GUIDELINES FOR COMPULSORY INCOME TAX SCRUTINY – FY 2023-24 CLARIFICATION

Central Board of Direct Taxes has issued guidelines for the compulsory selection of returns for Complete Scrutiny during the Financial Year 2023-24. These guidelines aim to clarify the procedure for compulsory selection in such cases.

The guidelines, F. No. 225/66/2023 — ITA-II, dated August 31, 2023, address the selection of cases for complete scrutiny based on certain parameters. Parameter 4 of the guidelines specifically deals with cases in which notices under Section 148 of the Income-tax Act, 1961, have been issued. The cases covered under this parameter are those where the return is either furnished or not furnished in response to the notice.

The guidelines further clarify the treatment of non-search cases where information related to other persons is found during the course of search & seizure action. It is explained that such non-search cases do not need to be transferred to the Central Charges unless covered by specific Board guidelines.

Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2023-24 — procedure for compulsory selection in such cases — clarification-reg.

Kindly refer to Boards’ Guidelines dated 24.05.2023 issued from F.No. 225/66/2023 /ITA-II on the above subject. Based on these guidelines, various letters/queries have been received in the Board from DsGIT(Inv.) and CCsIT(Central) regarding centralization of cases u/s 127 of the Income-tax Act,1961 (`the Act’) subsequent to issuance of notices u/s 143(2)/142(1) of the Act in various category of cases.

2. Parameter 4 of Para 2 of the above-referred to Guidelines dated 24.05.2023 reads as under:

3. During the course of Search & Seizure action, information relating to some other persons, who may have one-off/very few or limited financial transaction(s) with the main assessee group covered in the search u/s 132/132A of the Act, may be found. Such persons are not integrally connected with the core business of the main assessee searched and do not belong to the same business group. Often such persons are also not residing in the same city as that of the main assessee. In such cases, the relevant information is generally passed on to the jurisdictional AO for assessing them u/s 148(for searches conducted/requisition made after 01.04.2021) of the Income-tax Act, 1961.

4. Accordingly, with reference to Parameter 4 of Para 2 of the above-referred to Guidelines dated 24.05.2023, it is clarified that all such non-search cases selected are not required to be transferred to the Central Charges unless covered by the Board’s guidelines under F.No. 299/107/2013-IT(Inv.III)/1568 dated 25.04.2014.

5. The above may be brought to the notice of all concerned for necessary compliance.

(Castro Jayaprakash.T) Under Secretary (ITA-II), CBDT