Basis of taxability u/s 195(2). - Income Tax - 1352/CBDT

INSTRUCTION NO. 1352/CBDT Dated: September 9, 1980 It has come to the notice of the Board that in a case where an order u/s.195(2) of the I.T.Act 1961 was passed estimating the income taxable in India the basis of such an estimate was not given. On an appeal filed by the assessee the Appellate Tribunal has held inter-alia that the order passed u/s.195(2) was bad in so far as no basis for estimating the taxable income was given by the ITO. The standing counsel is also of the view that this was a very serious defect which completely vitiated the ITO's order. 2. The Board therefore desire that while determining any sum chargeable to tax in an order u/s.195(2) of the Act, the ITO should clearly give the basis on which the taxable income is determined so that the determination can stand the test of appeal. 3. These instructions may kindly be brought to the notice of all officers working in your charge.