Financial Daily from THE HINDU group of publications
Wednesday, Oct 06, 2004

Cross Currency

Group Sites

Industry & Economy - Income Tax

I-T authorities to target large assessees to boost collections

Mohan Padmanabhan

Kolkata , Oct. 5

IT looks like the income-tax authorities, in a bid to boost revenue collections like never before, have now decided to give all large assessees (corporate or non-corporate) claiming deductions, exemptions and refunds a tough time.

All NSE-500 companies and BSE-A group companies as on August 31, 2004 listed on the Bombay Stock Exchange, and all cases of companies liable to pay tax under Section 115JB with book profit exceeding Rs 50 lakh (MAT) may now be picked compulsorily for scrutiny.

Going by the fresh guidelines recently issued by the Department of Revenue, Central Board of Direct Taxes (CBDT) with regard to criteria for selection of cases for `scrutiny', for all assessees, it is quite clear that everyone, with special focus on large assessees, is being targeted to boost collections.

Tax consultants, however, are quite elated that the new scrutiny guidelines may bring more business to them, as a large number of departmental appeals in cases going for litigation do not succeed.

While welcoming the new norms, they, however, caution that a judicious approach must be followed by the department, especially with regard to high pitch assessments. Section 143(2) of the Act provides that a return can be selected within 12 months from the end of the month in which the return is filed. Among the large fish targeted are stockbrokers, building and bridge contractors, NBFCs, trusts, all professionals and even local bodies, if the income declared by them falls below a specified percentage of gross receipts.

For instance, all cases of stockbrokers (including sub-brokers) where gross brokerage disclosed is Rs 1 crore and above, and income declared is less than 10 per cent of gross brokerage will be picked for scrutiny. All NBFCs/investment companies with a paid-up capital of more than Rs 10 crore will come under the scanner.

Similarly, all cases of contractors whose gross contract receipts exceed Rs 5 crore and net income declared is less than 5 per cent of gross contract receipts will be scrutinised.

And in the case of non-corporate assessees, all cases of professionals with gross receipts of Rs 50 lakh or more and income declared is less than 20 per cent of gross receipts, will face scrutiny.

A significant departure from last year's guidelines seems to be the elimination of the department's dependence on outside agencies for information on tax evasion. The fresh norms, it is learnt, will apply to all returns filed between October 1, 2003 and March 31, 2005. The selection of cases for scrutiny for returns filed up to March 31, 2004 will have to be completed by October 15, 2004.

According to informed sources, for returns filed during 2004-05, selection of cases has to be completed within three months of the date of filing of returns. Going by this, the returns filed during April-June 2004 may not get selected for scrutiny, say experts.

Asked to comment, Mr Narayan Jain, tax expert and visiting faculty at National University of Juridical Sciences, Kolkata, said the Supreme Court has already laid out in a clear judgement that the additions to an assessee's income cannot be made on mere surmise.

Quoting the landmark judgement in Dhakeshwari Cotton Mills vs CIT (26-ITR-775), he said scrutiny assessments have to be based on cogent material which can stand up to legal scrutiny.

Sources point out that compared to the criteria issued for scrutiny of cases last year, as many as 11 new ones have been included in the fresh guidelines this year.

For example, all returns where refund claimed is Rs 50 lakh or above in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad, and Rs 20 lakh or above in other places will now come under the scanner.

More Stories on : Income Tax

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Dubai airport mishap victims to get compensation

Extended monsoon seen aiding rabi crop
Indian cos see market for carbon credits
Sri Lanka woos Indian investors
India asks Korea to eliminate non-tariff walls
1 m families to come under health scheme
Markets defy theory
Petronet promoters to discuss future of Kochi LNG terminal this month
Karnataka Power Corpn may diversify into gas trading
`Centre may fine-tune DEPB rate cut'
SISI training programme in Hyderabad
World Bank assures support for rural drinking water plan
SC allows DD to telecast matches — Reserves verdict on Zee petition
Jaipal Reddy defends autonomy for Prasar Bharati
AIR to sell rights of Australia-India series to ABC
IBMT to launch management course for NGOs
Literacy programme for adivasis in Thiruvananthapuram dt
Crossovers — the new breed on Indian roads
With phasing out of quotas — Garment exporters gearing up for social audit norms
PIB interaction with media
10 Tiruchi projects begin operations
CII to organise Managemantra on Nov 5, 6 in Chennai
I-T authorities to target large assessees to boost collections
V.R. Sharma to head carpet export body

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line