CBDT relaxes scrutiny norms in a few cases

[SUKU OPTIMISTIC]

NEW DELHI: The Central Board of Direct Taxes has decided to relax
norms on scrutiny of tax payers whose premises have been surveyed by
the officials, a step aimed at encouraging evaders to pay up.

"The decision is likely to provide relief to thousands of taxpayers
and it would save them from harassment at the hands of taxmen apart
from litigation costs," said a senior Finance Ministry official. The
decision has been taken following Finance Minister P Chidambaram's
assertion that government wanted to send a message that those who
comply with the tax laws would not be harassed by the tax officials.

CBDT has decided to exempt a taxpayer from scrutiny after a survey if
his account books are not impounded, there is no retraction of income
declared during the survey and income declared excluding additional
tax demanded by the department is not less than the last fiscal, the
official said.

He said the decision would immediately save about 15,000 taxpayers,
whose premises were surveyed in 2006-07 and those who filed returns
last year, from scrutiny. Going by earlier norms, they would have to
appear before the assessing officer for scrutiny of their returns.

Under the scrutiny norms, the tax officials would issue a notice to
the assessee to appear in person on a particular day and provide
detailed information relating to statements of all bank accounts,
matching of money withdrawals with expenses, including those on credit
cards besides cross-checking the perks, and scrutinies other incomes
like interest-free loans.

Income Tax officials said the scrutiny would usually require taxpayers
to hire chartered accountants or corporate lawyers to represent their
case before the department. In 2008-09, the Department is expected to
scrutinise 3.8 lakh returns. Of this, about 2.50 lakh cases will be
selected through the Computer Aided Scrutiny Selection (CASS) while
another 1.30 lakh will be chosen manually.

Under Section 133 A of the Income Tax Act, the tax official could
conduct survey at the business and residential premises of a taxpayer
to examine books of accounts, documents, stocks, business records and
cash. In 2007-08, the direct tax collections, including personal
income tax and corporate tax stood to Rs 3,14,468 crore.

It witnessed an increase of 38.61 per cent to Rs 57,373 crore in the
first quarter of this fiscal as compared to Rs 41,391 crore mopped up
during the same period a year ago.

N.Sukumar
Research Analyst
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