Review of Summary Assessment Scheme. - Income Tax - 1072/CBDT

INSTRUCTION NO. 1072/CBDT Dated : July 1, 1977 Having reviewed the working of the Summary Assessment Scheme in the last six years, the Board have decided to take some changes in its scope and structure. The main change is that the income limits within which the Scheme operates have been raised and made uniformly applicable to assessees irrespective of the charges where they are assessed and source of income. The details of the redesigned scheme are outlined in the following paragraphs. This is in supersession of F.No.237/16/76-A PAC.II dated 5.7.76 (Instruction No.966) as also all other instructions that might have been issued in regard to the scope, structure and procedure relating to the Summary Assessment Scheme. The redesigned scheme shall be implemented with immediate effect and applies to current as well as arrear assessments to be completed during the current financial year. 2. Income limits for Summary Assessment Scheme - Income-tax assessments in all Non-company cases where the returned income in the assessment year under consideration and the assessed income in the two preceding assessment years is less then Rs.75.000 in case of registered firms or Rs.50,000 in other cases shall be completed u/s 143(1). This general rule is subject to the exceptions listed in paragraph 4 below. 3. The income limits prescribed in paragraph 2 above are applicable to the sum total of the taxable income and exempted income declared in the Return. 4. Exceptions - Income-tax assessments in the following types of cases which otherwise fall within the income limits prescribed in paragraph 2 above, are excluded from the purview of the Summary assessment Scheme. Assessment in such cases shall be made u/s 143(3) after scrutiny:- (i) Cases where loss of Rs.25,000 or more has been claimed in the return. (ii) First assessment in the case of all new assessees. (iii) Cases where any change in status has been claimed. (iv) Cases where any change in the constitution of the firm has been made. (v) Assessment relating to search and seizure case. (vi) Cases relating to a group of assessees where detailed investigation is necessary. (vii) Cases in which penalty proceedings u/s 271(1)(c) have been initiated in respect of the preceding assessment year. (viii) Cases in which prosecution for concealment has been launched in respect of any of the three preceding assessment years. (ix) Cases in which tax evasion complaints containing specific allegation indicating escapement of income amounting to Rs.25,000 or more are pending for investigation. (x) Cases where the assessee has made fresh investment amounting to Rs.25,000 or more. (xi) Cases where a completed assessment has been reopened u/s 147. (xii) Cases where the agricultural income declared in the return is Rs.25,000 or more. (xiii) Cases where exemptions u/s 11 has been claimed. 5. Company cases excluded. - For the removal of doubts, it is clarified that all company assessment have been excluded from the purview of the Summary Assessment Scheme. 6. Slip and extracts. - Intimation slips and survey extracts should not be allowed to interfere with the completion of assessment in summary cases. These should be verified independently if such verification results in the detection of escaped income action should be taken u/s 143(2)b/147. 7. Petty tax evasion complaints - Assessment in summary cases should not be held up for verification of tax-evasion complaints indicating an escapement of income of less then Rs.25,000. Such complaints should be investigated independently and if necessary, the completed assessment should be reopened u/s 147. 8. Check sheets- In order to ensure that no summary case is wrongfully converted into a scrutiny case or vice versa, a check sheet (Annexure I) shall be filled in and placed in the miscellaneous folder with an appropriate entry on the order sheet. The existence of such a check sheet on record would enable the audit parties and supervisory officers to ascertain the reasons for the treatment of the case as a summary/scrutiny case. 9. Some defects in return to be ignored. While identifying the cases for summary assessments, the following defects in the return should be ignored: (i) Omission to mention assessment year if the previous year has been mentioned in the documents accompanying the return. (ii) Omission to mention previous year if the necessary particulars have been indicated in the accompanying documents. (iii) Failure to indicate residential status if the assessee was a resident in the preceding assessment year. (iv) Failure to indicate status if the necessary particulars can be gathered from the earlier records and no change in status has been claimed. (v) Omission to fill up annexure relating to Heads of Income, if the relevant information is available from the accompanying documents. (vi) Omission to fill up annexures relating to deductions and rebates if the relevant information is available from the accompanying documents. (vii) Omission to furnish LIP receipts (This also applies to cases where the amount of premium has increased or LIP relief is being claimed for the first time) 10. Defects in verification not be ignored.- It may be clarified that the omission to mention assessment year and the capacity in which the person is making the return in the verification portion of the return shall not be ignored. All defects in this portion must be got rectified through the Deficiency Letter (Annexure II). 11. Other defects.- Similarly defects other than those listed in Paragraph 9 above, shall be got rectified by sending a Deficiency Letter (Annexure II) to the assessee. For the removal of doubts it is made clear that if any particular defect is to be ignored as mentioned in para 9 above, that defect need not be indicated in the Deficiency Letter. 12. Chronological order of assessment. All assessments in cases falling within the income limits applicable to the summary Assessment Scheme shall be completed strictly in the chronological order of assessment year. An assessment for a later year shall not be taken up unless the assessment for the earlier years have been completed. 13. Special format for summary assessment orders. In order to save time, a special form shall be used for passing assessment orders in all summary cases. If the assessment is made on the income returned without making any adjustment and no further tax or interest is payable, the order should be in the form contained in annexure III. In other cases, Annexure IV should be used. In either case, a copy of the assessment order should invariably be sent to the assessee. 14. Demand Notices:- No demand notice need be issued in respect of a summary assessment which does not result in the liability to pay tax or interest after giving credit to prepaid taxes etc. provided that no adjustments to the income returned have been made u/s 143(1)(b). In other words, demand notice need be issued in the following circumstances only:- 1. Adjustments as provided u/s 143(1)(b) have been made, or 2. The assessment results in liability to pay tax or interest after giving credit to pre-paid taxes. In cases where no demand notice need be issued, the assessment order should be sent by ordinary post. In other cases, the assessment order should accompany the Demand Notice which will be served in the manner laid down in Section 282. 15. Sample Scrutiny. - Some of the cases in which assessments have been made under the Summary Assessment Scheme should be picked up for scrutiny. This should not be by reopening u/s 143(2)(b), an assessment already completed in summary manner u/s 143(1). The scrutiny should relate to the assessment which will be taken up in the following year. For example, some of the cases in which assessments have been made u/s143(1) during financial year 1977-78 would be picked out for scrutiny in respect of the assessment taken up in 1978-79. In the current year, scrutiny will be made of some of the cases in which summary assessments were made during the year 1976-77. The procedure for selecting cases for scrutiny on a random sample basis is indicated in Annexure V. The size of the sample should be as under: (a) Where the last assessed income is Rs.25,000 or more 10% (b) Where the last assessed income is less than Rs.25,000...2% There will not be any sample scrutiny of cases dealt with in Government salary circles. 16. The result of the scrutiny in cases picked up for sample scrutiny shall be recorded in a sample scrutiny register (Annexure VI) 17. In addition to the above, some of the cases in respect of which the Department has received information slips/Survey extracts etc. involving substantial amounts or those which, in the opinion of the IAC., may prove useful, may also be selected for sample scrutiny by the IAC. The results of such sample scrutiny should also be recorded in the Sample Scrutiny Register (Annexure VI). 18. Investigation of selected cases.- Where in the course of assessment proceedings relating to the cases selected for sample scrutiny, the ITO suspects substantial concealment or tax fraud, he should immediately report the matter to the IAC who should move the CIT to transfer the case to a special/Central Circle for thorough investigation.