07 May Important Guidelines for Compulsory Scrutiny of Returns for FY 2024-25
Introduction
In a bid to streamline the tax assessment process and ensure compliance with tax regulations, the Central Board of Direct Taxes (CBDT) has recently issued crucial guidelines for the compulsory scrutiny of returns for the Financial Year 2024-25. These guidelines, outlined in a document dated May 3, 2024, provide a comprehensive framework for selecting tax returns for complete scrutiny and detail the procedures to be followed in such cases.
Understanding Compulsory Scrutiny Guidelines
Criteria for Selection
The guidelines delineate various parameters for the compulsory selection of tax returns, including but not limited to:
- Cases arising from surveys under section 133A.
- Instances of search and seizure actions.
- Cases where notices under section 142(1) have been issued without returns being furnished.
- Instances involving specific tax evasion information.
- Cases marked by recurring issues of fact or law resulting in significant additions in earlier assessment years.
Administrative Approval and Transfer Process
Emphasizing the importance of administrative approval before selecting a case for scrutiny, the guidelines mandate obtaining prior authorization from appropriate authorities. Furthermore, cases, particularly those stemming from surveys or search and seizure actions, are required to be transferred to Central Charges within 15 days of notice issuance under the relevant sections of the Income Tax Act.
Handling of Returns and Notices
Instructions provided in the guidelines elucidate the process of forwarding cases to the National Faceless Assessment Centre (NaFAC) and serving notices. Notably, returns filed in response to notices under section 142(1) based on specific information sources like the NMS Cycle or AIS will not automatically undergo compulsory scrutiny but may be selected through the CASS cycle.
Timelines and Compliance
The document outlines strict timelines for various actions, including the selection and transfer of cases to NaFAC and the issuance of notices under section 143(2). Notably, a significant deadline highlighted is June 30, 2024, for serving notices for returns filed in the Financial Year 2023-24. The guidelines conclude by mandating the dissemination of instructions for necessary compliance and referencing earlier guidelines on the transfer or centralization of non-search cases under section 127 of the Income-tax Act.
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