Monday, November 19, 2012

My First Survey as an Authorised Officer

I conducted my first survey as an Authorised Officer in Nov'12. - Scintillating Experience..

I was very apprehensive in the beginning as anyone else would be. In the very first place, i wasn't knowing as to how to prepare a Sat Note. Then i called up some of the senior Officials whom i met during 2nd OJT. Everyone reiterated the same fact again and again that - "Move out of the office and visit your jurisdictional area". That was the time i decided to move out and went for the recce. The case related a big builder in Mumbai. I visited their site offices in Thane and also the Corporate office in Mumbai disguising my identity (as Jasbir Singh, Inderjeet Singh etc etc....).
Howver, on the date of survey, i realised that my recce was misdirected. During recce, i was basically looking for 'on money' transactions. I had infact visited and talked to one of the Property dealer also about this group whether they take any cash or not. But everywhere i was posted with the fact that they do business totally in white. All payment shave to be made in cheque only, no cash component at all. That was very disappointing. But, on the day of survey, in the morning, we totally changed our direction of investigation. The assessee was claiming deduction u/s 80IB(10) for one of its housing project. We decided to target this particular section only. That morning, we studied the entire section from the act, also read some of the articles from the web and took the decision that we will confront the assessee point by point. The strike time was 4.15pm on 06.11.2012. This lasted for 27 hours. And finally, we were able to prove that the assessee was not eligible to claim deduction u/s 80IB(10). Although they were fulfilling the 1000 sq ft. and more than 1 acre conditions. But we caught them on the issue of completion of the project which should be within 5 years from the end of financial year in which they obtained the commencement certificate from the local authority. Here, 5 years came to an end on 31.03.2012, but they received the completion certificate from the Thane Municipal Corporation on 27.09.2012. This was the catch. Moreover, they had been claiming deduction on 4 of their towers. But one of these towers ('VARUNA') was still under construction as was reflected by field verification and also by architect's certificate. In addition , the assesse was having certain 80IB and non 80IB towers. This concept itself appeared to be ridiculous. We relied on the Bombay High Court judgement in the case of BRAHMA ASSOCIATES. which specifically states that 80IB deduction cannot be given to any part of the housing project. This deduction is to be given for the entire housing project as a whole.
Also, the assessee was claiming deduction u/s 80IA(4)(iii), in one of its another premise which is developed as an Industrial Park. However, for claiming this deduction, the asssessee has to obtain a notification form CBDT, which was still pending in this case. Their auditor in the audit report had also stated that 'we are hopeful of getting a positive response from CBDT in the near future'. Our contention was that - WHAT IF CBDT REJECTS YOUR PLEA ?? We could not have allowed the deduction merely on the basis of presumption. Hence, this was also disallowed.
The assessee has agreed to pay the taxes over the surrendered amount. It turns out to be approx Rs.70 crores.

Total Deduction to be disallowed :

Deduction u/s 80IB(10)     : Rs.178,85,37,405/-
Deduction u/s 80IA(4)(iii)  : Rs.24,29,37,504/-

GRAND TOTAL : Rs.203,14,68,909/-


Tuesday, July 24, 2012

Face to Face with Harshad Mehta's Associate

This meeting with the closest associate of HARSHAD MEHTA left me pondering over the fact that how one man baffled the entire country's financial market and leading to such a huge impact. This person named Mr. Biyani (name changed for identity purpose) was the only one who could enter Mr. Harshad's room without knocking the door. Biyaniji happens to be my assessee. He narrated me the story of early 1990s when he and Mehta's other associates used to trade in the Bombay Stock Exchange (BSE). It used to be an open outcry system. However, with the fall of Harshad Mehta came the dark nights for Biyani. It would not be appropriate to discuss Biyani's case but yes meeting was mesmerizing.

Saturday, July 14, 2012

Mumbai Posting

   The experience in mumbai has been phenomenal. Initially, it was appearing to be very difficult to acclimatise with d situations here. Everything seemed to be very fast. People seemed to be running from pillar to post least concerned about each other. But without fail, everyone says one thing about Mumbai that soon after 5-6 months, one automatically starts liking the city. Mumbai was my first choice of posting and on the basis of Departmental ranking, i happened to get my first choice. Its cool. I am very much new to this city. When the orders came after AGT, it was known that i was getting City 12 and my office would be the main Head Office - Ayakar Bhavan, Churchgate. It sounded very appealing to me.

   Then on 18th April, 2012, we all (21) were suposed to join there. However, somehow 4 of us got a bit late on that day so we happened to join on 19th april at the DCIT(HQ) office at ayakar bhavan attached to CCIT(CCA), Mumbai. We got the designation of Assistant Commissioner of Income Tax (ACIT-OSD). The proper designation actually was ACIT (OSD), UOP - Under Orders of Posting. The actual internal orders took a bit of time somewhere around 3 weeks. When the orders came, i was posted to Circle 12(2). This moment was very exciting. I was about to get my room in the office. Then only i came to know that City 12 is a model charge in Mumbai wherein the Officrrs get their single room. This appears to be a luxury to me. I was even more thrilled. I took charge on 22 May 2012, the first day when i sat on the chair which was official. There is immense interaction with the public in the income tax department. The only difference is that here we happen to interact with people belonging to higher echelons of society. My Circle happened to have assessees speaking flawless flamboyant english. I was pretty impressed.

   The most significant thing to note is that EVERYDAY IS A DECISION MAKING DAY! !!! I have realised that if we take appropriate timely decisions, the grievances of the public will be redressed at large. The major grievances of the people arises because of the fact that timely decisions are not taken on their files. But a huge change is seen these days in the department. People are becoming proactive, Return processing is getting digitized, Refunds are expedited smoothly through refund banker, infrastructure is improving at a rapid pace etc etc. However, soon after one month in this circle, i got transferred to Circle 12(1) within the same City. Its been just 10 days i have begun work here. Notices u/s 142(1) have been issued. The scrutiny season has begun.


Monday, March 12, 2012

2nd Departmentals


Our 2nd Departmentals have commenced. Ironically, when i wrote the last exam (Pub Admn) of my last mains, i declared it everywhere that this was my last exam and i do not have to study anymore. But after entering these Services, i have realized that Study is never gonna stop. Income Tax Personnel needs to study the most. Even after they take up the field postings, they always have to remain updated vis-a-vis various Circulars and Notifications from CBDT (You also have a choice not to study, but at your own risk). 

Hopefully, there are no more exams after these during the course of the training. The Bharat Darshan is also starting from 17th of this month. The postings should come by the end of this month. The Valediction is on 16th April 2012. I just love all of it. 


Saturday, January 21, 2012

My First Survey


During my 2nd OJT at Faridabad, we went for a Survey in 4 different groups. Around 8 people were there in each team with Police personnel. We took the entire premises under our control as soon as we reached there. The assesse was a Jeweller. We searched the entire premises and checked the back door, if any. All the mobiles were taken into our custody. The assesse was taken by a shock. He suddenly insisted upon calling up his business partner. However, despite repeated calls, the Partner did not turn up. Then, in general, certain preliminary questions were asked from the assessee viz.

·         Do you trade only in gold ?
·         How much gold stock do you have ?
·         From where do you purchase ?
·         Who’s your CA ?
·         What is your main work ? Sale or Repair ?

Then, I only volunteered for recording the statement of the assesse. We, thereafter began recording the statement with the following questionnaire :

1.       Please identify yourself.
2.       Please give details of your business concerns and sister business.
3.       Please give details of your family  members, who have interest in the firm.
4.       What are the sources of your income ?
5.       Please furnish details of your income tax / details of income tax of firm.
6.       Please give details of any investments made during the FY or in PY.
7.       Please give details of the vehicles owned / issued by business concern.
8.       Please furnish the details of bank accounts.
9.       Please give details of immovable assets held by the business concern.
10.   Any other concerns, if any, operating from this premises.
11.   Do you maintain regular books of a/c ? Where are these kept ?
12.   Furnish details of purchase bills , if any , which have not been entered into books of a/c & goods have been received or yet to be received.
13.   Please produce the goods received for repair (gold, diamond or silver) as on today.
14.   Give details upto the date til which books of a/c have been written.
15.   Do you maintain stock register ?

I, somehow, was not able to stay back till the conclusion of search and left the premises by 10.30pm. Hence, this questionnaire was to be concluded by the ITO present there. The Valuation Officer also showed up. However, he was too late. He did the entire valuation of the stock present in the following format :

Metal Used
Gross weight in grams
Net weight approx.
Description of Stone’s set
Approx. weight of stones
Value of stones
Total value

                The valuation was done for following items :

~        Chains
~        Jhumkey
~        Tops
~        Ladies ring
~        Pendants
~        Gents rings
~        Mixed ornaments
~        Baali
~        Mangalasutra
~        Nosepin in diamonds
~        Gents ring and tops in diamond
~        Bracelet and Kangans
~        Gold sets
~        Silver ornaments (Payal, utensils, coins, Mix, Murti)
~        Moti, Pukhraj and Pearls
~        Gold coins
~        Brick piece

This experience of survey u/s 133A was a great learning experience. This shows how much impact and influence does the income tax department have in the public. The surrender and disclosure in this case was to the tune of Rs.40 Lakhs. Similar amount was disclosed in the other 2 cases also but in the 4th case, we managed to have surrender to the tune of Rs.81 Lakhs. These Surveys have a huge deterrent effect in the market. 

People know that they will now have to keep their books in order otherwise the Income Tax people will grab them.


Tuesday, January 10, 2012

2nd OJT


   Our 2nd On the Job Training have just begun from yesterday. I have opted for Faridabad station. Early in the morning yesterday, we called on the CIT (Faridabad) - Shri R.K.Bajaj, JCIT Range II Gurgaon – Shri Sampoornanand, ACIT(HQ) and OSD Range 1 Faridababd – Shri Parikshit Singh and other officers and staff members. During the day, we also met CIT(A) – Shri Amarveer Singh. We were given an overview of the working of income tax department in Faridabad and Gurgaon region. Various initiatives like Document management solution and CCTV cameras were talked about. The CIT sir happened to be the person under whose leadership the PAN cards got introduced in the country. He told us that they were first conceptualized in 1969. We also discussed certain problems pertaining to ITD software that the department uses.

   In the Office overview, we were shown how the office numbering was done e.g. TN R – 09 means Third floor, North Hall, Room no. – 09. Then various other staff members were introduced to us who gave us a brief about their sphere of working like – Daak receipt and dispatch, PAN transfer, overlooking ITAT and HC orders, CIT(A) orders, drafting, establishment matters etc. The various corners of the office were shown to us. We were also briefed about the administrative difficulties being faced in introducing various changes in the CIT Office. 

   The Golf playing and Photography classes have been made compulsory for all of us. I am just loving it.

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