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CBDT Chief Slams High-Pitched Assessment Committee For Inaction –Errant AOs To Be Subject To Transfer &Disciplinary Action

Hon’ble Sushil Chandra, the Chairman of the CBDT, has written an irate letter dated 4th July 2018 to the Principal Commissioners in which he has stated that the ‘High Pitched Scrutiny Assessments Committee’ which was set up amidst much pomp and show, has been a non-starter. The learned Chairman has directed the PCsITs to get their act in order and ensure that the Committee does its work as intended.

The learned Chairman has also directed that AOs who are found guilty of making high-pitched additions on frivolous grounds, non-observance of principles of natural justice, non-application of mind, gross negligence etc should be transferred without any delay and subjected to disciplinary action.

It is also stated that no coercive action should be taken for recovery of demand in such high-pitched assessments.

It may be recalled that the said ‘High Pitched Scrutiny Assessments Committee’ was set up pursuant to the solemn promise by Prime Minister Narendra Modi that AOs would no longer be allowed to run amok and hold taxpayers to ransom.

The CBDT has earlier issued an Office Memorandum setting out 12 steps that have to taken by the department to ensure a “non-adversarial tax regime”. Assessing Officers are prohibited from issuing “long and non-specific questionnaire” and making assessments without proper basis.

SUSHIL CHANDRA
Chairman, CBDT &Special Secretary to the Government of India
(GOVERNMENT OF INDIA
Ministry of Finance/Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi-110001
E-mail : chairmancbdt@nic.in
Tele : 23092648 &Telefax : 23092544

D.O.F.No. 225/256//2018/ITA.II

Dated the 4th of July, 2018

My Dear Pr. Chief-Commissioner

You may recall that vide Instruction No. 17/2015 dated 9th November, 2015, Board had issued Guidelines for constitution of Local Committees in each of the Pr. CCIT Regions to expeditiously deal with taxpayers’grievances arising from High Pitched Scrutiny Assessments.

The Committees were required to dispose of taxpayers’grievance after examining the case on parameters such as high-pitched additions on frivolous grounds, non-observance of principles of natural justice, non-application of mind, gross negligence etc. on the part of Assessing Officer.

In cases where Local Committee found the order to be unreasonable or high-pitched, they were required to submit report to the concerned Pr. CCIT/CCIT so that proper administrative actions could be taken in such cases.

2. In last three years, the performance of Local Committees has not been found to be satisfactory. Last Year i.e. for 2016-2017, after follow-up from the Board, Pr. CCsIT furnished their report on cases held to be high-pitched by the Local Committees. In some of the instances/cases, these reports were found to be deficient/incomplete.

For 2017-2018, not a single report of Local Committee from any of the Regions has been received in the Board. It may be mentioned that vide Instruction No. 17/2015, Pr. CCsIT were required to highlight outcome of work of Local Committees in their monthly DO Letters to the respective Zonal Member, however, it is observed that very few charges are following this practice.

I have also got a personal feedback from some of the charges that Local Committees have not been duly reconstituted after transfer/promotion of Members of the existing Local Committee.

I have also been informed that meetings of the Local Committee are not being held regularly in most of the Regions. You would also appreciate that all these deficiencies in functioning of Local Committees are hampering their effectiveness in tackling high-pitched assessments in an institutional manner.

3. Therefore, I would like to take this opportunity to emphasise that it is necessary to give due attention by the Pr. CCsIT themselves to monitor performance of Local Committees on a regular basis so that these Committees serve as a useful mechanism/institution to curb high-pitched assessments in the Income-tax Department.

In addition to the mechanism outlined in Instruction No. 17/2015, following further steps should also be taken in cases which are found to be high-pitched by the Local Committees:

3.1 Wherever Local Committee has taken a view that addition made in the assessment order is high-pitched, explanation of the Assessing Officer should invariably be called for.

Wherever required, administrative action such as inter-city transfer of the concerned Assessing Officer to non-sensitive post should be taken in such cases without any delay.

Further, appropriate disciplinary action should also be taken/initiated in these cases;

3.2 No coercive action should be taken for recovery of demand in cases which have been identified as high-pitched by the Local Committee;

3.3 The concerned Commissioner (Appeals) should be requested to expedite hearing in such cases.

4. All Pr. CCsIT are requested to furnish the reports of Local Committees regarding assessments framed during the Financial Year 2017-2018 by 315′July, 2018 to Member (IT&C) as per the enclosed format. Thereafter, report of Local Committee would be required to be furnished to the Board every quarter as per the prescribed format.

5. I would also like that proper publicity in this regard may also be given at the local level. With the above initiatives along with your active involvement, I am hopeful that in future, Local Committees would inspire the taxpayers to place their grievances arising from high-pitched assessments before the Local Committees for appropriate redressal.

Enclosure: as above

Yours sincerely,
(Sushil Chandra)


7 comments on “CBDT Chief Slams High-Pitched Assessment Committee For Inaction –Errant AOs To Be Subject To Transfer &Disciplinary Action
  1. Varaprasad Daitha says:

    There is a large gap what CBDT says and practices. Being knowledgeable of basic principles of accounting one can understand the intricacies in the following facts in brief and action by CBDT which came to notice only in the last month.
    1. Survey operations took place in 2 sister concerns on the same day and stock excess stock was arrived at on estimated gross profit in one case and on another basis in the other case. Had the same principle applied to both cases the stock to be available in the 2nd case would result in negative stock.
    2. Statement was recorded without any oath or without the signature of the officer who recorded it.
    3. The assessees had agreed to such estimated excess stock and included the value of the same in the trading account under separate head “stock found during survey”. No corresponding debit entry for such excess stock wss made. That means the assessees did not claim any set off.
    4. The GP was taken to P &L account and arrived at net profit after all other items of P &L account. The resultant figured was as income.
    5. The AO has proceeded with ROI since the only valid documents before him were ROI and “information” found during survey. He proceeded with the information to find how the excess stock was arrived at to examine the angle of Sec.69.
    6. Since he could not lay hands on the information conclusively to prove any single purchase voucher was without entry into the books of account. The AO was not the same AO who made survey.
    7. Since no information could be gathered to invoke section 69, he accepted the return of income since the assessees had displayed and declared the value of such estimated excess stock to tax and there was no loss of revenue to Govt.
    8. Vigilance took objection for the action of the AO and held that the AO ought to have made a separate addition equal to the value of stock in addition what had already been declared in the accounts.
    9 The asst order was ordered to be examined u/s 263 and the CIT had dropped the proposals u/s 263. This record was not made available either to the charged officer or Inquiry officer of any one in the vigilance hierarchy.
    10. After a lapse of 5 years from the end of asst year, the successive CIT has obtained proposals u/s 147 which was illegal as per SC orders. The reassessment was struck down by ITAT as not maintainable.
    11. After issue of charge sheet and prolonging for 12 years finally the great CBDT had levied a penalty of cut of 10% in basic pension for not making unlawful high pitched assessment.
    12. All this was done because the AO hailed from lower ranks to the cadre of IRS.

  2. Varaprasad Daitha says:

    It may read the action plan part that the reopened assessments as u/s 147 and not as u/s 154. Sorry for the omission.

  3. Varaprasad Daitha says:

    The letter under circulation is a DO from Chairma, CBDT to all Pr.CsCIT etc. and it is not known how such a communication had been produced to media. I hope that the Chairman himself had released to media for a purpose of publicity.

    It is also highly been discussed among some CsIT that this is being done to derive a gain for personal purposes. They have cited that the concept of assessments had been circulated in every Action Plans. According to the same the types of assessments which were prone to scrutiny were like 1. selected by CPC Bangalore with specific points of verification, 2. Reopened assessments u/s 154, 263 etc, 3. Cases identified by the DI (Inv) and DI (Intelligence) like cases verified and identified for action u/s 50C etc. 4. all cases where surveys and S&S operations took place etc.

    The chairman had quoted the Instruction No. 17/2015 dated 9th November, 2015 which was was issued consequent to PM’s observations on high pitched assessments till financial year 2014-15. The great chairman failed to note the changes in the concept of scrutiny assessments from FY 2015-16 as explained above. He also failed to note absence of any complaints from assessees of high pitched assessments from FY 2015-16. When there was no complaint where would be the need for a committee mentioned in the DO?

    Let us understand whether there could be any scope for complaint of high pitched assessment at all after FY 2015-16. In the cases selected by CPC Bangalore the limited points to verify under scrutiny were restricted and there could be no choice of any opinion except yes or no observation on points of verification noted by CPC.

    In the case of reopened assessments there also limited scrope for high pitched assessments because these assessments were to checked by Inspecting authorities for any high pitched assessments.

    In the cases suggested by DI(Intelligence) also the scope is also limited because the points for verification are to the issues as instructed by him and the assessments are also subjected to checks by controlling and inspecting authorities.

    In the cases of surveys and search &seizures the assessments are made under direct supervision of the range heads / CITs and the AO is expected to verify the seized material or impounded material, panchanamas, statements recorded during operations and assessments. Hence the room for complaints or grievances are remote.

    From the DO under circulation it is amply evident that how the high pitched assessments were remotest possibility and the situations were not that alarming to call for the review by the Chairman of CBDT to go through all earlier instructions available in Tax Bulletins.

    Again it is to be seen that the Chairman did not make any statement of existence of complaints of high pitched assessments of late.

    Hence there appears to be a case of pleasing some higher ups above him for personal gains as whispered amongst some of the departmental heads.

    I also endorse the views of smondal and bobjee kurien.

  4. Bobjee kuruen says:

    Dear Sushil Chandra

    You have been in the seat for along time

    It is strange that being in the department for a very long time you seem to feign ignorance of this fact and in the third time being in the seat you have taken a decision which was taken long time ago

    You are aware (if you are not God save the direct taxes board) that high pitched assessment has been the bane and no effective steps taken by the Board to curb this practice
    At least on paper the board is aware for twenty years

    The reason for the Inaction is not too far to see
    As I mentioned on my earlier post High pitched assessments is a ploy played by IRS to ensure that the money flows into their hands
    All cases wher high incomes are assessed are specially scrutinised by IRS and counter scrutinised by their own .
    The promotee officers are never given jurisdiction over these cases
    The reason is not far to seek

    Make a study of all cases where high pitched assessments were made it will be clear that there is an IRS hand in it
    And I need not tell. All these assessments are vetted by senior
    Still the chairman issues a dikath that promotee officers action needs to be monitored and if any fault seen have to be charge sheeted
    Sad
    The grievance petitions at the board level has to be attended to quickly
    But the board does not monitor it
    If it has. Why is it that the grievance petitions filed fifteen years back is still pending
    Will he take action against the persons responsible for this delay
    He may need to take action against himself for not monitoring it effectively
    The delay is well documented and it should not be difficult to initiate the action proposed in the chairman’s letter
    Let me tell you. He is not the first person to threaten
    Barking dogs seldom bite

  5. smondal says:

    such committee is uselless. Bosses supported the Assessing officers for such actions for reaching higher collection target.
    If CBDT really wants to pin point-high pitched assessment cases let pick up 100 cases from each Prin.CCITs charges and let special group in CBDT analyse .
    Also allow Assessees to report their cases where high pitched assessment has been done followed by coercive recovery measures and select cases there from to get the actual misdoing.
    Pl don’t expose my identity.

  6. PC yadav says:

    Mr Sushil Chandra there are several(CIT DR) in Delhi ITAT who are intentionally sinking the citations in favour of the revenue, they are planning to escape and then start their career as consultant in big four so hang them also

    • Bobjee kurien says:

      Dear Sushil Chandra

      Please ascertain from the feild the names of the officers who are assessing the top assesses in India
      Are you not aware that the scrutiny of assts are made by a group of officers and all the decision making officers are IRS
      An ITO or an ACIT can complete ascrutiny asst only after it is approved by the higher ranked official who is none other than an IRS

      You are aware that appeals by the department to the ITAT and higher appeal forums are restricted by the tax effect
      Unless the tax raised is over ten lakhs the asst becomes final after the first appeal

      If that happens how can the IRS officials make a killing

      All these officers are hand in glove with each other

      So unless there is a high pitched asst how are these officials going to make money

      Just think over

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