Write off of irrecoverable arrears. - Income Tax - 1740/CBDT

INSTRUCTION NO. 1740/CBDT Dated: December 29, 1986 It is stated that the powers at present delegated to the various authorities with the approval of the Cabinet for according administrative approval for write off of irrecoverable Income-tax arrears are as under :- (i) between Rs. 1 lakh : and The Commissioner of Income-tax 10 lakhs. (ii) between Rs.10 lakh Individual Members of the Board 25 lakhs. (iii) between Rs. 25 lakhs Full Board. Rs. 50 lakhs. (iv) Above Rs. 50 lakhs Full Board with the prior approval of the Minister. The exercise of the above powers, however, is regulated by the various instructions issued by the Board from time to time. Where the tax arrears exceed Rs. 1 lakh, but are less than Rs. 10 lakhs, the C.I.T may pass orders for write-off after receiving the approval of the Zonal Committee. Where the tax arrears are Rs. 10 lakhs or above, in each case the CIT is required to take the prior approval of the C.B.D.T. before passing the orders of write-off of tax arrears as irrecoverable. For this purpose he has to send a proposal for write-off, duly recommended by the Zonal Committee consisting of three Commissioners of Income-tax including the C.I.T. concerned to the Board. The administrative approval to the proposal thereafter is accorded as outlined above. 2. According to Boards Instruction No. 1394 dated 4-5-1981, it has been made clear that in every proposal for write-off the total amount of tax arrears should be worked out after including interest chargeable for late payment of tax upto the end of the month preceding the month in which the proposal is considered by the Zonal Committee. The question whether the TRO's interest under section 220(2) should be included in working out tax arrears was examined in consultation with the Ministry of Law. The Ministry of Law has opined that irrespective of the fact that whether interest is capable of being recovered or not, it has to be worked out in the manner envisaged under Rule 119 of the I.T Rules and should be included in the total amount of tax arrears when write-off of tax arrears is considered. It has been noticed that in many cases coming up for consideration before the Board the arrears on account of addition of TROs' interest under section 220(2) form a sizeable chunk of the total arrears so much so many cases are required to be placed before the Board and even before the Minister for obtaining the administrative approval for write-off. 3. Now with the creation of the post of the Chief Commissioners of Income-tax in some charges, the question of enhancement of powers was examined by the Board in consultation with the Department of Expenditure of the Ministry of Finance. It has now been decided that in charges where Chief Commissioners are functioning, the irrecoverable tax arrears above Rs. 10 lakhs and upto Rs. 15 lakhs may be written off by the Chief Commissioner of Income-tax with the recommendations of the Zonal Committee. Subject to this modification the powers and procedure for writing off of irrecoverable Income-tax arrears are regulated by the existing instructions issued by the Board from time to time. 4. These instructions may please be brought to the notice of all the officers working in your charge.