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CBDT clarification regarding refunds and scrutiny assessments

Time and again the Central Board of Direct Taxes (CBDT) is giving clarifications regarding the Income Tax refunds and the process of selection of cases for scrutiny assessment. There is a misconception among the general public that the Income Tax Officers (ITOs) can pick up the cases for scrutiny as per their wish.

Here is the clarification by CBDT Chairperson, Ms.Anita Kapur, (as appeared in the media)

  • The Income Tax department does not withhold refunds of small taxpayers nor does it generally select their tax returns for scrutiny and detailed analysis. In cases of neatly filed electronic Income Tax Returns (ITRs), the department has set a deadline of six months for refunds to be generated and sent to the taxpayer.
  • she would like to bust the myth and “fear psychosis” that once people file their tax returns, they automatically come on the radar of the taxman and then they are tracked
  • For large taxpayers, if it is a scrutiny case, then we have to hold it as per law till the scrutiny assessment is over but not for small taxpayers if their ITRs are all correct
  • She said her second area of concern over which she would like to put the record straight is the version that taxman puts the cases of small and middle-category taxpayers on the scrutiny list which entails submission of additional documents and visits to the assessing I-T officer. Citing an example, she said no tax inspector can just go to a person, like a fruit-seller, and say he has to file his I-T return or that his return is going to be scrutinized.
  • We are told that people are scared that once tax department knows about them after they have done filing (of ITR) then they are tracked and followed and they stay on the radar of the I-T department. We want to tell the taxpayers that only in less then one per cent cases you will be asked to come to the tax department for scrutiny of your case.
  • And even this less than one per cent category is not discretionary selection by the assessing officer. It is a computer-based programme where risk parameters are fed in, algorithm is developed, and based on that cases get selected.

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CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm.For further information or query, please email it to team@simplifiedlaws.com
  • Vivek

    I got a notice under section 143(2) from income tax department dated 28/08/2015 to appear before them on 9/10/2015 for assessment year 2014-15.

    For some reason i was out of station on 9/10/2015,so my CA took power of attorney reading :

    “i authorize , in the above mentioned case of mine representative i empower them to produce all the books of accounts and such other documents as shall be deemed necessary or advisable connected therewith explanation and statements given or made by him/them shall be binding on me. further,i empower them to plead,argue,submit details,papers & documents and give arguments before the
    various income tax & service tax authorities. I further empower him to sign on my behalf file petition or application to accept service of notices or summons to take deliveries of various orders,to produce or take back various papers/documents,to take adjournments,to apply for inspection and inspect
    files,record and to do all other necessary and lawful acts incidental in the case or connected proceedings on/our behalf.

    i hereby agree to rectify and own all acts,pleadings or statements made or done by him/them or either of them and i hereby agree not to hold the counsel for the result of the said cause in any circumstances whatsoever.”

    After giving this power to attorney to them i inquired with them after coming from out of station. They say that they have submitted the power of attorney with the local ito,and they dont have any receipt of that , and again a notice will come in april or may then we have to go till then wait for the notice.

    Please advice me about this is this normal or abnormal reply by the CA?

    Should i wait for another notice or is my CA doubtful please let me know ?

    Thanks

    • simplifiedlaws

      Hi Vivek

      Submitting POA along with basic documents ie copy of ITR is sufficient for initial notice.

      Even if it is not submitted you don’t need to worry. As your CA said, you will get one or more reminder notice may be after April 2016 to appear before him or submit documents. Department is in the process of completing scrutiny assessment for the AY 2013-14 for which time limit for completion of assessment is 31st March 2016.

      Department will not take any action as a natural justices without sending at least two or three reminder notice.