Safeguards and controls over large refunds. - Income Tax - 1873/1991

INSTRUCTION NO. 1873/1991 Dated: January 4, 1991 In order to ensure that proper safeguards and controls are exercised over large refunds, the Board has decided that, in modification of earlier instructions on the subject, refunds of over Rs. 5 lakhs in metropolitan cities of Bombay, Calcutta, Delhi, Madras and Ahmedabad and over Rs. 1 lakh in all other places would be issued only after prior approval of the Commissioner of Income-tax. 2. Before according approval, the Commissioner of Income-tax will, inter alia, specifically look into the following aspects:- i) that there are proper and justifiable reasons for the huge claim of refund; ii) that the justification or need to with-hold refund in terms of section 241 has been duly considered; and iii) that the possibility of adjusting the refund against existing demand or any demand which can be raised in the near future has been considered and appropriate necessary action taken. 3. In case of refunds under section 143(1)(a) the following will also be looked into:- i) all prima facie adjustment/disallowances have been made; and ii) that the need for taking up the case for scrutiny by issue of notice under section 143(2) on the basis of existing guidelines has been considered and appropriate necessary action taken in time. 4. The Deputy Commissioner of Income-tax will approve each case where refund over Rs. 25,000 is to be issued. He will exercise the same checks as prescribed for Commissioner of Income-tax in pargraphs 2 and 3 above. In regard to refund upto Rs. 25,000 the assessing officer will also exercise similar checks.