Clarification in Board's Instruction-1072 dated 1-7-1977. - Income Tax - 1172/CBDT

INSTRUCTION NO. 1172/CBDT Dated : May 8, 1978 Section(s) Referred: 143(1) Statute: Income - Tax Act, 1961 Clarification have been sought by some of the Commissioners on the scope of certain points dealt with in Board's Instruction* 1072 dated 1-7-1977 (F.No. 237/16/76-A PAC-II). the requisite clarifications are given below: Point No. 1: What is the scope of the expression "fresh investment" appearing in item(x) of paragraph 4 of Instruction No. 1072? Does it include cash credits appearing in the balance-sheet? Clarification : Item (x) of paragraph 4 of Instruction NO. 1072 would be applicable only to "no account" cases. In regard to others, it has been decided that where the increase in the totals of the balance-sheets is Rs. 1 lakh or more compared to those of the immediately preceding year, the case would go out of the Summary Assessment Scheme. Point NO. 2: There are cases wherein declarations showing unaccounted investment of Rs. 25,000 or more were filed by the assessees under section 3 of the Voluntary Disclosure of Income and Wealth Act, 1976. Should such cases be excluded from the scope of the Summary Assessment Scheme? Clarification : Declarations under the Voluntary Disclosure of Income and Wealth Act, 1976 should not be taken cognizance of to decide whether an assessment should be dealt with under the Summary Assessment Scheme or not. Point No. 3 : Paragraph 3 of Board's Instruction No. 1072 states that the Scheme applies to the sum total of the taxable income and ' exempted income' declared in the return. Does the term 'exempted Income' include deductions claimed under Chapter VI-A of the Income-tax Act? Clarification : 'Exempted Income' referred to in para 3 of the Instruction is the income claimed by the assessee as not-taxable and shown in part III of the return of income. It does not include deductions under Chapter VI-A. Point No. 4 : Can an assessment in respect of which notice under section 143(2) has been issued, be made under the Summary Assessment Scheme? Clarification : After a notice under section 143(2) for any assessment year has been issued and served, the assessment for that year cannot be made under section 143(1). A serious view should, however, be taken where a notice under section 143(2) is issued even though the assessment was otherwise required to be disposed of under the Summary Assessment Scheme. Point No. 5 : There are cases where the returned income is within the prescribed limit for summary Assessment Scheme but because of the disallowance of items like donations, etc., the assessable income exceeds the prescribed limit. Can such an assessment be completed under the Summary Assessment Scheme? Clarification : No. Such an assessment cannot be completed under the Summary Assessment Scheme because the assessee is required to add back inadmissible items like donations, etc., while computing the assessable income and if he had done so, his case would have gone out of the ambit of the Scheme. Point No. 6 : In cases where earlier assessments were completed on an income of Rs. 75,000 or more in respect of registered firms and Rs. 50,000 or more in other cases but reduced in appeal/revision etc. below the aforesaid limit, should the subsequent assessment be made under the Summary Assessment Scheme if other conditions are fulfilled? Clarification : Yes, Such cases should be completed under the Summary Assessment Scheme if other conditions are fulfilled. Point No. 7 In cases where penalty proceedings under section 271(1)(c) were initiated but dropped before the subsequent assessment was taken up, should the assessment be completed under the Summary Assessment Scheme? Clarification : Yes. If penalty proceedings are dropped before the assessment is taken up, the case should not on that score be excluded from the ambit of the Scheme. Point No. 8 Can the assessment of the partners of the firms be made under the Summary Assessment Scheme by taking their share income provisionally? Clarification : Vide Board's Instruction No.1129, it has been categorically stated that the completion of partner's assessments by adopting the share income should be discouraged. It is reiterated that a partner's assessment should normally be completed after the assessment of the firm so that the necessity of taking his share income provisionally is avoided. Only in a case where the firm is assessed by a different ITO, the assessment of the partner may be completed by taking his share income provisionally if the assessment of the firm is not likely to be completed in the near future and the case is getting time-barred within the next 3-4 months. Every case where a partner's assessment is completed by taking his share income provisionally, should be entered in the Rectification Register and the entry number of the said register should be mentioned in the ITO's copy of the assessment order. Urgent steps should be taken to get the share income from the ITO assessing the firm and the assessment revised soon after the receipt of the share income. 2. Consequent upon the clarifications given above, the following amendments may be made in the check-sheet given as Annexure I to Board's Instruction No. 1072 dated 1-7-1977:- Part II-Item 3- Instead of the words "documents accompanying the return indicate fresh investment of Rs. 25,000 or more". Substitute 'In no account' cases documents accompanying the return indicate fresh investment of Rs. 25,000 or more. In other cases the increase in the totals of the balance-sheet is Rs. 1 lakh or more compared to those of the immediately preceding year'.