Functional Scheme in the light of the recommendations of the Wanchoo Committee. - Income Tax - 451/CBDT

INSTRUCTION NO. 451/CBDT Dated: August 30, 1972 A Committee was set up by the Board for considering and suggesting necessary modifications in the Functional Scheme in the light of the recommendations of the Wanchoo Committee, the proposals made in the Brief for the Commissioners' Conference held in August, 1971 and the comments from the Commissioners of Income-tax. 2. The report of the Committee was discussed and generally adopted at the Commissioners' Conference held in April-May, 1972. Accordingly, the scheme as set out in the Manual of Procedure for Functional Unit is modified to the extent indicated in the following paragraphs and the Commissioners should take necessary action for re-organising the functional units in their charges. A report to the effect that the functional units have been so re-organised should be sent by 21st October, 1972. 3. The Board has decided that the revised procedures of the Functional Scheme should be followed uniformally in all the charges, unless there is any exceptional circumstance justifying a departure in which case prior approval of the Board should be obtained. Administration Branch: 4. Receipt Grop-This Cell will continue to be under the control of the I.T.C (Admn). The following points should be noted:- (i) While receiving the dak and other papers, the receipt clerk should verify that all stated accompaniments (particularly in the case of returns) are in order. (ii) A proper acknowledgement receipt should be issued in the prescribed form. The accompaniments (particularly in the case of returns) should be properly listed in the acknowledgement receipt. (iii) If the accompaniments to the return have not been listed by the assessee in the body of the return itself, these should be listed in the blank space at the end on the last page of the return, over the dated initials of the receipt clerk. (iv) The Receipt Group should be put under the supervision of a Head Clerk who would be responsible for the smooth working of the Group. He should particularly ensure that no delays take place in entering the dak and other receipts in the various Receipt Registers and their distribution to the various ITOs/Sections. (v) All returns (including S.T/W.T/G.T. (returns) should be passed on to the Return Scrutiny Group (see paragraph 5 below) on the same day. 5. Return Scrutiny Group-(i) A 'Return Scrutiny Group' consisting of two or more clerks (as may be found necessary) working under the supervision of a Head Clerk should be formed in each Functional Unit. The deployment of staff in this Group will depend on the volume of work in hand from time to time. (ii) On receipt of returns from the Receipt Group (vide paragraph 4(v) above, the Return Scrutiny Group should scrutinise the returns as to their validity and completeness. In the case of defective returns, necessary action should be taken for getting the defects removed. (iii) Income-tax returns with incomes below Rs. 1,000, Rs.2,000 and Rs.10,000 in the case of companies, registers firms and other assessees respectively, wealth-tax returns with net wealth below Rs.1,05,000 in the case of individuals and Rs.2,05,000 in the case of HUFs and all sur-tax and gift-tax returns should then be passed on to the ITO(Asstt) concerned after taking the signatures of his stenographer in a receipt book to be kept for this purpose. The remaining income-tax and wealth-tax returns should be entered in a "Self-assessment Control Register" to be maintained by this Group. The Register will have the following columns:- SELF-ASSESSMENT CONTROL REGISTER _________________________________________________________________________ Sl. Date of Name of Permanent Assess- Total Tax payable No. receipt of assessee Account ment income as per return Number year _______ return wealth returned _________________________________________________________________________ 1 2 3 4 5 6 7 _________________________________________________________________________ ________________________________________________________________________ Amount of Date and amount Amount of pre-paid Balance of payment u/s penalty Remarks taxes as 140 A/15 B and levied U/S per return challan number 140A(3)/ 15B(3) _________________________________________________________________________ 8 9 10 11 12 _________________________________________________________________________ The Register should be divided into two parts--Part I for income-tax returns and Part II for wealth-tax returns. Cpls.8 and 9 above are to be ignored in the wealth-tax part of the Register. (iv) At this stage, entries may be made upto Col.9. If no self-assessment tax is due under section 140 A of the Income-tax Act or section 15B of the Wealth-tax Act, the words "S.A.Not Liable" should be rubber stamped in the remarks column of the Register and on the first page of the relevant return in the portion meant for office use. In other cases, the returns should be stamped "S.A.Liable". (v) The returns entered in the Register should then be passed on to the ITO(Asstt) concerned after taking the signature of his stenographer in the Register in the margin against the names of the concerned assessees. The returns should not be kept by the Return Scrutiny Group for more than a week. (vi)After entering the challans relating to self-assessment tax in the daily collection Register,the Collection Cell II will pass them on to the Return Scrutiny Group who would then make entries in col.10 of the Self Assessment Control Register. Thereafter, the challans should be passed on to the Record Keepers concerned who will place them in the relevant Miscellaneous covers. (vii) If within two months of the receipt of the return from an assessee, the challan in respect of self-assessment tax in respect of a case in which such tax is payable, is not received by the Return Scrutiny Group, a show-cause notice should be issued for the purpose of initiating action for imposition of penalty under section 140A(3) of the I.T.Act/section 15D(3) of the W.T.Act. For this purpose the relevant records should be obtained from the ITO(asstt)/Record Cell. (viii) All work relating to self-assessment tax, e.g., placing of challans in files, imposition of penalty, entry in the D CR, preparation and issue of demand notice, etc., will be done by the staff in the Return Scrutiny Group. 6. The statutory function of imposing penalty under section 140A(3) of the I.T.Act/15B(3) of the W.T.Act should be allotted to the I.T.O.(Admn) by suitably modifying the jurisdiction orders wherever necessary. The clerks in the Return Scrutiny Group will work under the day to day and direct control and supervision of the ITO(Admn). Assessment Branch 7. Demand and Penalty Cell (1)- The functions of the "Tax Computation", "Register Entry" and "Demand Notice" Groups of the Assessment Branch and the Penalty Cell as at present should be combined to form a consolidated cell which may be called the "Demand and Penalty Cell". (Of course, the penalties for default in payment of regular and advance tax will be dealt with in the Collection Branch. As regards penalties for non-payment of self-assessment tax, see paragraphs 5 and 6 above). (ii) The work amongst the various clerks in the Demand and Penalty Cell should be allocated ITO-wise, i.e., all the aforesaid functions (viz., tax computation, D CR. Entry, preparation of assessment form, demand notice, refund voucher and challans and the penalty work (other than penalties u/s.221 or 140A of the I.T.Act and the corresponding sections of the W.T.Act) in relation to the cases falling within the jurisdiction of a particular ITO should be performed by the same clerk except that-- (a) when the work relating to one ITO is not enough to need one full clerk, the clerk may also attend to the cases of another ITO to the extent necessary; or (b) when the work of one ITO is too much for one clerk, the additional work may be allotted to another clerk. It should, however, be ensured that each clerk deals with the work relating to one or more specified ITOs. (iii) The D C Register shall primarily remain in the custody of the respective clerks in the Demand and Penalty Cell. The Register will, however, be made available by them to the clerks in other cells/branches as and when required. 8. Refunds- Preparation of refund vouchers and other connected work should be attended to by the same clerk who prepares the assessment form irrespective of the fact whether the assessment leads to a demand or refund. Separate clerks need not be earmarked for preparing refund vouchers. Each ITO(Asstt) will ensure that no delay takes place in the preparation and signing of refund vouchers (and advice notes). 9. Each clerk in the Demand and Penalty Cell should work under the direct and day to day control of his ITO(Asst.) who will also write his character roll. Necessary re-deployment of clerks due to any uneven flow or sudden increase of work at any point of time will of course be made by the ITO(Admn) under the supervision of the I.A.C. as and when necessary. The I.T.O.(Admn) will continue to exercise and general control and supervision on the proper functioning of the Demand and Penalty Cell as a whole. 10. Entries in the D CR(ITNS.110):- (i) After the computation of income has been finalised by the I.T.O. the UDC allotted to him in the Demand and Penalty Cell should prepare the assessment form, demand notice, challlans and/or refund voucher (and the advice note). (ii) The entries in cols.1--26 of the D CR., Register should then be made by the same UDC. (iii)In the case of 'non-scrutiny' charges, the entries in the D CR Register made by the UDC, should be simultaneously checked by the H.C/Supervisor in charge of the Demand and Penalty Cell and initialled by him in token thereof. (iv) In the case of 'scrutiny' charges, the ITO(Asstt) should at the time of signing the demand notice/refund voucher, initial the entries in the D CR relating to each assessee in token of having verified them. (v) It is the date on which the ITO(Asstt) signs the demand notice and challans (and also the refund voucher where refund is due) which should be shown as the date of disposal of the case in col.4 of the D CR. The monthly disposal of assessments in the Monthly Progress Reports should be shown on the basis of such dates and not on the basis of the dates appearing on the assessment order where such dates are different from the dates on which the demand notices, etc., are signed. In the latter case, both the dates should be shown in col.4 of the D CR. 11. Entries in 'Provisional Share Register' and 'Penalty Register'-- The ITO(Asstt) should ensure that the initial entries in the Provisional Share Register and the Penalty Register are made at the time when he signs the assessment order and, in token thereof, he should put his dated initials in a suitable column in these two registers against the entries relating to each case. 12. Record Cell-- (i) The Record Cell will henceforth be regarded as a part of the Assessment Branch instead of the Administration Branch. (ii) It is desirable that all the assessment records relating to a functional unit should be arranged physically in one room. Where a room large enough for this purpose is not available, the records may be housed in two or more rooms as may be necessary. (iii) The records pertaining to each ITO should be kept in separate almirahs or racks and should not be mixed with the records of any other ITO. The files in the jurisdiction of each ITO should be arranged in the serial order of the Permanent Account Numbers. (iv) As in the case of Demand and Penalty Cell, the clerks should work ITO-wise. (v) All the record-cum-personal clerks will be under the direct and day-to-day control and supervision of the concerned ITOs(Asstt) who will also write their character rolls. The ITO (Admn) will, however, continue to exercise a general control and supervision on the proper functioning of the Record Cell. 13. Audit Cell--(i) This Cell may remain as a separate cell working under the direct control and supervision of the ITO(Admn) as at present, though the statutory function of passing or rectifying the relevant orders will vest with the ITO(Asstt). (ii) The ITO(Admn) should write the character rolls of the officials working in this Cell after consulting the ITO(Asstt) concerned. (iii)The clerks in this Cell should do all the work relating to Audit cases including rectification of assessment on acceptance of audit objections, preparation of the assessment form, demand notice, challans and/or refund voucher and entries in the D CR. Collection Branch (14). A.R.R.Cell--(i) The supervision and control this Cell will be shifted from the ITO(Admn) to the ITO(Collection). While the statutory functions will continue to be performed by the concerned ITOs (Asstt), the day-to-day administrative control and supervision over the clerks in this Cell would vest with the ITO(Collection( who should also write their character rolls after consulting the ITOs(Asstt) concerned. As far as possible, each clerk in this Cell should work for one or more specified ITOs. (ii) The clerks in this Cell should do all the work relating to ARR cases upto and including the stage of preparation of assessment form, demand notice, challans and/or refund vouchers and entries in the D CR. 15.The other Cells under the Collection Branch will continue to function as at present. 16.Collection Files--(i) In order to minimise the movement of files from the Assessment Branch to the Collection Branch, a separate Collection File should be started in respect of each assessee. These collection files will be kept in the Collection Branch. (ii) For this purpose, an extra copy of (a) the assessment order, penalty order, rectification order or any other order which creates or modifies a demand, (b) the relevant assessment form(ITNS-150) and (c) the demand notice should be taken out by the Demand and penalty Cell or the ARR Cell, as the case may be. These extra copies will be passed on by those Cells to the Collection Branch for being placed in the Collection Files. (iii) The acknowledgement slips (ITNS-50) for the service of the documents referred to in (ii) above, will be passed on by the Despatch Cell (or by the Receipt Group in the case of the postal acknowledgement receipts) to the Collection Branch for being placed in the respective Collection Files. (iv) The clerks in the Collection Branch will enter the date of service of the notice of demand in the relevant column of the D CR. (v) The Collection File will also contain all other papers relating to subsequent proceedings for collection including imposition of penalty u/s.221. For this purpose, separate folders, may be kept for different assessments years, if necessary. 17. The challans relating to post assessment (regular) collections should be kept in the Collection File and should not be sent to the Record Cell for being placed in the respective Miscellaneous Covers. (It is clarified that the challans relating to advance-tax and self-assessment tax will continue to be recorded in the relevant Miscellaneous Covers kept in the Collection Cell I/Record Room as at present). As a consequence, the Collection Files when introduced will have to be seen for verifying the post assessment(regular) tax payments for the purpose of giving credit at the time of rectifying assessments or giving effect to appellate orders, etc. 18. The procedures laid down in paragraphs 16 and 17 should be brought into effect from 1-4-1973. General Administration 19. Role of the I.A.C.--The I.A.C. should play a dynamic role in the administration and co-ordination of the functional unit. He has to assume administrative responsibility for the smooth functioning of his unit as a whole. For this purpose, apart from exercising control through statistical reports(including Work Status Reports), as already prescribed, he should pay frequent visits to the office and satisfy himself by on-the spot verification that there are no delays or bottle- necks in the flow of the work in any Branch/Cell. Further, in view of the special importance of the work in the Demand and Penalty Cell, the ARR Cell and the Audit Cell, the I.A.C. should personally assume direct day-to-day and supervisory control over these Cells. 20. Role of ITO(admn)-- A whole-time ITO(Admn) should be provided in each Functional Unit. He should devote a substantial part of his working time every day to an on-the-spot supervision of the various Cells of the Unit including the Record Cell and the Demand and Penalty Cell. 21. As far as possible, the ITO(Admn) and the ITO(Collection) should sit in cabins separated from the office(s) by glass partitions. Weeding of Records 22. Weeding of old records is important in order to conserve space and adequate attention should be paid to this work. Special squads should be formed for clearing the arrears of work in this sphere. Organizational Chart 23. A chart showing the re-grouping of the various cells in the functional scheme in Annexure(A). This chart replaces the chart appearing at page 2 of the Manual of Procedure for Functional Units.