I-T returns scrutiny to fall in number but rise in intensity

The number of income tax (I-T) returns picked for scrutiny will be reduced this financial year to about 5 per cent of the figure in previous years. This is part of the new guidelines issued by the Central Board of Direct Taxes (CBDT) to all field officials, for picking returns for scrutiny this financial year. The idea is to select fewer cases but do an in-depth scrutiny so that the resultant orders hold good in the appellate fora and finally result in additional revenues.

The aim is to focus on a few cases rather than spread the manpower resources over a large number. The idea is to make scrutiny so effective that it acts as a deterrent to tax evaders.

 The selection of cases for scrutiny will be based on information available with the I-T department and their potential. Claims of heavy deductions from taxable income and large refunds are also to be considered while choosing the returns for scrutiny, according to the instructions issued by the CBDT.

As per these instructions, the total number of cases selected for scrutiny will be 30 in each I-T range having only company cases and 40 in other ranges. Earlier, no such limit on the number of cases to be picked per range was specified. Thus, the number of such cases will be reduced to about 5 per cent of the number normally picked in previous years, I-T sources said.

However, these 30 or 40 cases will be in addition to the tax returns picked for scrutiny due to directions of courts and orders by I-T appellate fora. These will also be in addition to cases where the files are reopened after information pointing to tax evasion becomes available after the assessment is closed. Further, all search cases will be done at the central circles and will be scrutinised, the instructions stated.

The instructions also make it clear that since the number of scrutiny cases will now be limited the officers will be required to devote extra time to the rest of the work in the department.