An instruction issued by the Central Board of Direct Taxes, as F. No. 225/193/2016/ITA.II, dated 22 July 2016.
A standard operating procedure issued by the Board to its field formations. The annual information return machinery collected reports of high value transactions from banks, mutual funds, sub-registrars and others, and a large body of those reports carried no valid permanent account number, so the transaction could not be linked to any assessee. This document tells the Principal Commissioners and their officers how to work that unmatched data, and supplies the letter to be sent to the person behind the transaction.
This is an instruction to the department's own officers. It tells them how to do something — which cases to take up, what to check, how to record it. It is an internal direction, and its whole force runs downwards inside the department.
The procedure records that the Directorate of Systems processed the non-PAN annual information return data and identified around seven lakh high risk transaction clusters covering around fourteen lakh non-PAN transactions, and that the data has been mapped to the Principal Commissioner on the basis of a pincode to Principal Commissioner mapping dictionary. It then sets the steps. The data file shared by Systems is to be downloaded by the Principal Commissioners and by the Commissioner (Administration and Tax Payer Services). For the priority cases the letter is to be sent centrally by the Systems Directorate rather than by the field. The letter itself asks the recipient to confirm the transaction and to respond electronically, and states that submission of an electronic response will be treated as a response to the letter.
A high value transaction with no permanent account number attached is a lead that the department cannot act on, because it cannot be tied to a return or to an assessee. Fourteen lakh such transactions had accumulated. Left alone they would have expired unused. The Board built a clustering and pincode mapping exercise to turn them into addressable cases, and issued this procedure so that the field would work them in a uniform way and so that the first contact with the person would be a request for confirmation rather than a notice.
The procedure is internal. It binds the Principal Commissioners and the assessing officers who work the data, and it defines what the department may do at this stage. It creates no obligation on the person who receives the letter, and it is not authority for anything before a Tribunal or a court: an instruction of the Board is a direction to officers, never a rule the assessee must obey and never a proposition binding on a judicial forum.
Operative from the date of issue, 22 July 2016, on the non-PAN annual information return data set then released by the Directorate of Systems. The document as read does not fix an outer date for completing the exercise.
The letter that goes out under this procedure is not a notice under any section, and no section is cited anywhere in the document. That matters when advising a recipient: the electronic response route is a convenience the Board has offered, and a reply through it is treated as a reply to the letter, but nothing about the procedure enlarges the officer's powers. The pincode mapping is also approximate, so cases do reach the wrong charge.
Directorate of Systems has processed non-PAN AIR transactions which resulted in identification of around 7 lakh high risk transaction clusters having around 14 lakh non-PAN AIR transactions.
— the Central Board of Direct Taxes, instruction F. No. 225/193/2016/ITA.II, 22 July 2016. Read it in the department’s own PDF.
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction 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. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
We did not read all of it. The department’s file returned only part of this document to us, so what is written above is written from the part we could read. Open the PDF before you rely on it.
What we could not settle. The document cites no provision of the Income-tax Act, 1961, so the authority field and the sections list are left empty. Paragraph 3 and the remaining clauses of paragraph 4, together with most of the annexed letter format, did not come through in the fetched text.