The boards decisions regarding the problems are stated below: (i) As most of the assessees coming under the summary assessment scheme would be generally filing returns in form No.3 it should be possible to waive the absence of these enclosures. But summary assessments made without copies of final accounts, balance-sheet or tax deduction certificates and LIP receipts, may result in denying the assessee due credit for taxes paid. So, if an assessee does not file these papers along with a return, the person receiving the return should give him a printed/cyclostyled notice, pointing out that in the absence of the relevant papers, it would not be possible for the ITO to give him credit for the TDS and asking the assessee to re-submit the return within a week along with the respective documents. The CsIT may also take some steps like putting up advertisements or cinema slides, for enlightening the tax payers about the necessity of filing these documents along with their returns. (ii) Whether a case where a return has been filed showing a changed status of the assessee should come under the "summary assessment" scheme? Where there has been a bon fide change in the constitution of a firm or in the status of an assessee, unrelated with the computation of its or his income, the case should not be taken out of the summary assessment scheme. iii) Cases where the return of income shows some income in Part IV of the return, which along with that shown in Part I of the return exceeds Rs.25,000 should such cases be excluded? Where the aggregate of the income shown in Parts I and IV of the return exceeds Rs.25,000 the case should be excluded from the category of summary assessments. iv) Whether summary assessments may be in a case where the value of capital assets sold in a year exceeds Rs.50,000. Such a case should be in the excluded category because the assessees are usually unable to work out correctly the profit u/s.41(2) or capital gains, if any. v) Salary cases in which there is a wide difference between the value of perquisites shown in an assessee's return for any year and that determined by the ITO for earlier years-whether such cases can be disposed of under the new scheme? Where the value of perquisite declared by an assessee differs from the determined by the Department, it will not be permissible to make any adjustment on the basis of the assessee's own past records. Where the difference is substantial, the case will have to be taken out of the summary assessment scheme. vi) Will para 2(vi) of the Board's Instruction No.289 cover the cases of cash credits, fresh deposits/loans in the name of the assessee's wife, or near relations or nominees? Yes. If there are specific allegations/information regarding cash credits or fresh deposits or loans in the name of the assessee's wife, his near relations and nominees, the case should be excluded from the category of cases to be done under the summary assessment procedure. vii) Whether IAC's prior approval will be needed for the issue of notice u/s.143(2) where a return was filed prior to 1-4-71 but the assessment is to be completed after this date ? The summary assessment procedure is operative in respect of the assessment year 1970-71 and earlier years as well, if the return of income was filed on or after 1-4-71 or if a return of income had been filed before 1-4-71, but no assessment proceedings under the old procedure were started before that date. Accordingly, the IAC's prior approval would be needed in the type of cases envisaged. viii) How does the assessee's right of having summary assessments reopened u/s.143(2) affect the position regarding the limitation for completing the assessment ? The Board have already issued instructions on this point. For avoiding a claim u/s.143(2)(a) which would take the date of assessment beyond the time limit permissible u/s.153(1), the ITOs should complete summary assessments by the end of the financial year in which the returns are received or within one month thereafter in the cases of delayed returns. 3. The following decisions touching upon the administrative and statistical aspects for disposals under the summary assessment scheme also have been taken by the Board:- 1) Cases of registered firms with income upto Rs.50,000 should not be brought under the summary assessment scheme in the charges other than city charges of Bombay and Calcutta. 2) In the cases with total income below Rs.7,500, notices u/s.139(2) are required to be issued only once in 4 years. In the first year, therefore notices will have to be issued in 25% of such cases. The cases selected for issue of notices u/s.139(2) should include not only the cases where voluntary returns have been filed by the assessee, but also those where such returns have not been filed. 3) For the purpose of statistical returns, the number of current assessments for disposal should be arrived at by adding the number of cases where returns have been received to the cases in which notices u/s.139(2) have been issued. 4) Summary assessment cases and scrutiny cases must be segregated. 5) A disposal of 500 summary assessments per month is expected from the ITOs solely engaged in such work. A revised target may be fixed after a study by the Director of Inspection(Income-tax Audit) which can be undertaken only after the scheme has run for some time. 4. These instructions may please be brought to the notice of all officers working in your charge.