Modus Operandi of Income Tax Scrutiny

The main objective of the IT officer during scrutiny is to make sure that the income shown in the return is real and there is no tax evasion. The expenses incurred are also scrutinised to find out whether they are actually incurred and are not fictitious. For this, the assessing officer calls for the following documents/information:

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It seems that the government is all set to make Income Tax more complex and wipe away transparency from it. Taxpayers have not even recovered from the filing of cumbersome new ITR forms that it is reported by IT department to keep the scrutiny selection process away from the purview of RTI Act. This means an assessee will have no right to ascertain as why his case was selected for scrutiny by the department.

Moreover, the number of cases to be picked up for scrutiny will be increased from 1.5% to 2.5% of the returns filed in 2007-08 which will unearth more hidden income and thereby more tax revenue for the department. Around 15 % additional revenue is generated through the scrutiny assessments.

Scrutiny is the process of selecting some income-tax returns and examining them closely by calling for extra information and seeing if the details furnished are correct. It is an audit of the income-tax return filed by the taxpayer to assess his real tax liability.

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News on income tax raid can be found flashing quite often on your TV screen and in morning newspaper, highlighting the unaccounted cash and wealth of the affected. Such news sends jitters in our spines and makes us dread income tax authorities.

Under the Income Tax Act, the Search and Seizure operations are a carefully and secretly devised plan of action on the basis of authentic and bonafide information and material (something more than a rumor and gossip), which may be gathered on its own or given by some informer.

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