Income Tax regulatory development ( 08 Dec 2016 to 13th Dec 2016)


1.INSTRUCTIONS TO SUBORDINATE AUTHORITY – FUNCTIONALITY FOR PROCESSING OF RETURNS FOR A.Ys. 2007-08 TO 2011-12 HAVING REFUND CLAIMS WHICH WERE NOT PROCESSED WITHIN TIME ALLOWED UNDER SECTION 143(1) DUE TO CERTAIN TECHNICAL OR OTHER REASON (INSTRUCTION NO.142 [F.NO.AST INST.NO.142/119(2)(a)/21/2017-17], DATED 9-12-2016)

SECTION 119, READ WITH SECTION 143, OF THE INCOME-TAX ACT, 1961 – INCOME-TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITY – FUNCTIONALITY FOR PROCESSING OF RETURNS FOR A.Ys. 2007-08 TO 2011-12 HAVING REFUND CLAIMS WHICH WERE NOT PROCESSED WITHIN TIME ALLOWED UNDER SECTION 143(1) DUE TO CERTAIN TECHNICAL OR OTHER REASON
AST INSTRUCTION NO.142 [F.NO.AST INST.NO.142/119(2)(a)/21/2017-17]DATED 9-12-2016
Consequent to CBDT Instruction No. 18/2013 dated 17-12-2013, functionality for processing of returns for AY 2007-08 to 2011-12 having refund claims which were not processed within the time allowed u/s 143(1) due to certain technical or other reasons was made available to field formations vide AST Instruction No. 120.
2. Now, in exercise of the power u/s 119 of the I.T. Act, 1961, CBDT vide order dated 25-10-2016 has relaxed the time-frame prescribed in second proviso to sub-section(1) of section 143 for the returns-of-income having ‘claim of refund’ for AY 2014-15, 2013-14 and 2012-13 which were filed either u/s 139 or 142(1) of the Act. The cases for the above mentioned AYs may now be processed by 31-03-2017.
3. In pursuance of this, functionality to process such unprocessed returns has been made available in AST. Following are the validations for processing the returns under this functionality.
(i)   Return is valid and filed under permitted time limit u/s 139 or 142(1).
(ii)   Assessee has claimed refund in return of income.
(iii)   On computation, the resultant outcome is refund.
(iv)   Return processing has got time barred by limitation of time.
(v)   The returns pertain to AY 2012-13 to 2014-15.
4. To process such cases, AO has to fetch the requisite return through the path “AST–> Processing –> Returns”. Thereafter, AO has to choose the functionality u/s 119(2) and has to select check box of 119(2)(a) and then enter requisite details.
5. The complete procedure is elaborated in the user manual for the functionality which is available on ITD and i-Taxnet for the convenience of the users. This may be circulated amongst all officers working in your charge. With this, the various representations received from field formations in this regard stand disposed off.
6. In case of any technical difficulty faced, officers can immediately contact the ITBA helpdesk.
A.   URL of helpdesk – http://itbahelpdesk.incometax.net
B.   Help desk number – 0120-2772828 – 42
C.   Email ID – helpdesk_messaging@incometax.gov.in
D.   Help desk Timings – 8.30 A.M. – 7.30 P.M. (Monday to Friday)

2. Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year’s turnover has increased 

(CIRCULAR NO.40/2016(F.NO.225/326/2016/ITA.II), DATED 9-12-2016)
SECTION 147, READ WITH SECTION 119, OF THE INCOME-TAX ACT, 1961 – INCOME ESCAPING ASSESSMENT – GENERAL – DIRECTIONS UNDER SECTION 119
CIRCULAR NO.40/2016 (F.NO.225/326/2016/ITA.II)DATED 9-12-2016
Recent initiatives of the Government to curb the black economy in the country has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts. Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years’ cases involving lower turnover u/s 147 of the Income-tax Act, 1961 (‘Act’) by the Assessing Officer causing undue harassment to tax payers.
2. It is hereby clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing Officer “has reason to believe that any income chargeable to tax has escaped assessment for any assessment year” and not merely on the basis of any reason to suspect. Mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year’s turnover has increased.
3. The above may be brought to the notice of all for necessary and strict compliance.


3. PROCEDURE FOR PURPOSE OF FURNISHING AND VERIFICATION OF FORM 27BA FOR REMOVING OF DEFAULT OF SHORT COLLECTION AND/OR NON-COLLECTION OF TAX AT SOURCE (NOTIFICATION 12/2016 [F.NO.DGIT(S)/CPC(TDS)/NOTIFICATION/2016-17], DATED 8-12-2016)
SECTION 206C OF THE INCOME-TAX ACT, 1961 – COLLECTION AT SOURCE – PROFITS AND GAINS FROM BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP, ETC. – PROCEDURE FOR PURPOSE OF FURNISHING AND VERIFICATION OF FORM 27BA FOR REMOVING OF DEFAULT OF SHORT COLLECTION AND/OR NON-COLLECTION OF TAX AT SOURCE
NOTIFICATION 12/2016 [F.NO.DGIT(S)/CPC(TDS)/NOTIFICATION/2016-17]DATED 8-12-2016
1. As per first proviso to sub-section (6A) of section 206C of Income-tax Act, 1961, any person, other than a person referred to in sub-section (1D), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee—
(i)   has furnished his return of income under section 139;
(ii)   has taken into account such amount for computing income in such return of income; and
(iii)   has paid the tax due on the income declared by him in such return of income,
and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.
2. As per sub-rule (1) of Rule 37J of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (6A) of section 206C shall be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems) in accordance with the procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub-rule (2).
3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (2) of Rule 37J of Income-tax Rules, 1962 the Principal Director General of Income-tax(Systems) hereby authorizes the Income-tax authorities mentioned at Col. No. 1 to receive the form-type mentioned in Col. No. 2 to be filed in the mode specified at Col. No. 3 for the assessment years mentioned at Col. No. 4 and pertinent to defaults under sections of the Act mentioned at Col. No. 5:
1 2 3 4 5
Authorised A.O. Form Type Mode of furnishing Form A.Y. To be used exclusively for defaults under section
Field Assessing Officer(TDS)[1] 27BA Paper Up to & including 2016-17 206(6A)
CPC-TDS 27BA Electronic[2] Up to & including 2016-17 206CB
CPC-TDS 27BA Electronic[2] Including & from 2017-18 206CB and/or 206(6A)
[1] The AO should ensure that interest on non-collection of the whole or any part of the tax or failure in payment after collection as required by or under this Act shall be paid before furnishing the statement in accordance with the provisions of the Act.
[2] Furnishing of Form 27BA in electronic shall be enabled with effect from 15-1-2017.
4. The procedure for electronic filing of Form 27BA is as follows:
1.1 Role of Collector:
STEPS PLACE OF ACTION ACTION
1 TRACES Portal Get Details of Short Collection: Collector needs to submit request to get details of short collection.
2. TRACES Portal Enter No Collection transactions: Collector needs to enter details of Non-Collection transaction at TRACES, if any and submit transaction details at TRACES in the rows provided for this purpose.
3. TRACES Portal Submit Request: On submitting request, a Unique Request Number will be generated for further reference. The Short-Collection and/or Non-Collection request so submitted will be processed by TRACES and the successful transaction will be displayed to the Collector after certain time. A unique DIN[3] will be generated by TDSCPC for unique Short Collection transaction. Similarly a unique Alpha-Numeric String (combination of TAN, PAN and F.Y.) will be generated for No-Collection transaction. Both of these unique numbers and strings will be displayed after successful processing by TRACES. These unique DINs and Alpha-Numeric Strings will be communicated electronically to E-Filing Portal and available for further action by Collector.
4. Offline The Collector will communicate the DINs and/or Alpha-Numeric Strings generated in step no. 3 for each of the Short-Collection and/or Non-Collection transactions to the accountant identified for certifying Annexure A and obtain the membership no. of such accountant to be used in step no. 5.
5. E-Filing Portal (Login as Collector) Locate DIN on which Form 27BA effect is to be given: Locate and select relevant DIN in menu driven option for which request for Form 27BA is to be submitted.

Locate No Deduction Transactions on which Form 27BA effect is to be given:
Locate and select No- Collection transaction for which request for Form 27BA is to be submitted.
6. E-Filing Portal Authorize Membership Number of Accountant[4]: Collector, after ascertaining the membership number of the accountant who is to certify Annexure A of Form 27BA, needs to authorize such accountant by entering his membership number in respect of each of the Short-Collection and Non-Collection transactions(in one or more sessions) and submit these authorizations.
7. E-Filing Portal Certification from Authorized Accountant: On successful authorization by Collector, the Accountant so authorized on E-Filing Portal may fill in the relevant details in Annexure A to Form 27BA with respect to the Buyer in question and certify by digitally signing Annexure A. The details of unique DINs and Alpha-Numeric Strings will become visible to the authorized accountant(when he logs into his own account as a registered accountant on E-Filing Portal) only when Collector has authorized such an accountant with respect to any Short-Collection and/or Non- Collection transaction.
8. E-Filing Portal Submit Digitally signed Form 27BA: Once registered Accountant/Accountants certify DINs and/or Alpha-Numeric Strings, Collector needs to digitally sign the form and submit its final request. Consequently, these submitted records will be shared with the FAOs concerned.
9. TRACES Portal View Modified Status of default: Once request has been processed, short Collection will be re-calculated and Late Collection Interest will be generated accordingly, which can be viewed by Collector.
10. NSDL\TRACES Portal Make payment for Modified Late Collection Interest: Collector needs to pay Late Collection Interest amount, according to the modified computation.
[3] DIN is unique identification number of single buyer row.
[4] Accountant shall have meaning assigned to it in the Explanation to sub-section (2) of section 288 of the IT Act, 1961.
4.2 Role of Accountant at E-Filing:
1.   Accountant has to get himself registered at E-Filing Portal and share his membership number with the collector desiring to authorize him with respect to Short-Collection and/or Non-Collection.
2.   Receive DINs and/or Alpha-Numeric Strings with respect to each of the Short-Collection and/or Non- Collection from the Collector.
3.   After being so authorized by Collector and upon receiving DINs and/or Alpha-Numeric Strings from Collector; login to E-Filing Portal with Accountant credentials.
4.   Use DINs and/or Alpha-Numeric Strings to identify the buyer rows which are to be verified.
5.   Complete Annexure A to Form 27BA with respect to the concerned Buyer.
6.   Submit the Annexure A so completed by digitally signing it.
4.3 Role of e-filing:
For Collector Validations TRACES
1.   Provide view of Short-Collection and/or Non-Collection transactions to Collector as communicated to E-Filing Portal electronically by CPC-TDS.
2.   Allow Collector to locate and select Short- Collection and/or Non-Collection transactions and authorize Accountant(s) with respect to each of these transactions by entering membership number of Accountant(s).
3.   Allow Accountants so authorized to view Annexure A to Form 27BA on the basis of DIN and/or Alpha-Numeric String; complete the Annexure; and submit it by digitally signing it.
4.   Allow Collector to view Form 27BA including Annexure A to Form 27BA so submitted by authorized Accountant(s) and submit this Form 27BA by digitally signing it.
Check mandatory Compliance: ITR of buyer(PAN) should have been filed u/s 139 and no demand should be payable at the time of assessment. Share digitally signed Form 27BA with CPC-TDS.
4.4 Role of TRACES:
For Collector Backend Processing
1.   Display identified Short-Collection transactions for viewing of Collector.
2.   Provide option of adding Non-Collection transactions to Collector.
3.   Provide DIN and/or Alpha-Numeric String for each transaction after submission by Collector as per Step 3 of Para 4.1.
4.   Display updated status of submitted Form 27BA as received from E-Filing Portal.
Processing the request: Once Collector submits request of Form 27BA, TDS CPC will reprocess the statement and Short Collection will be modified.


4. INCOME TAX SLEUTHS UNEARTH INNOVATIVE METHODS OF LAUNDERING AND TRANSPORTATION OF CASH AT MUMBAI, NAGPUR AND AHMEDABAD (PRESS RELEASE, DATED 8-12-2016)
MISCELLANEOUS – INCOME TAX SLEUTHS UNEARTH INNOVATIVE METHODS OF LAUNDERING AND TRANSPORTATION OF CASH AT MUMBAI, NAGPUR AND AHMEDABAD
PRESS RELEASEDATED 8-12-2016
Income tax investigations at Mumbai led to the revelation of a syndicate of ground level operators active in converting banned currency notes into legal tenders for a commission. As part of the operation to nab the culprits, Income Tax Investigation Directorate sent out a few decoy customers seeking to exchange banned currency notes into new notes. The syndicate, acting through its mediator, agreed to the exchange for a 35% commission. The exchange was to take place at the mediator’s residence. The mediator was caught red handed and new currency notes aggregating to Rs. 29.5 lakh was seized.

It has now emerged that the syndicate comprised of many ground level operators (GLOs) -mainly local youths led by a master aggregator and a mediator. The mediator would seek customers. The GLOs would withdraw new currency in their own names or names of friends and family within the prescribed weekly limits, pass it on to the aggregator for a commission and deposit the old notes in their own accounts or accounts of family or friends in small sums.

Another investigation into cash deposits in a bank account in Nagpur revealed that the account holder had no knowledge of the existence of her account where Rs. 3.29 crore had been deposited after 8th November, 2016. Enquiries by the Department revealed 6 more such accounts in her and parents’ names. The 7 accounts were opened and operated by unknown persons to launder cash of Rs.4.25 crore. Evidences gathered suggest that copies of PAN and other personal documents that she handed over to a friend few years back were used to fraudulently open these accounts in Kolkata, which were operated to channel suspicious funds to 8 beneficiaries, who are now being investigated.

In an interesting case at Ahmedabad, discrete intelligence gathered by the IT investigation team led to a survey at the premises of a transporter in the late hours of 3rd December, 2016. Twenty four cartons in the godown of the transporter meant for transport to Delhi were found. Lorry receipts declared these to contain fire crackers. When the cartons were opened and examined, two cartons were found to conceal currencies in the denomination of Rs.100 aggregating Rs.27 lakhs On interrogation, the consigner claimed that the cash was on account of sale of fire crackers being transported to Delhi for purchase of fire crackers. The cash was seized on 5th December, 2016


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