1.In super cession of earlier instructions on the above subject the Boardhereby lays down the following procedure for selection of returns /cases of Non-Corporate Assessees for scrutiny during the currentfinancial year i.e. 2007-08.
2. The following categories of cases shall be compulsorily scrutinized;-
i) All assessment pertaining to search and seizurecases.
ii) All assessment pertaining to surveys conducted u/s133A of the Income tax Act.
iii) [1]All returns where deduction claimed underChapter VIA of the Income tax Act is Rs. 25 lakhs or above in stationsother than the cities on computer network.
iv) 1All returns, including those of non-residents, whererefund claimed is Rs. 5 lakhs or above in stations other than the citieson computer network.
v) (a) All cases in which the CIT (Appeals) or ITAT hasconfirmed an addition / disallowance of Rs.5 lakhs or above or if theassessee has conceded on addition in any proceeding Assessment year andIdentical issue is arising in the current year. But if the issueinvolves a substantial question of law, the cases may be picked up forscrutiny irrespective of the quantum of tax involved. However, if theaddition has been deleted by a superior appellate authority and theDepartment has accepted that decision, the case need not be taken up forscrutiny.
(b) All cases in which an appeal is pending before the CIT (Appeal)against an addition / disallowance of Rs.5 lakhs or above, or thedepartment has filed an appeal before the ITAT against the order of theCIT (Appeal) deleting such an addition / disallowance and an identicalissue is arising in the current year. However, as in (i) above, thequantum ceiling may not be taken into account if a substantial questionof law is involved.
(vi) All returns filed by statutory bodies, marketing committeesand other authorities assessable to income tax.
(vii) All cases of banks and Non-banking financial institutions withdeposits of Rs. 5 crores and above
(viii) Cases of universities , educational institutions, hospitals,nursing homes and other institutions for rehabilitation of patients(other than those, which are substantially financed by the Government),the aggregate annual receipts (including donations credited to thecorpus / any other fund) of which exceed Rs 10 crores in Delhi, Mumabi,Chennai, Kolkota, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 5crores in other places (Ref. S 10 (23c) & Rule 2 BC)
(ix) All cases where exemption is claimed under section 11 ofIncome Tax Act and the gross receipts (including donations credited tothe corpus / any other fund) exceed Rs. 5 crores in Delhi, Mumbai,Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 1crores in other Places.
(x) (a) All cases where total value of InternationalTransactions (as defined u/s 92 B of the Income tax Act) exceed Rs.15crores)(b) In all other cases where the Transfer Pricing Audit carried out inthe earlier year had led to an adjustment / addition to the totalincome.
(xi) All cases of stockbrokers and commodity brokers as well astheir sub brokers where brokerage received is disclosed at Rs. 1 croreor above.
(xii) All cases of stockbrokers and commodity brokers as well astheir sub brokers where there are claims of bad debts of Rs. 5 lakhs ormore.
(xiii) All cases of professionals with gross receipts of Rs.20 lakhsor more if total income declared is less than 20% of gross professionalreceipts.
(xiv) All cases of deductions under sections 10 A / 10 AA / 10BA / 10B of the I.T. Act exceeding Rs.25 lakhs.
(xv) All cases of contractors (excluding transporters) whose grosscontractual receipts exceed Rs. 1 crores if total income declared fromcontract work is less than 5% of gross contractual receipts.
(xvi) All cases of builders following project completion method.
(xvii) All cases in which fresh capital introduced during the yearexceed Rs.50 lakhs in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad,Bangalore and Ahmedabad and Rs.10 lakhs in other cities.
(xviii) ¹All cases in which new unsecured loanintroduced during the year exceed Rs.25 lakhs.
(xix) All cases in which deduction u/s 80IA(4), 80 IB, 80IC, 80JJA,80JJAA, 80LA, 10 (21), 10(22B), 10(23A), 10(23B), 10(23C), 10 (23D), 10(23EA), 10 (23FB), 10 (23G), 10(37), 10 A, 10AA, 10B, or 10BA of theI.T. Act is claimed for the first time.
(xx) *All cases in which loss from house property is more thanRs.2,50,000/-
(xxi) *All cases in which investment in property is more than fivetimes the gross receipts (i.e. purchase of property (008 from AIR) /(Gross Total Income (746) + Agricultural Income (762) + Income Claimedexempt (125)>5)
(xxii) *All cases in which sum of short term capital gains u/s 111Aand long term capital gain is more than Rs 25 laksh.(xxiii) *All cases in which sale of property has been shown as per AIRreturn but no capital gains have been declared in the return of Income.
(xxiv) *All cases in which commission paid ismore than Rs. 10 lakhs
(xxv) *All cases having business of real estates with gross turnoverexceeding Rs. 5 crores.
(xxvi) *All cases having business of hotels/touroperations with gross turnover exceeding Rs. 5 crores if net profitshown is less than 0.05%
(xxvii) *All cases in which total depreciationclaimed at the rates of 80% and 100% is more than Rs.25 lakhs.
(xxviii) All cases in which net agricultural incomeis more than Rs 10 lakhs.
(xxix) All cases covered by retrospective amendment in setion 80 IA ofthe I.T. Act, 1961 brought by the Finance Act, 2007 i.e. all persons whomerely executive the civil construction work or any other works contractentered into with the undertaking or enterprise reffered to in Sec 80 IAof I.T Act 1961.
NOTE: If a case has been assessed earlier under scrutiny for at least 2A.Y.s but in each of the immediately proceeding two years assessed u/s143(3) of the I.T. Act, total additions or disallowances made /sustained in appeal are less than 5 lakhs in Delhi, Mumbai, Chennai,Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad and less than Rs. 1lakhs in other places then such a case should be excluded fromcompulsory scrutiny under clauses (ii). (vi), (vii), (viii), (ix), (x),(xii), (xiii)
2.Provided that the above exclusion clause shall not apply in casesinvolving substantial question of law.
3. In addition to above, where the CCIT / DGIT (International taxation)/ DGIT (Exemptions), on the matter having been brought to his notice byan authority below, is satisfied that the case needs to be taken up forscrutiny, the CCIT / DGIT (International taxation) / DGIT (Exemptions),for reasons to be recording in writing, may approve the selection of thecase for scrutiny.
4. The CCIT / DGIF (International Taxation) / DGIT (Exemptions) mayissue suitable guidelines for reducing / increasing the number of casesselected under specific clauses of para 2, for proper management of theworkload as well as to avoid large scale transfer of cases from onejurisdiction to another.
5. All returns field in response to notice issued U/s 148 of theI.T. Act shall be selected for scrutiny.
6. In addition to above, selection of cases out of returnsprocessed on AST will be made through a Computer Assisted ScrutinySystem (CASS). Separate instructions in this regard will be issued bythe DIT (Systems).
7. List of cases up for scrutiny during each month shall besubmitted by the Assessing Officer to the CIT and Addl. CIT, Range by15th of the following month and shall also be displayed on the NoticeBoard of the office.
[1] Selection of cases under these criteria shall not be done manuallyin the cities on computer network but through Computer Assisted ScrutinySystem (CASS), for which necessary provisions have been made in the CASSsoftware being issued by Directorate of Income tax (Systems)
¹ Selection of cases under these criteria in the cities on theComputer network would be made through Computer Assisted ScrutinySystems (CASS) in respect of cases where audit report U/s 44 AB has beenfiled. In all other cases in threes cities and in all cases in citiesnot on the Computer Network, the selection would be made manually.
* Selection of cases under these criteria shall not be done manually inthe cities on computer network but through Computer Assisted ScrutinySystem (CASS), for which necessary provisions have been made in the CASSsoftware being issued by Directorate of Income tax (Systems)
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