CBDT has issued 2guidelines on 11th May 2022 for compulsory scrutiny of income-tax returns for complete scrutiny during the financial year 2022-23 and prescribes the procedure for compulsory selection in such cases.
The guidelines prescribe compulsory scrutiny of returns in the following cases:
1. Where survey has been conducted under section 133A of the Income-tax Act, 1961 (‘Act’), subject to certain exclusions.
2. Where search is conducted under section 132 or requisition was made under section 132A
3. Where notices under section 142(1) were issued for furnishing return of income but no return is furnished
4. Where notices under section 148 have been issued
5. Where registration or approval under section 12A/35/10(23C), etc. have not been granted or have been cancelled/withdrawn and the assessee is claiming tax exemption. However, if the orders of withdrawal of registration or approval are set-aside or reversed in appellate proceedings, the same may not be taken for scrutiny.
6. Where additions are made on a recurring issue of law or fact in earlier assessment year/s and the same has been accepted by the assessee and becomes final or upheld by the appellate authorities irrespective of the fact of pending further appeal. The monetary limit prescribed for such addition is in excess of Rs. 25 Lakh in 8 meteor cities and Rs. 10 Lakh in other cases.
7. Where there is specific information on tax evasion from any law enforcement agency
Read the full text of CBDT Guidelines dated 11.05.2022 on Compulsory Scrutiny of Returns for FY 2022-23
F.No.225/81/2022/ITA-II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (ITA-II division)
North Block, New Delhi, the 11th May, 2022
To
All Pr. Chief Commissioners of Income-tax/ Chief Commissioners of Income-tax
All Pr. Director Generals of Income-tax/ Director Generals of Income-tax.
Madam/Sir
Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2022-23 – procedure for compulsory selection in such cases – regarding.
Kindly refer to the above.
2. The parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2022-23 and procedure for compulsory selection in such cases are prescribed as under:
| S No. | Parameter | Procedure for compulsory selection |
| 1 | Cases pertaining to survey u/s 133A of the Income-tax Act,1961(Act) |
| Returns filed for the assessment year relevant to the previous year in which survey was conducted under section 133 A of the Act subject to exclusion below:
Exclusion:
Cases, where following conditions are satisfied, are excluded from selection for compulsory scrutiny:
1. books of accounts, documents, etc. were not impounded;
2. returned income (excluding any disclosure of hitherto undisclosed income made during the Survey) is not less than returned income of preceding assessment year; and
3. assessee has not retracted from the disclosure referred to in point 2 above. | The cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2) of the Act by the Assessing Officer concerned. |
| 2 | Cases pertaining to Search and Seizure |
| Assessments in Search and Seizure cases to be made under section(s) 153A, 153C read with section 143(3) of the Act and also for return filed for assessment year relevant to previous year in which the Search was conducted under section 132 or requisition was made under section 132A of the Act. | The cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned. Where such cases are not centralized and Return of Income is filed in response to notice u/s 153C, the Assessing Officer concerned shall serve notice u/s 143(2) of the Act. Where such cases are not centralized and no Return of Income is filed in response to notice u/s 153C, the Assessing Officer concerned shall serve notice u/s 142(1) of the Act calling for information. |
| 3 | Cases in which notices u/s 142(1) of the Act, calling for return, have been issued & no returns have been furnished |
| Cases where no return has been furnished in response to a notice u/s 142(1) of the Act. | The Assessing Officer shall upload the underlying documents, on the basis of which notice u/s 142(1) was issued, on ITBA, for access by National Faceless Assessment Centre (NaFAC).
The Directorate of Income-tax (Systems) shall forward these cases to NaFAC, which will take further necessary action.
Notice u/s 142(1) of the Act calling for information shall be served on the assessee through NaFAC. |
| 4 | Cases in which notices u/s 148 of the Act have been issued |
| Cases where return is either furnished or not furnished in response to notice u/s 148 of the Act. | (i) Cases, where notices u/s 148 of the Act have been issued pursuant to search & seizure/survey actions conducted on or after the 1st day of April, 2021:
These cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned who shall ensure that such cases, if lying outside Central Charges, are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/l 42( 1) of the Act calling for information by the Assessing Officer concerned.
(ii) Cases not covered in (i) above:
The Assessing Officer shall upload the underlying documents, on the basis of which notice u/s 148 was issued, on ITBA, for access by NaFAC.
The Directorate of Income-tax (Systems) shall forward these cases to NaFAC, which will take further necessary action.
Notice u/s 143(2)/l 42(1) of the Act calling for information shall be served on the assessee through NaFAC. |
| 5 | Cases related to registration/ approval under various sections of the Act, such as 12A, 35(l)(ii)/ (iia)/ (iii), 10(23C), etc. |
| Cases where registration/approval under various sections of the Act, such as section 12A, 35(l)(ii)/ (iia)/ (iii), 10(23C), etc. have not been granted or have been cancelled/withdrawn by the Competent Authority, yet the assessee has been found to be claiming tax-exemption/ deduction in the return. However, where such orders of withdrawal of registration/ approval have been reversed/ set-aside in appellate proceedings, those cases will not be selected under this clause. | The Assessing Officer shall prepare a list of cases falling under this parameter with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned.
The list of such cases shall be submitted by the Pr. CIT/Pr.DIT/CIT/DIT to the Pr.CCIT concerned for onward transmission to NaFAC with a copy marked to DGIT(Systems).
Notice u/s 143(2) of the Act shall be served on the assessee through NaFAC. |
| 6 | Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact |
| Where the addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact (including transfer pricing issue) is:
a. exceeding Rs. 25 lakhs in eight metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune;
b. exceeding Rs. 10 lakhs in charges other than eight metro charges; and where such an addition:
1. has become final, as no further appeal has been preferred against the assessment order; or
2. has been upheld by the Appellate Authorities in favor of Revenue; even if further appeal of assessee is pending, against such order. | The Assessing Officer shall prepare a list of cases falling under this parameter with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned.
The list of such cases shall be submitted by the Pr. CIT/Pr.DIT/CIT/DIT to the Pr.CCIT concerned for onward transmission to NaFAC with a copy marked to DGIT(Systems).
Notice u/s 143(2) of the Act shall be served on the assessee through NaFAC. |
| 7 | Cases related to specific information regarding tax-evasion |
| Cases, in respect of which:
(a) specific information pointing out tax evasion for the relevant assessment year is provided by any law-enforcement agency, (Investigation Wing/ Intelligence/ Regulatory Authority/ Agency, etc.) ; and
(b) the return for the relevant assessment year is furnished by the assessee. | The Assessing Officer shall prepare a list of cases falling under this parameter with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned. The Assessing Officer shall upload the underlying documents containing specific information regarding tax evasion, for access by NaFAC.
The list of such cases shall be submitted by the Pr. CIT/Pr.DIT/CIT/DIT to the Pr.CCIT concerned for onward transmission to NaFAC with a copy marked to DGIT(Systems).
Notice u/s 143(2) of the Act shall be served on the assessee through NaFAC. |
3. It is clarified that where return has been furnished in response to notice u/s 142(1) of the Act and such notice u/s 142(1) of the Act was issued due to the information contained in NMS Cycle/SFT information/information received from Directorate of I&CI, such return will not be taken up for compulsory scrutiny. Selection of such cases for scrutiny will be done through CASS cycle.
4. The cases shall be selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned. The cases which are selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure, shall, as earlier, continue to be handled by these charges.
5. As per the amendments brought by Finance Act 2021, the time limit for service of notice u/s 143(2) of the Act has been reduced to three months from end of the Financial Year in which the return is filed. Therefore, selection of cases and transfer of cases, wherein assessments have to be completed in faceless manner, to NaFAC shall be completed positively by 31.05.2022. In cases selected for compulsory scrutiny, service of notice u/s 143(2) of the Act shall be completed by 30.06.2022.
6. These instructions may be brought to the notice of all concerned for necessary compliance.
(Ravinder Maini)
Director (ITA-II), CBDT
Download CBDT Guidelines dated 11.05.2022 on Compulsory Scrutiny of Returns for FY 2022-23 in PDF format
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