Insights

Direct Tax Alert

Guidelines for Compulsory Scrutiny during the Financial Year 2021- 22

June 23, 2021

Guidelines for Compulsory Scrutiny during the Financial Year 2021- 22

The Central Board of Direct Taxes (“CBDT”) vide F.No. 225/61/2021/ITA-II, dated 10th June, 2021, has issued guidelines for Pr. Chief CIT/Chief CIT/Pr. DGIT/DGIT for Compulsory Scrutiny in certain cases. Under these guidelines, the parameters have been prescribed for compulsory selection of returns for Complete Scrutiny during the Financial Year (“FY”) 2021-22. These guidelines may help taxpayers understand, under which category they may fall for the purpose of initiating assessment.

S.No. Types of Cases Parameters Selection for Compulsory Scrutiny Procedure of Assessment Proceedings
1 Survey u/s 133A of the Income-tax Act, 1961 (“Act”) Books of accounts, documents etc. were impounded. Yes

(i) issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer (“AO”); and

(ii) transfer of cases to Central Charges u/s 127 of the Act within 15 days of issue of aforesaid notice.

Books of accounts, documents etc. were not impounded, but the assessee has retracted from disclosure made during the Survey. Yes

(i) issue of notice u/s 143(2) of the Act by the Jurisdictional AO; and

(ii) assessment proceedings will be conducted by National Faceless Assessment Centre (“NaFAC”).

(iii) The AO shall upload the Survey Report in the ITBA at the time of issue of notice u/s 143(2) of the Act.

Books of accounts, documents etc. were not impounded and returned income is not less than returned income of preceding assessment year (“AY”). No Not Applicable
2 Search and Seizure cases

Assessment in search and seizure cases:

(i) u/s 153A,153C read with section 143(3) of the Act; and (ii) for return filed for AY relevant to previous year in which the search was conducted u/s 132 or requisition was made u/s 132A of the Act.
Yes

Cases where return is furnished u/s 153C of the Act

Issue of notice u/s 143(2) of the Act by the Jurisdictional AO;

Cases where no return is furnished u/s 153C of the Act

Issue of notice u/s 142(1) of the Act calling for information by the Jurisdictional AO;

Above cases shall be transferred to Central Charges u/s 127 of the Act within 15 days of issue of notice u/s 143(2)/142(1) of the Act.

3 Notices u/s 142(1) of the Act, have been issued No return has been furnished in response to a notice u/s 142(1) of the Act. Yes Compulsory scrutiny by NaFAC
Return has been furnished in response to notice u/s 142(1) of the Act where such notice was issued due to the information contained in Non-Filers Monitoring System (NMS)/AIR information/ information received from Directorate of Intelligence and Crime Investigation (I&CI). No Selection of such cases for scrutiny will be through Computer Aided Scrutiny Selection (CASS) Cycle.
Return has been furnished in response u/s 142(1) of the Act where such notice was issued due to the specific information received from Law Enforcement Agencies, including the Investigation wing; Intelligence/ Regulatory Authority/ Agency; Audit Objection; etc. Yes

(i) issue of notice u/s 143(2) of the Act by the Jurisdictional AO; and

(ii) assessment proceedings will be conducted by NaFAC.

4 Notices u/s 148 of the Act, have been issued No return has been furnished in response to notice. Yes

(i) issue of notice u/s 142(1) of the Act by the Jurisdictional AO, calling for information regarding the issues raised in notice u/s 148; and

(ii) assessment proceedings will be conducted by NaFAC.

Return is furnished in response to notice. Yes

(i) issue of notice u/s 143(2) of the Act by the Jurisdictional AO; and

(ii) assessment proceedings will be conducted by NaFAC.

5 Cases related to registration/ approval under sections 12A, 35(1)(ii)/ (iia)/ (iii), 10(23C) etc. of the Act. Registrations/approvals have not been granted or have been cancelled/withdrawn by the Competent Authority yet the assessee has been found to be claiming tax-exemption/deduction in the return. Yes

(i) issue of notice u/s 143(2) of the Act by the Jurisdictional AO; and

(ii) assessment proceedings will be conducted by NaFAC.

Orders of withdrawal of registration/approval have been reversed/set-aside in appellate proceedings. No Not Applicable
   

In respect of above guidelines, following points may also be noted:

  • Cases which are selected for compulsory scrutiny by the International Taxation and Central Circle charges, following the above prescribed guidelines, shall, as earlier, continue to be handled by the same charges.
  • Amendments brought vide Finance Act, 2021, provides for reduction in the time limit for service of notice u/s 143(2) of the Act to three months from the end of the Financial Year in which the return is filed. Therefore, service of notice u/s 143(2) of the Act for compulsory scrutiny will have to be completed by 30.06.2021.
 

Last updated: 23/06/2021

Article contributed by:

CA Vaibhaw Agrawal / CA Mamta Verma

MBG Corporate Services

Also Read:- 


What can we help you achieve?

Stay one step ahead in a rapidly changing world and build a sustainable future with us.

Get a quote