Analysis on guidelines for compulsory selection of returns for Complete Scrutiny during FY 2020-21

CBDT has defined parameters for compulsory selection of returns for Complete scrutiny during FY 2020-21. The exercise of selection of cases based on the below mentioned parameters shall be completed by 30 Sep 2020.

Cases related to registration/approval under various sections of the Act, such as 12A, 35(1)(ii)/(iia)/(iii), 10(23C), etc: Cases where such registrations have not been granted or have been cancelled or withdrawn and the assessee is still claiming tax exemption/deduction in his return, then after the issue of notice u/s 143(2) of the Act by the jurisdictional AO for compulsory selection, the assessment proceedings in such cases will be conducted by NeAC. However, where such order of withdrawal of registration/ approval have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

Cases in which notice u/s 148 of the Act have been issued:

1. Cases where no return has been furnished in response to notice u/s 148 of the Act: In such cases, Jurisdictional AO shall issue notice u/s 142(1) of the Act, calling for information regarding the issue on the basis of which notice u/s 148 was issued, subsequent to which assessment proceedings will be conducted by NeAC.
2. Cases where return has been furnished in response to notice u/s 148 of the Act and where such notice was issued due to information contained in NMS Cycle/Air information/information received from directorate of IC&I: These cases will not be taken up for compulsory scrutiny and the selection of such cases for scrutiny will be through CASS.
3. Cases where return has been furnished in response to notice u/s 148 of the Act and where notice u/s 148 of the Act was issued due to the specific information received from the Law enforcement Agencies, including Investigation Wing, Intelligence/Regulatory Authority/Agency; Audit Objection; etc: After the notice is issued u/s 143(2) by the Jurisdictional AO, assessment proceedings in such cases will be conducted by NeAC.

Cases in which notices u/s 142(1) of the Act, calling for return, has been issued:

1. Cases where no return has been furnished in response to the above mentioned notice: These cases will be taken up for compulsory scrutiny by NeAC.
2. Cases where return has been furnished in response to the notice and where notice u/s 142(1) of the Act was issued due to the information contained in NMS Cycle/AIR information/information received from directorate of IC&I: These cases will not be taken up for compulsory scrutiny and the selection would be through CASS cycle.
3. Cases where return has been furnished in response to notice u/s 142(1) of the Act and where notice u/s 142(1) was issued due to the specific information received from Law Enforcement Agencies, including the Investigation Wing, Intelligence/Regulatory Authority/Agency; Audit Objection; etc: After the issuance of notice u/s 143(2) of the Act by the Jurisdictional AO for compulsory selection, the assessment proceedings in such cases will be conducted by NeAC.

Assessment in Search & Seizure cases to be made under sections 153A, 153C read with section 143(3) of the Act and also return filed for assessment year relevant to the previous year in which authorization for Search & Seizure was executed under section 132 or 132A of the Act: These cases pertaining to search & Seizure u/s 153C if lying outside the central charges, shall first be transferred to central charges u/s 127 of the IT Act within 15 days of issue of notice u/s 143(2) for compulsory selection.

Cases pertaining to survey u/s 133A of the Act

Cases pertaining to survey u/s 133A of the Act, excluding:

1. Cases where books of accounts are not impounded
2. Cases whose return income (excluding disclosures made during survey) is not less than returned income of previous assessment year.

In respect of cases selected for compulsory scrutiny and where there is impound material: After the issuance of notice u/s 143(2) of the Act by Jurisdictional AO for compulsory selection, such cases shall be transferred to Central Charges u/s 127 within 15 days fof issuance of notice u/s 143(2).

In respect of cases selected for compulsory scrutiny and where there is no impound material: After the issue of notice u/s 143(2) of the Act by the Jurisdictional AO for compulsory selection, assessment proceedings will be conducted by NeAC. The AO shall upload a survey report in the ITBA at the time of issue of notice u/s 143(2) of the Act.