Many taxpayers got confused as to why a notice of assessment proceeding is issued to them. But they don’t know that every year CBDT issued guidelines mentioning the various parameters for manual selection of Income Tax Return (ITSs) for assessment. This year also, as per vide Notification dated 11th May 2022, the CBDT had issued such guidelines and had provided different parameters for compulsory selection of ITRs for complete scrutiny assessment proceedings, during the Financial Year 2022-23.
We have discussed those parameters below for your better understanding.
● In case, a survey was conducted under section 133A of the Income Tax Act during the previous year 2021-22, subject to the following exclusion.
Where, books of accounts, documents, etc. were not impounded and the returned income (excluding any disclosure of undisclosed income made during proceedings of the survey) is not less than returned income of the preceding assessment year. Although, the said exclusion will not be applicable in case the taxpayer has retracted from the disclosure made during the proceeds of the survey.
● In case, a search and seizure were conducted on the assessee under section 132 of the Income Tax Act or the requisition was made under section 132A of the Act, during the previous year.
● In case, a notice is issued to the assessee under section 142(1) of the Income Tax Act, calling for the return but no return was furnished in response to such notice.
Please note that, if a return was furnished in response to notice issued under section 142(1) but the said notice was issued due to information contained in NMS Cycle/AIR information/information received from Directorate of I&Cl, then such return is not be taken for compulsory scrutiny manually. Although, the selection of such cases will be through CASS.
● In case, a notice was issued to the assessee under section 148 of the Income Tax Act irrespective of the fact that a return has been furnished in response to such notice.
● In case, registration to the assessee under various sections such as section 12A, 35(1)(ii), 35(1)(iia), 35(1)(iii), 10(23C), etc. of the Income Tax Act have not been granted or have been after being grated was canceled or withdrawn due to any violation, but the assessee has still claimed the tax exemption available under section while filing the return.
Please note that, if in appellate proceedings the order of withdrawal or registration has been reversed then the return, in that case, will not be selected for complete scrutiny manually.
● In case, an addition is made in earlier assessment years on a recurring issue of law or fact or law & fact both, exceeding Rupees 25 lakhs in metro cities (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai & Pune) or exceeding Rupees 10 lakhs in other cities, if such an addition has become final due to the fact that no further appeal preferred or such addition upheld by appellate authorities as well or even if further appeal is pending for final order.
● In the case of tax evasion, where any information related to tax evasion for the relevant assessment year is provided by any law enforcement agency and the return is furnished by the assessee.
Apart from the above, International Taxation authorities and Central Circles Officers can select the returns for compulsory scrutiny, with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned.
P.S. The time limit for service of notice under section 143(2) for the complete scrutiny for the assessment year AY 2021-22 shall be completed by 30th June 2022.
