Working of special circles for professional and contractors. - Income Tax - 1131/CBDT

INSTRUCTION NO. 1131/CBDT Dated : January 4, 1978 The Board has received the Annual Report for 76-77 on the working of special circles for professional and contractors from Director of Inspection (Income-tax Audit). Although this is the second year of the functioning of special circles for such persons, the facts brought out in the Report show that there is scope for improvement in the functioning of the circles from various angles. 2. In many Commissioners charges, the work relating to centralisation of such cases has not seriously been taken up. The reports show that such circles are functioning in the following cities: Bangalore, Bombay, Calcutta, Delhi, Hyderabad, Agra, Kanpur, Lucknow, Madras, Patna, Ranchi, Pune and Thana. In some of these charges, circles have been created only for doctors and lawyers whereas others such as architects, engineers, etc.., have been left out. In some charges circles have been created but all cases have not been transferred to these circles. The Board, therefore, desire that the work of organisation of special circles for professionals and contractors may be completed expeditiously and it should be ensured that all cases falling under this category are centralised in these circles. The Commissioners should also examine the feasibility of creating special circles in cities other than those mentioned above. In particular, they should examine whether such circles should be created in the following cities: Ahmedabad, Allahabad, Chandigarh, Cuttack, Cochin, Jaipur, Jabalpur, Indore Nagpur and Trivandrum. 3. The object of formation of these circles is to ensure that all professionals and contractors having taxable income/wealth are brought to taxnet and to provide necessary expertise to the officers in making their assessments. However, the report of the Director of Inspection (Income-tax Audit) shows that the number of cases in with penalties are imposed or potential cases for prosecution have been built-up is quite insignificant. It is, therefore, obvious that even where special circles have been created, assessments are being made mostly in a routine manner. This has defeated the very purpose for which these circles were created. The Commissioners are, therefore, requested to look into the matter and issue instructions to the Income-tax Officers and the Inspecting Assistant Commissioners, so that all suspected cases of tax-evasion requiring detailed investigation, are not completed in a routine manner. For the removal of doubts, it may be mentioned that cases of professionals and contractors coming under the Summary Assessment Scheme will be dealt with as summary assessment . In other words, in the operation of the Summary Assessment Scheme, there is no distinction between professionals and non-professionals. It is expected that the Inspecting Assistant Commissioners incharge of these circles should remain in close and constant touch with the work of survey for discovering new assessee and give requisite guidence to the assessing officers in making proper investigation in important cases and cases of suspected tax evasion. 4. It has also come to the notice of the Board that some of the Commissioners in whose charges such special circles are functioning are not sending evaluation reports to the Director of Inspection (Income-tax Audit) in the format prescribed by the Board in their F.No.415/2/76-II (Inv), dated 20th April, 1976 (printed below). These evaluation reports are expected to reach the Director of Inspection (Income-tax Audit) by 15th May each year. All Commissioners should ensure that the report is submitted in the proper form and sent to the Director of Inspection (Income-tax Audit) by the due date. To summarise, action on the following lines are called for on the part of the Commissioners:- (i) starting special circles for professionals and contractors in more places, wherever considered feasible; (ii) to expand the jurisdiction of the circles so as to include contractors, architects, engineers, as well as doctors, lawyers and chartered accountants; (iii) to ensure that all professionals and contractors having taxable income are brought on the registers of the Department and their cases are dejure and defacto transferred to these circles. (iv) to see that assessments are made properly in these cases and important cases and cases of suspected tax evasion are properly dealt with; (v) to send evaluation reports to Director of Inspection (Income-tax Audit) on due date. The Commissioners of Income-tax are requested to take action on the above lines and send a compliance report so as to reach the Board by 15th May, 1978.