• Notification Date: 31-05-2023
• Notification No: N/A

CBDT: Avoiding Income Tax Department Queries will attract Full ITR Scrutiny

The Central Board of Direct Taxes (CBDT) has issued fresh guidelines and procedure to be followed for selecting income tax returns (ITRs) for complete scrutiny for the financial year 2023-24. The nodal tax department has said that avoiding queries from I-T Department will attract full scrutiny of the income tax return (ITRs) filed.   

It has added that the income tax department will examine tax returns based on where the survey was undertaken or where the income tax notices were served under Sections 142 (1) and 148 in cases of tax evasion, search and seizure.   

The guidelines, which were issued on May 24, have also highlighted the procedures to be followed by the I-T department for scrutiny.   

“Cases, in respect of which specific information pointing out tax evasion for the relevant assessment year is provided by any law enforcement agency, and the return for the relevant assessment year is furnished by the assessee,” CBDT said.   

Here’s the list of different parameters that the income tax department will follow to pick up scrutiny cases:  

Specific tax evasion: The I-T department will pick up cases where there is specific information pointing out tax evasion for a relevant assessment year provided by the law agency. The tax return for the relevant assessment year must be filed by the taxpayer.  

Under Section 148: It will also pick up cases if a notice has been served under Section 148, irrespective of whether the tax return has been filed in response to the notice.   

Section 148 of the Income Tax Act clearly says that if an individual's taxable income has escaped assessment from the IT department, an Assessing Officer will issue a notice to furnish necessary documents to prove that they are tax compliant. 

Under section 142 (1): If the taxpayer doesn’t file a tax return in response to the notice under section 142 (1), such cases will come under its scrutiny. The Section 142(1) notice is issued by the department for more clarification regarding the return filed.  

Section 142(1) of the Income Tax Act gives powers to the tax authorities to issue a notice for more clarification or for further details about where a return has been filed. If the return has not been filed, then they can ask to furnish the required information in a prescribed manner. 

Search & seizure cases: In addition, it will warrant a scrutiny if the income tax authorities have conducted a search and seizure prior to April 1, 2021, or after that.   

Survey cases: If the I-T department has conducted a survey under Section 133A based on the tax return filed, it can go full scrutiny. Under this, there are certain exclusions. Cases, where the order of withdrawal/approval has been reversed or set aside in appellate proceedings, would be excluded.