All aspects to be taken into account at the time of original assessment specially with regard to provisional assessments u/s 141A. - Income Tax - 1443/CBDT

INSTRUCTION NO. 1443/CBDT Dated: December 31, 1981 The C AG of India in his report for the year 1979-80 has brought to notice instances of two cases where there has been an aggregate tax under-charged of nearly Rs.18 lakhs due to failure of the AO to take into account refunds issued by making a provisional assessment u/s.141 A while completing the regular assessment. The relevant paragraph which gives the full facts as under. In 2 cases the assessee-companies furnished their returns of income for the assessment year 1976-77 in September 1976 declaring incomes of Rs.21,10,390 and Rs.7,81,310 and claiming credits of Rs.17,74,000 and Rs.16,55,000 as advance tax and Rs.14,889 and Rs.212,486 as TDS respectively. As the amounts of advance tax paid together with TDS exceeded the tax payable on the basis of income returned the department made provisional assessment in April 1977 and refunded in May 1977 sums of Rs.5,70,140 and Rs.12,23,652 respectively being the excess tax paid. The regular assessments were completed later in September 79 on total incomes of Rs.38,60,970 and Rs.43,17,930 and tax demands aggregating Rs.12,66,955 were against the assessees after adjustment of the entire advance tax of Rs.34,29,000. As a result there was an aggregate tax undercharge of Rs.17,93,792 for the assessment year 1976-77. 2. The board has taken grave notice of this failure in two of the bigger scrutiny cases assessed in a company circle. The workload of the ITOs in company circles has been purposely kept low with a view to ensuring that all aspects are taken into account when making assessments and mistakes do not occur in company cases. It is obvious that the ITO while completing the regular assessments has proceeded in a routine manner without exercising proper perspective and circumspection resulting in his failure even to take actions which are obvious. Had the provisional assessment register been maintained properly, entries noted therein contemporaneously and also the earlier ITNS-150 A forms which sought to have been filed in the assessment record been verified to check the details of refunds issued and filled in the relevant cage of the form, such mistake could not have happened. There is also no excuse for such cases normally belonging to the immediate audit category having not been checked by the IAPs. The actions taken are purely indefensible and it is time, that prompt and critical attention is paid to such matters to eliminate the possibilities of recurrences of such mistakes. 3. The board had issued instructions from time to time that the actions taken in the top 100 cases of each I.T. Circle/IAC's range/Commissioners charge should be checked for ensuring that suitable timely action be taken on all the matters pending in such cases. The ITO should have been alert from the beginning that in a case of this type a provisional assessment u/s.141 A was likely to have been made and should have checked up this aspect particularly while completing the regular assessment. Had this been done, perhaps the mistake could have been avoided. CITs, IACs, ITOs should ensure that instructions regarding taking immediate and prompt action in the top 100 cases of their charges/ranges/circles are invariably adhered to. 4. The format of ITNS-150A has since been revised. In the revised format, column F of part III under details of tax computation provide for the entry of tax payable/paid or refundable/refunded as per the original assessment or prior assessment on date. It is clarified that the order prior assessment occuring in this column will also include a provisional assessment completed prior to the completion of the original assessment and the results of such assessment should be indicated in this column before determining the additional tax payable/refundable in col.G of part III of the said form. 5. These instructions should be brought to the notice of all AOs who should be advised to ensure that such mistakes in calculation do not occur in any case. In bigger cases particularly where even the tax calculations have to be checked by various authorities including the ITOs there should be no occasion for rectifying it later on such grounds, as arithmetical errors, wrong computation of taxes, wrong credit for taxes etc. There should also be no occassion where interest has to be paid due to delay in giving effect to appellate revisionary or rectificatory orders. Instructions regarding checking of tax calculations including taking note of the aspects here before referred should be adhered to. The IAPs should also ensure that such cases are checked up by them promptly and any errors get rectified immediately.