“Limited Scrutiny ‘ cases can be converted in to “Complete Scrutiny” with the approval of CIT only if there is potential escapement of income exceeding Rs. 5 Lakh (Rs. 10 Lakh for metro cities)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi
Instruction No. 20/2015
Dated-29th of December, 2015
Subject: Scrutiny Assessments-some important issues and scope of scrutiny in cases selected through Computer Aided Scrutiny Selection (‘CASS’)-reg .-
The Central Board of Direct Taxes (‘CBDT’) , vide Instruction No. 7/2014 dated 26 09.2014 had clarified the extent of enquiry in certain category of cases specified therein , which are selected for scrutiny through CASS . Further clarifications have been sought regarding the scope and applicability of the aforesaid Instruction to cases being scrutinized.
- In order to facilitate the conduct of scrutiny assessments and to bring further clarity on some of the issues emerging from the aforesaid Instruction, following clarifications are being made.
i Year of applicability : As stated in the Instruction No. 7/2014 , the said Instruction is applicable only in respect of the cases selected for scrutiny through CASS-2014
ii Whether the said Instruction is applicable to al l cases selected under CASS : The said Instruction is applicable where the case is selected for scrutiny under CASS only on the parameter(s ) of AIR /CIB/26AS data . If a case has been selected under CASS for any other reason(s)/parameter (s) besides the AIR /CIB/26AS data , then the said Instruction would not apply.
iii Scope of Enquiry : Specific issue based enquiry is to be conducted only in those scrutiny cases which have been selected on the parameter(s ) of AIR/CIB/26AS data . In such cases , the Assess ing Officer , shall also confine the Questionnaire only to the specific issues pertaining to AIR/CIB/26AS data . Wider scrutiny in these cases can only be conducted as per the guidelines and procedures stated in Instruction No. 7/2014.
iv Reason for selection: In cases under scrutiny for verification of AIR/CIB/26AS data , the Assessing Officer has to intimate the reason for selection of case for scrutiny to the assessee concerned.
- As far as the returns selected for scrutiny through CASS-2015 are concerned , two type of cases have been selected for scrutiny in the current Financial Year- one is ‘Limited Scrutiny’ and other is ‘Complete Scrutiny’ . The assessees concerned have duly been intimated about their cases falling either in ‘Limited Scrutiny’ or ‘Complete Scrutiny’ through notices issued under section 143(2) of the Income-tax Act, 1961 (‘Act’). The procedure for handling ‘Limited Scrutiny’ cases shall be as under:
- In ‘Limited Scrutiny ‘ cases , the reasons/issues shall be forthwith communicated to the assessee concerned.
- The Questionnaire under section 142( 1) of the Act in ‘Limited Scrutiny ‘ cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny . Further . the scope of enquiry shall be restricted to the ‘Limited Scrutiny ‘ issues.
- These cases shall be completed expeditiously in a limited number of hearings.
- During the course of assessment proceedings in ‘ Limited Scrutiny ‘ cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges , the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s) , then , the case may be taken up for ‘Complete Scrutiny ‘ with the approval of the Pr. CIT/CIT concerned . However , such an approval shall be accorded by the by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating ‘Complete Scrutiny’ in that particular case. Such cases shall be monitored by the Range Head concerned . The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such cases. (For the present purpose, ‘Metro charges ‘ would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad ).
- The Board further desires that in all cases under scrutiny, where the Assessing Officer proposes to make additions or disallowances , the assessee would be given a fair opportunity to explain his posit ion on the proposed additions/disallowances in accordance with the principle of natural justice . In this regard, the Assessing Officer shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/reasons forming the basis of the same . Before passing the final order against the proposed additions/disallowances due consideration shall be given to the submissions made by the assessee in response to the show cause notice.
- The contents of this Instruction should be immediately brought to the notice of all concerned for strict compliance.
- Hindi version to follow.
Under Secretary to Government of India
(F. No. 225/269/2015-ITA.II)