Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

CBDT explains Scope of ‘Limited Scrutiny Cases selected under CASS where issues referred by Law-Enforcement/Intelligence etc

The Central Board of Direct Taxes ( CBDT ) vide its instructions F. No. 225/402/2018/ITA.II dated 28th Nov. 2018 has explained the scope of limited scrutiny cases selected under CASS cycles 2017 and 2018 where the issues referred to by the law-enforcement/ intelligence/ regulatory authority or agency. 

Under CASS cycles 2017 and 2018, some of the cases were selected for scrutiny as a ‘Limited Scrutiny’ case. In ‘Limited Scrutiny’ cases, Assessing Officer cannot travel beyond the issue(s) for which the case was selected. 

The field authorities asked the Board to consider the issue that in several cases under ‘Limited Scrutiny’, information pointing out specific tax-evasion for the relevant year, given by any law-enforcement/intelligence/regulatory authority or agency is available with the concerned Assessing Officer, however, in view of the restrictive nature of enquiry/investigation which can be made in ‘Limited Scrutiny’ cases, the same presently cannot be acted upon. 

After examining the issue in deep, the Board said that issues arising from such information can also be examined during the course of conduct of assessment proceedings in such ‘Limited Scrutiny’ cases with prior administrative approval of the concerned Pr. CIT/CIT. 

It was said that in such ‘Limited Scrutiny’ cases, Assessing Officer shall not expand the scope of enquiry/investigation beyond the issue(s) on which the case was flagged for ‘Limited Scrutiny’ & issue arising from nature of information,” the Board said. 

The board further prescribed to adopt the following procedure while examining the additional issue:

The Assessing Officer shall duly record the reasons for expanding the scope of ‘Limited Scrutiny’ to the extent mentioned in para 2 and 3, above;
The same shall be placed before the Pr. CIT/CIT concerned and upon his approval, further issue can be considered during the assessment proceeding;
iii. The Assessing Officer shall issue an intimation to the assessee concerned that additional issue would also be considered during the course of pending assessment proceeding;
To ensure proper monitoring in these cases, provisions of Section 144A of the Income Tax Act, 1961 may be invoked in suitable cases. Further, to prevent fishing and roving enquiries in these cases, it is desirable that these cases are invariably picked up for Review/Inspection by the administrative authorities. 

It was further clarified that the above directive shall be applicable from the date of its issue and shall apply to the pending ‘Limited Scrutiny’ cases which were selected under the CASS 2017 and 2018 cycles. It is reiterated that the grounds mentioned in para 3 above are the only grounds on which a ‘Limited Scrutiny’ case of CASS 2017 and 2018 cycles can be expanded in its scope and that too only to the extent of the issues referred to by the law-enforcement/intelligence/regulatory authority or agency .

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