SCRUTINY………..by Income Tax ……appears such a
dreaded word that for most people it is akin to see a wolf while you are alone
and unarmed with no where to run to, right?

I am
tax practitioner, Scrutiny is my bread and butter but that does not mean I can
not under stand your pain.

Any ways, norms for selecting a case for
scrutiny have been announced and they are as follows:

Procedure
for selection of cases for 'Scrutiny' for non-corporate assessees

This is only a selected reproduction of the
norms as applicable to most assessees. If you have disposed off any property or
acquired any property during the year, your attention is invited to para xix
and xxi below

The Board has laid down the following
procedure for selection of returns / cases of *Non-Corporate Assessees* for
scrutiny during the current financial year i.e. 2007-08.

2. The following categories of cases shall
be compulsorily scrutinized; -

i)
All assessment pertaining to
search and seizure cases.

ii)
All assessment pertaining to
surveys conducted u/s 133A of the Income tax Act.

iii)
All returns where deduction
claimed under Chapter VIA of the Income tax Act is Rs. 25 lakhs or above in
stations other than the cities on computer network.

iv)
All returns, including those of
non-residents, where refund claimed is Rs. 5 lakhs or above in stations other
than the cities on computer network.

v)
(a) All cases in which the CIT
(Appeals) or ITAT has confirmed an addition / disallowance of Rs.5 lakhs or
above or if the assessee has conceded on addition in any proceeding Assessment
year and Identical issue is arising in the current year. But if the issue
involves a substantial question of law, the cases may be picked up for scrutiny
irrespective of the quantum of tax involved. However, if the addition has been
deleted by a superior appellate authority and the Department has accepted that
decision, the case need not be taken up for scrutiny.

vi)
All cases in which an appeal is
pending before the CIT (Appeal) against an addition / disallowance of Rs.5
lakhs or above, or the department has filed an appeal before the ITAT against
the order of the CIT (Appeal) deleting such an addition / disallowance and an
identical issue is arising in the current year. However, the quantum ceiling
may not be taken into account if a
substantial question of law is involved.

vii)
All returns filed by statutory
bodies, marketing committees and other authorities assessable to income tax.

viii)
All cases of banks and
Non-banking financial institutions with deposits
of Rs. 5 crores and above

ix)
Cases of universities ,
educational institutions, hospitals, nursing homes and other institutions for
rehabilitation of patients (other than those, which are substantially financed
by the Government), the aggregate annual receipts (including donations credited
to the corpus / any other fund) of which exceed Rs 10 crores in Delhi, Mumabi,
Chennai, Kolkota, Pune, Hyderabad, Bangalore and Ahmedabad and Rs. 5 crores in
other places (Ref. S 10 (23c) & Rule 2 BC)

x)
All cases where exemption is
claimed under section 11 of Income Tax Act and the gross receipts (including
donations credited to the corpus / any other fund) exceed Rs. 5 crores in
Delhi, Mumbai, Chennai, Kolkata, Pune,
Hyderabad, Bangalore and Ahmedabad and Rs. 1 crores in other Places.

xi)
All cases of stockbrokers and
commodity brokers as well as their sub brokers where there are claims of bad
debts of Rs. 5 lakhs or more.

xii)
All cases of professionals with
gross receipts of Rs.20 lakhs or more if
total income declared is less than 20% of gross professional receipts.

xiii)
All cases of deductions under
sections 10 A / 10 AA / 10BA / 10 B of the I.T. Act exceeding Rs.25 lakhs.

xiv)
All cases of contractors
(excluding transporters) whose gross contractual receipts exceed Rs. 1 crores if
total income declared from contract work is less than 5% of gross contractual
receipts.

xv)
All cases of builders following
project completion method.

xvi)
All cases in which fresh
capital introduced during the year
exceed Rs.50 lakhs in Delhi, Mumbai,
Chennai, Kolkata, Pune, Hyderabad,
Bangaloreand Ahmedabad and Rs.10 lakhs in other cities.

xvii)
All cases in which new
unsecured loan introduced during the year exceed Rs.25 lakhs.

xviii)
All cases in which loss from
house property is more than Rs.2,50,000/-

xix)
All cases in which investment
in property is more than five times the gross receipts (i.e. purchase of
property (008 from AIR) / (Gross Total Income (746) + Agricultural Income (762)
+ Income Claimed exempt (125)>5)

xx)
All cases in which sum of short
term capital gains u/s 111A and long term capital gain is more than Rs 25 lakh.

xxi)
All cases in which sale of
property has been shown as per AIR return but no capital gains have been
declared in the return of Income.

xxii)
All cases in which commission
paid is more than Rs. 10 lakhs

xxiii)
All cases having business of
real estates with gross turnover exceeding Rs. 5 crores.

xxiv)
All cases having business of
hotels/tour operations with gross turnover exceeding Rs. 5 crores if net profit
shown is less than 0.05%

xxv)
All cases in which total
depreciation claimed at the rates of 80% and 100% is more than Rs.25 lakhs.

xxvi)
All cases in which net
agricultural income is more than Rs 10 lakhs.

xxvii) All cases covered by retrospective amendment in setion 80 IA of the I.T. Act, 1961 brought by the Finance
Act, 2007 i.e. all persons who merely executive the civil construction work or
any other works contract entered into with the undertaking or enterprise referred
to in Sec 80 IA of I.T Act 1961.