The fear of selection of their case for scrutiny by the tax department haunts many taxpayers. The recent Central Board of Direct Taxes (CBDT) press note has brought some relief for senior citizen aged 60 years or more (without any limit on income) and individuals and Hindu Undivided Families (HUFs) with gross total income up to R10 lakh (before deduction under Chapter VIA of I-T Act),as they would not be scrutinised in a routine manner. Such benefit,however,would not be available to those who have business income (and file ITR-4) or income from partnership business (and file ITR-3). At present,the computer-aided scrutiny selection system selects cases at random apart from manual selection by the assessing officer based on certain preset parameters. Since the cases are selected at random,you cannot predict when your turn may come! Once a case is selected for scrutiny,the assessing officer is empowered to call for particulars/make inquiries as he considers necessary. Any non-compliance in this regard may invoke penal provisions and give the assessing officer a chance to complete the assessment and determine your income and tax thereon,being payable by you,to the best of his judgment based on the information available with him. While scrutiny is an important tool to ensure compliance and check tax evasion,the same may prove futile in case of small taxpayers,since it increases the administrative burden and cost of collection for the I-T department as well as hassles for the individuals in complying with numerous inquiries Moreover,once a case is selected for scrutiny in a particular year,it may get selected year after year. The above move of the government is an effort to increase voluntary compliance by reducing the hassles of the senior citizens and small taxpayers. However,the press note also mentions that I-T return of such taxpayers may be scrutinised where the I-T department is in possession of credible information. What can be a credible information may needs to be objectively defined (indicative instances may be the credit card purchase,investment in FDs/securities,purchase of white goods,etc exceeding a particular amount) so that the intention behind this move is achieved. Absence of clarity on the credible information may give unreasonable power to the assessing officer to initiate scrutiny proceedings even on the basis of insignificant items thereby defeating the objective of this move by the CBDT. Needless to mention,the assessing officer would continue to have power to reassess the income within six years from the end of the relevant assessment year subject to fulfillment of certain specified conditions. In summary,though the above step is a noble one,it needs to undergo the test of time to prove if it achieves its objective and if it does,it may be extended to future years for the benefit of these taxpayers. * The writer is manager,E&Y
