Income Tax Returns filed Electronically are more Prone to Scrutiny: CBDT Criteria for Selection of Returns for Scrutiny

By | August 23, 2014

Statement “Returns filed electronically are more prone to scrutiny” is wrong. Every year income tax department randomly pulls out the list of people to scrutinize. Also CBDT has laid down the criteria for selection of Income Tax Return for Scrutiny. There are equal chances of getting scrutinized even if you paper file your return. So, there is no such rule that only people filing electronically are selected for Income tax scrutiny. In fact, digital filing can help in automatically tallying returns particulars filed by you and that filed by your employer, Banks and other financial institutions. Few of the most common reasons/criteria is addition of Rs 10 Lakhs in an earlier assessment year and Cases claiming exemption of income u/s 11 or u/s 10(23C)

By filling online your refund process will be faster and the refund will directly be deposited to your bank account if your bank details are given correctly. Also if Income of the assessee is more than Rs 5 Lakhs she has to e-file Income return .i.e.  Filing of Income Tax electronically through income tax India website.

Using the e-filing process you can file your tax returns easily with a few clicks and following a simple process, any time of the day and without any hassles. Using this technology all you have to do is filling the ITR form and submit it, online or offline.

Thus it would be incorrect to say that returns filled electronically are more prone to scrutiny.

CBDT hereby lays down the following procedure and criteria for manual selection of returns/cases for scrutiny during the financial-year 2013-2014:

2. The targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action plan document for Financial Year 2013-2014 has to be complied with. It is being reiterated that all scrutiny assessments including the cases selected under manual criteria will be completed through AST system software only.

3. The following categories of cases / returns shall be compulsorily scrutinized:-

a) Cases where value of international transaction as defined u/s 92B of IT Act exceeds Rs. 15 crores.

b) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs. 10 Crores or more which is confirmed in appeal or is pending before an appellate authority.

c) Cases involving addition in an earlier assessment year in excess of Rs. 10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before an appellate authority.

d) all assessments pertaining to Survey under section 133A of the IT Act excluding the cases where there are no impounded books of accounts/documents and returned income excluding any disclosure made during the Survey is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey will not be covered by this exclusion.

e) Assessment in search and seizure cases to be made under sections 158B, 158BC, 158BD, 153A & 153C read with 143(3) of the IT Act.

f) All returns filed in response to notice u/s 147/148 of the IT Act.

g) Cases claiming exemption of income u/s 11 or u/s 10(23C) which are hit by proviso(s) to Section 2(15) of IT Act.

h) Entities which received Donations from countries abroad in excess of Rs. One crore during the Financial Year 2011-2012 (relevant for the A.Yr. 2012-2013) under the provisions of Foreign Contribution Regulation Act (FCRA). Such Information is maintained by Ministry of Home Affairs and is available on its Website ( Respective Cadre-Controlling chief Commissioners / Directors – General of Income-tax may identify the cases pertaining to their respective jurisdiction after downloading from the website and disseminate the information to various field offices.

i) Cases in respect of which information is received from other Government Department(s) or other authorities pointing out tax-evasion. The Assessing Officer shall record reasons in such cases and take approval from jurisdictional CCIT/DGIT before selecting such case for scrutiny.

4. In order to ensure the quality of assessment orders, CCsIT/DGsIT would evolve suitable monitoring mechanism. They shall analyse at least 50 quality assessments of their respective charges and send the report to respective Zonal Member with copy to Member (IT) with suggestions for improvement by 30th April, 2014. CCsIT/DGsIT would further ensure that cases selected for publication in ‘let us share’ are picked up from quality assessments as reported.

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