Circular No. 402/92/2006-MC (07 OF 2011)

What it does

Narrows scrutiny selection for two classes in the financial year 2011-12. Cases of senior citizens and small taxpayers filing returns in Form ITR-1 or ITR-2 are to be taken up for scrutiny only where the Department is in possession of credible information. A senior citizen for this purpose is an individual of 60 years of age or more; a small taxpayer is an individual or Hindu undivided family whose gross total income, before deductions under Chapter VI-A, does not exceed rupees ten lakh.

Why it was issued

Small taxpayers and senior citizens had expressed concern about prolonged enquiries and about the same cases being selected for scrutiny year after year, and the Board reviewed its selection procedure to mitigate that hardship.

Who it reaches

Individuals aged 60 or more filing Form ITR-1 or ITR-2
Individuals and Hindu undivided families with gross total income up to rupees ten lakh before Chapter VI-A deductions
Taxpayers picked up for scrutiny in successive years

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

PRESS RELEASE
INCOME-TAX
Income-tax : Streamlining procedure for scrutiny of income-tax returns
PRESS RELEASE NO. 402/92/2006-MC (07 OF 2011), DATED 14-3-2011
Scrutiny of income-tax returns is an important mechanism for ensuring taxpayer compliance and to counter tax-evasion. However, it has evoked some concern from small taxpayers and senior citizens about prolonged enquiries. Concerns have also been raised about selection of the same cases in scrutiny year after year.
Appreciating the concern of these taxpayers and with a view to mitigate their hardships, Central Board of Direct Taxes has reviewed its scrutiny selection procedure. In order to redress the grievance, it has been decided that during the financial year 2011-12, cases of senior citizens and small taxpayers, filing income-tax returns in ITR-1 and ITR-2 will be subjected to scrutiny only where the Income Tax department is in possession of credible information.
Senior citizens for this purpose would be individual taxpayers who are 60 years of age or more. Small taxpayers would be individual and HUF taxpayers whose gross total income, before availing deductions under Chapter VI-A, does not exceed Rupees ten lakh.

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What to watch

The threshold is gross total income before Chapter VI-A deductions, so deductions do not bring a taxpayer under the ten lakh mark.
The protection depends on the return being in Form ITR-1 or ITR-2 — a return in another form is outside it even for a senior citizen.
Credible information in the Department's possession still permits selection; this is not an exemption from scrutiny.
It governs the financial year 2011-12 only; each year's selection is governed by its own instruction.

Where you meet it

On a notice under section 143(2) to a senior citizen or small taxpayer for a return of that period, where the basis of selection is questioned.

← Circular No. D.O.F.NO. 500/44/2011-FTD-I · Circular No. No.402/92/2006-MC (06 of 2011) →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.