It summarizes the legislative amendments made to the Income-tax Act 1961 and also the various circulars and instructions issued by the CBDT. Through Computer Aided Scrutiny Selection (CASS), cases are being selected in two categories viz. CASS is a system-based method for scrutiny selection which identifies the cases through data-analytics and three-hundred sixty degree data profiling of taxpayers and in a non -discretionary manner.
The Central Board of Direct Taxes (CBDT) is a statutory authority functioning under the Central Board of Revenue Act, 1963. The CBDT is a part of the Department of Revenue in the Ministry of Finance, Government of India. It is responsible for administering direct taxation acts passed by the Parliament of India.
Q.1. What are the Objectives of the Central Board of Direct Taxes ?
The list of these cases is being/has been separately intimated by the Principal DGIT(Systems) to the Jurisdictional authorities concerned for further necessary action. In respect of cases selected under CASS cycle 2019, the following guidelines are specified. It has been reported that in large number of cases, ITATs and High Court have recognized the unique modus operandi involved in such scam and have passed judgements in favour of the revenue.
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The Union Finance Minister Nirmala Sitharaman chaired a review meeting with the Central Board of Direct Taxes (CBDT), that discussed the taxpayer base, and new TDS codes among other issues. The Income Tax Department of the government of India is a leader in good governance. Since large portion of population interacts with department on a yearly basis hence good governance by ITD has improved citizen satisfaction with government functioning.[citation needed] A very well known model of good governance, Sevottam, is being implemented by the Income Tax Department. It is reiterated that the outstanding income-tax demand relating to additions made under section 56(2)(viib) shall not be pursued and no communication with the assessee in respect of outstanding demand shall be made for this purpose. In respect of other income-tax demand, it is decided that the income-tax demand shall not be pursued unless the demand is confirmed by the ITAT.
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The Central Board of Direct Taxation (CBDT) is a statutory government authority that functions under the rules laid down by the Central Board of Revenue Act of 1963. Primarily the CBDT is responsible for laying down all the rules and methods related to implementation of direct tax policies in India. It is the body that issues orders, circulars and notifications for the implementation of various taxes and tax-related rules/regulations. As income tax is a type of direct tax and the Income Tax Department monitors income tax collection by implementing taxes, the IT department operates according to the guidelines laid down by CBDT through its periodic notices and circulars. The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue, Ministry of Finance. The CBDT provides inputs for the policy and planning of direct taxes in India and is also responsible for the administration of direct tax laws through the IT Department.
During this process, it came across certain cases where cash deposited was more than the income declared in the income returns filed by such persons. The Election Commission has directed the CBDT to verify any mismatch in the information provided in the affidavit filed by Union Minister and BJP candidate Rajeev Chandrasekhar as he contests from Thiruvananthapuram. The department can survey any business premises during the time such place is open for business for physical verification of records and other valuables. Section 133A of the Income Tax Act 1961 provides the department to conduct surveys.
Pursuant to exercise of this power, the CG issued the following notifications with corresponding reference to the DIPP notifications. (i) Cases where returns are selected for scrutiny through CASS but are not verified by the assessee within th e specified peri od of e-fil ing and such ret urns remain unverified before the due date for issue of notice u/s 143(2), shou ld be reopened by issue of notice under section 148 of the Act . Laying down the assessment procedure, the scheme says that National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143, specifying the issues for selection of his case for assessment. The assessee would be given 15 days time from the date of receipt of the notice to file their response. In its bid to curb corruption by making tax filing and their review faceless, the government has come out with e-assessment scheme, 2019 making it mandatory for all communication between tax department and taxpayers to be done online.
The CBDT also extended the benefit of angel tax exemption to start-ups where additions were made in assessment orders passed before 19 February 2019. Also, in a press meeting on 23 August 2019, the Finance Minister announced a blanket relaxation from angel tax to start-ups registered with Department for Promotion of Industry and Internal Trade. These measures are expected to address the tax issues of start-ups and improve ease of doing business for such entities. Section 56(2)(viib) (Section) of the Indian Tax Laws (ITL) (popularly known as the “angel tax” provisions) is an anti-abuse provision which applies when a CHC issues shares (including preference shares) to a resident at a premium and receives consideration which is in excess of the FMV of the shares. The excess amount so received is deemed as income from other sources in the hands of the CHC in the year of issue of the shares.
- Thereafter, as promised by the Finance Minister in Budget Speech on 5 July 2019, the CBDT laid down a specific administrative mechanism for pending assessments of start-ups involving angel tax and other issues.
- The 2019 DPIIT Notification extended the condition-based exemption to past and proposed issue of shares undertaken by start-up companies.
- In case of Startup Companies recognized by the DPIIT, which have not filed Form No.2, but have been selected for scrutiny, the inquiry in such cases also will be carried out by the Assessing Officer only after obtaining approval of the supervisory authorities.
- However, in cases where some appellate fora have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department for filing further appeal in view of the prescribed monetary limits.
In case the case is pending before the ITAT, the Department shall not press the ground relating to addition under section 56(2)(viib) of the Act in these cases. All assessment referred to in 2(i) should preferably be completed by the AOs by 30th September, 2019. The assessments referred to in 2(ii) & 2(iii) should be taken up on priority and should be preferably completed by 31st October, 2019.
► At the enactment stage, the exemption is extended to all sub-categories of Category-I AIFs. Thus, investment by any entity in Category-I or Category-II AIF in a Venture Capital Undertaking (including a recognized start-up) will now be exempt from angel tax. • Thus, where the taxpayer wishes to rely on the DCF method, it can now obtain a DCF valuation report only from a Category 1 MB. A valuation report from a practising CA will no longer be a valid compliance for the angel tax provision.
Angel tax exemption extended to issue of shares to all sub-categories of Category-I AIFs
In case of Startup Companies recognized by the DPIIT, which have not filed Form No.2, but have been selected for scrutiny, the inquiry in such cases also will be carried out by the Assessing Officer only after obtaining approval of the supervisory authorities. This threshold will be applicable for all stations in respect of all applications of non-resident taxpayers either pending as on date or filed hereafter. Cases where the amount of tax, which would have been evaded if the failure had not been discovered, is Rs. 25 Lakhs or below, shall not be processed for prosecution except with the previous administrative approval of the Collegium of two CCIT/DGIT rank officers as mentioned in Para 3.
For shares other than unquoted equity shares (like preferenceshares), the taxpayer continues to have the option to obtain a valuation report from either a Category I MB or a CA. • The Valuation Notification has withdrawn the option given to the taxpayer to obtain a valuation report from a CA for determining the FMV of unquoted equity shares based on the DCF method for the purpose of the angel tax provision. As aconsequential amendment, it has also omitted the definition of “accountant”. (v) Cases in respect of which specific information pointing out tax-evasion for the relevant year is given by any law- enforcement /intelligence/regulatory authority or agency .
However, before selecting a return for scrutiny under this criterion, Assessing Officer shall take prior administrative the cbdt is a statutory authority functioning under the approval from jurisdictional Pr. The Central Board of Direct Taxes has been issuing guidelines from time to time for streamlining the procedure of identifying and examining the cases for initiating prosecution for offences under Direct Tax Laws. With a view to achieve the objective behind enactment of Chapter XXII of the Income-tax Act, 1961 (the Act), and to remove any doubts on the intent to address serious cases effectively, this circular is issued. Just upload your form 16, claim your deductions and get your acknowledgment number online.