Guidelines for Central Information Branches. - Income Tax - 1874/1991

INSTRUCTION NO. 1874/1991 Dated: January 7, 1991 Instruction No. 1759 dated the 11th June, 1987, issued vide Board's F.No. 415/8/87-IT(Inv.i) laid down the procedure for collection, collation, verification, dissemination and utilisation of information collected from various internal and external sources by the Central Information Branches functioning under the Investigation Wing of the Department. 2. The experience has, however, shown that there is no uniformity with regard to the extent of verification carried out and the nature of information disseminated to the Assessing Officers by the various CIB Units under different Directors in Income-tax(Inv.) Further, it has not been possible to judge the efficacy of the CIB Units in the absence of a reporting system with regard to utilisation of information collected and verified by the CIBs. 3. In order to achieve uniformity with regard to procedures and for making CIB verification more effective, the guidelines, as per succeeding paragraphs, are laid down. THE EXISTING INSTRUCTION NO. 1759 WOULD STAND MODIFIED TO THE EXTENT OF THE CHANGES PROPOSED IN THESE GUIDLINES. 4. The CIB Units in the Investigation Wing will carry out verification of the transactions contained in the information collected by the Unit in all cases, including those where the party claims to be an existing assessee. Verification in the case of an eixsting assessee would mean obtaining of relevant information to ascertain whether the transaction stand duly reflected in the income and/or wealth declared by the assessee or not. For carrying out such verification, a reference may also be required to be made to assessment records Verification in the case of a person, who is not an existing assessee would mean obtaining of relevant information to ascertain whether the person has taxable income and/or taxable wealth or not. 5. For the purpose of carrying out verification the CIB Units will write to the concerned party by sending a letter as is laid down in Instruction NO. 1759. If necessary the language of the letter may be suitably modified to meet the requirements of verification in each case However, if there is no response from the party to the said letter enquiry should be pursued in every case and if necessary by using powers under section 131, 133 and 133A of the Income-tax Act. Such enquiry would also be taken to its logical conclusion, so as to indicate further action, if any, to be taken by the Assessing Officer. 6. On verification of the transaction, the following four types of situations may arise and are required to be dealt with as under:- i) In the cases of existing assessees, if on verification, the transaction is found to be duly accounted for income-tax/wealth-tax purposes, such cases will be kept apart by the CIB Units for transmission to the Assessing Officers for being placed on the relevant assessment records. ii) In the cases of existing assessees. if on verification, the transaction is not found to be accounted for and indicates evasion of Income-tax/wealth-tax, such cases will be marked for further action to be taken by the Assessing Officers. iii) In cases where the party is not an existing assessee, and on verification, there is an indication that the concerned party has taxable income/or wealth, such cases will also be marked for action to be taken by the Assessing Officer. iv) In cases where the party is not an existing assessee and, on verification of the transaction, it is noticed that the concerned party does not have taxable income and/or taxable wealth these cases will be simply filed in the Investigation Wing. 7. In cases, where the CIB Unit proposes that action is to be taken by the Assessing Officer, clear and specific recommendations about the nature of action will be given. The recommendations of the Income-tax Officer, CIB will be vetted by the concerned Assistant Director of Income-tax(Inv.) in each case. The Deputy Director of Income-tax(Inv.) and Director of Income-tax(Inv.) may see some cases at random to ensure that the recommendations for action are in order. Such of the cases, which have high revenue potential, may be brought to the notice of the concerned Commissioner of Income-tax by the Director of Income-tax(Inv.) through separate letters. 8. Details of these cases of the type referred to at S.No (ii)and (iii) of paragraph 6 will be listed as per columns 1 to 8 of Annexure IV appended to Instruction No. 1759 (copy enclosed for ready reference). The verified pieces of information will be appended to the list and forwarded to the range Deputy Commissioner at the end of every month. A copy of the list alone will also be forward to the concerned Commissioner of Income-tax. 9. In the type of cases referred to at S.No.(i) of paragraph 6, the verified pieces of information will be forwarded to the concerned Assessing Officers through a covering letter at the end of every quarter. The individual pieces of information will be placed by the Assessing Officers in the relevant assessment records of the concerned assessees. 10. For the purpose of monitoring the information received from the CIB Units with specific recommendations on further action to be taken by the Assessing Officer, a register in the format as per Annexure IV to Instruction No. 1759 will be maintained by the range Deputy Commissioners. Entries in this register will be made every month immediately on receipt of verified pieces of information from the CIB Units. The pieces of information will be transmitted to the concerned Assessing Officers immediately thereafter. No register will be maintained in the Commissioner's Office. The lists of cases received from the CIB Units every month will be placed in a file in the Commissioner's office. 11. A CIB and Survey register, in the following format, will be maintained by each Assessing Officer:- This register should be maintained in 3 parts for making entries of cases as follows:- (i) Cases where tax evasion by the existing assessees has been found by the CIB. (ii) Cases of new assessees identified by the CIB; (iii) Cases of new assessees located through survey under section 133B. The same register may be continued for a period of 3 years. 12. At the end of every month, the Assessing Officers will record the progress made in this area of work in all the three parts of the register in the following form:- 1. S.No. of cases in respect of which returns were accepted u/s 143(1)(a) during the month, or assessments were completed under scrutiny during the month. 2. Tax/additional tax determined u/s 143(1)(a) or on assessment, in respect of the cases mentioned at 1 above. 13. For reporting the results of utilisation of information, Proforma-I of the monthly report of Survey and New Assessees' prescribed, vide Board's letter F.No. 415/121/89-IT (Inv.I) dated 18th August, 1989 has been modified and the revised format is being issued separately. The progress recorded at the end of every month as per paragraph 12 above, should form the basis of furnishing information in part C of the proforma. Board's instruction NO. 1876 dated 7.1.91 issued from F.No. 414/17/90-IT(Inv.I) may be referred to in this context. 14. The Commissioners and the Deputy Commissioners of Income-tax will carry out random checks regarding action taken by the Assessing Officers in respect of the verified pieces of information which were forwarded by the CIB Units for action. This aspect will also be examined by the Commissioner/Range Deputy Commissioners during the course of inspection of the Assessing Officers work 15. The aforesaid instructions may be brought to the notice of all concerned and steps may be taken to implement them with immediate effect.