Guidelines for Scrutiny Selection : Income Tax

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Following criteria would be considered by CBDT  for compulsory manual selection of cases for scrutiny during the financial year 2014-15 vide instruction no. 6/2014 dated 02.09.2014.

A. Following procedure or guidelines have been laid down by the board for manual selection of returns/cases for scrutiny during the F.Y. 2014-15.

  1. Cases involving addition of more than Rs. 10 lakhs, which is confirmed or is pending in appeal and on a substantial and recurring question of law or fact in an earlier assessment year.
  2. Cases involving the issue of transfer pricing of Rs. 10 crore or more which is confirmed or is pending in appeal and on a substantial and recurring question of law or fact in an earlier assessment year.
  3. All cases where Survey under section 133A of the Act has been conducted.

But those cases will be excluded where no impounding of books of accounts/documents have been done by the department and returned income excluding any disclosure m ade during the Survey is not less than returned income of preceding assessment year.

However, if the assessee, while filing the ITR does not withstand his or her statement of disclosure during survey, then such cases will be covered in scrutiny selection.

4. Cases of Search & Seizure in which assessments to be made under section 158B, 158BC, 158BD, 153A & 153C read with section 143(3) of the Act and also for the previous year in which search arid seizure was authorized to be executed u/s 132 or 132A of the Act.

5. Cases where ITR is filed in response to notice under section 148 of the Act.

6. Cases where CIT/DIT has not granted tax exemption certificate to a trust or NGO or has cancelled registration of a trust or institution u/s 12AA of the IT Act, and yet the assessee claims tax-exemption under section 11 of the Act. However, those cases will not be selected where such order’s of the CIT/DIT have been reversed/set-aside in appellate proceedings.

7. Cases where the Competent Authority has not given the approval to a university or other educational institution u/s 10(23C) of the Act or has withdrawn the approval already given, and yet the assessee claims tax-exemption under the above provisions of the Act.

8. Cases where Government Departments/Authorities has given specific and verified information related to evasion of tax. The Assessing Officer shall record reasons and take prior approval’ from jurisdictional Pr. CCIT/CCIT /Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.


B. Computer Aided Scrutiny Selection (CASS):

CBDT vide instruction no. 7/2014 dated 26.09.2014 directs that the cases are also being selected under CASS on following basis:-

  1. AIR data
  2. CIB information
  3. Non reconciliation with 26AS data

In such cases the scope of enquiry should be limited to verification of these particular aspects only. Therefore, in such cases, an assessing Officer shall confine the questionnaire and subsequent enquiry to these specific points only.

The notice issued u/s 143(2) regarding the case selected under CASS to be issued to the taxpayer with the remark “Selected under Computer Aided Scrutiny Selection” and should be completed within minimum possible number of hearings.

In case, during the assessment proceedings it is found that there is escapement of income exceeding Rs. 10 lakhs on any other issue(s) apart from the AIR/CIB/26AS information based and require substantial verification, then such case with the prior approval of Pr. CIT/DIT concerned in writing, may be taken up for detailed scrutiny and shall be monitored by the Jt. CIT/Addl. CIT concerned.

C. Guidelines also state that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year 2014-2015 has to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only.

CA Chanchal Verma, Author is a practicing chartered accountant and may be reached at

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