From your desk to the FM - KarSetu

There is a particular kind of satisfaction — quiet, almost private — that comes from watching something you crafted at your own desk travel all the way up and enter the public domain at the highest level. On 20th March 2026, the Hon'ble Finance Minister of India, Smt. Nirmala Sitharaman, released Kar Setu — the eBook and booklet on Interplay and Transition FAQs from the Income Tax Act, 1961 to the Income Tax Act, 2025.

What Kar Setu Is

India is undergoing one of the most significant legislative transitions in its fiscal history. The Income Tax Act, 1961 — a statute that governed the tax lives of every Indian for over six decades — is being replaced by the Income Tax Act, 2025. This is not a cosmetic rewrite. It is a restructuring of 536 sections, affecting over 700 field offices, tens of thousands of tax officers, and millions of taxpayers and practitioners across the country.

The question that every officer in the field, every chartered accountant advising a client, every taxpayer filing a return would inevitably ask is: What changes? What stays? What do I do differently starting April 2026?

Kar Setu was built to answer that question.

The name itself — Kar Setu, a bridge of duty — was chosen deliberately. This is not a commentary or an academic paper. It is a bridge. A structured, FAQ-based guide that maps the interplay between the old Act and the new, so that the transition is navigable rather than bewildering.

The Four Months Behind It

What the public sees today is a finished product — clean, structured, authoritative. What they don't see is the four months that preceded it.

Sixteen sub-committees were constituted to cover every major area of the Act. Each committee comprised officers who live and breathe these provisions daily — assessment, appeals, penalties, TDS, international taxation, search and seizure, and more. The coordination happened out of the Directorate of Organisation and Management Services (DOMS), CBDT, where I serve as Member Secretary to the Guidance Note Committee for the ITA 2025 implementation.

There were drafts. Many drafts. There were rounds of review where a single FAQ would be debated, reworded, cross-referenced, and debated again. There were late-night iterations where you are staring at Section 247 of the new Act and tracing its lineage back to Section 143(3) of the 1961 Act, making sure the transition guidance is precise enough that a young ITO in a mofussil town can rely on it.

This is the unglamorous work of governance. No stage, no spotlight. Just a desk, a screen, and the knowledge that if you get this wrong, the confusion will cascade across the entire tax ecosystem.

Why This Matters Beyond Tax

I have spent fifteen years in the Indian Revenue Service. I have done transfer pricing investigations, ITAT litigation, international tax advisory, and policy work. I have studied at Columbia and Harvard, advised at the UN, and consulted for the G20. But I will say this plainly: there is something uniquely grounding about building a document that will be used by an Assessing Officer in Dharwad and a Senior Partner at a Big Four firm in Mumbai on the same day, for the same purpose.

Kar Setu is a leveller. It doesn't distinguish between the officer who needs it to process a case and the practitioner who needs it to advise a client. It serves both. That is what public goods are supposed to do.

In an age where we talk endlessly about AI in governance, digital transformation, and technology-led reform, it is worth remembering that sometimes the most impactful thing a government can produce is a well-structured document that answers the right questions clearly. Not an app. Not a dashboard. A document — researched, debated, refined, and released.

The Moment

When the Finance Minister releases something you have been working on for months — something that started as a working file on your desktop, went through committee after committee, was revised at 11 PM on a Thursday, and finally emerged as a polished eBook — there is a moment. It is not dramatic. It is not cinematic. But it is deeply, quietly, satisfying.

You don't need anyone to tell you the work mattered. You know. Because you watched it travel from your desk to the hands of the person who stewards this country's fiscal policy. And now it is in the public domain, serving the people it was always meant to serve.

Kar Setu is live. The bridge is built.

Election Duty in Tamil Nadu

The alarm goes off at 4:30 AM in Girnar Guest House in Kaushambi. It is the 18th of March 2026. I have packed the night before. Three copies of my appointment letter. Six passport-size photographs. A hardbound diary. Blue pen, black pen, red pen. The red one, I suspect, will see the most use.

On my laptop, my phone, and a pen drive, there is a PDF I have been reading for two days. The Compendium of Instructions on Election Expenditure Monitoring, December 2024 edition. Five hundred and some pages. It is going to be my reference manual for the next forty-five days.

I have been following money trail in Income Tax. Today, I am going to follow money in a different place.

The Election Commission of India has appointed me as Expenditure Observer for the Tamil Nadu Legislative Assembly Elections, 2026. My constituency is 86-Edappadi, Salem District. 

My job is straightforward. Every candidate contesting this seat can spend a maximum of Rs. 40 lakh under Rule 90 of the Conduct of Election Rules, 1961. I am here to make sure that limit is respected. And to catch the spending that candidates would rather not declare: the cash, the liquor, the freebies, the vehicles that never make it into any register.

Different domain. Same discipline. Follow the money.

The flight leaves Delhi at 7:05 AM. I land in Bangalore by mid-morning and make my way to Salem by a connecting flight. The landscape changes as you cross into Tamil Nadu. The soil turns red. Granite quarries appear on hillsides. Steel plants. Sago factories. Roadside stalls selling tender coconut. The signboards switch to Tamil, a script I cannot read.

Salem is bigger and more industrial than I expect. Thirty lakh people live in this district. Eleven Assembly constituencies. One Lok Sabha seat. A steel plant, a river, a busy corporation. This is not a sleepy town. This is a serious place.

A blue-beacon Innova is waiting for me. My Liaison Officer, Thiru. Duraisamy, and my PSO, Thiru. Samuel, are standing beside it. In the grammar of Indian government, a blue-beacon vehicle is a statement. It says: the Election Commission is here. Word travels in a constituency. By evening, people in Edappadi will know that the Expenditure Observer has arrived.

That is by design.

Most people think of elections as rallies and speeches and ballot boxes. They do not think about what runs underneath.

India's election expenditure monitoring system is, quietly, one of the most ambitious real-time financial surveillance operations in any democracy. Flying Squads patrol highways at 3 AM, stopping vehicles and checking for cash. Static Surveillance Teams sit at junctions with cameras and logbooks. Video teams record every rally and public meeting so that someone can later count the chairs, measure the pandal, estimate the cost, and ask: did the candidate report this?

Check posts on every major road. An Election Seizure Management System that logs every seizure of cash, liquor, drugs, or freebies in real time. Shadow registers that track observed expenditure independently of what candidates declare.

And at the centre of this system, an Expenditure Observer in every constituency. 

I meet the police first. The Superintendent of Police, Salem.

We sit across a table and talk about money. Not money in the abstract. Cash movement corridors through the district. Drug transit routes that get repurposed during elections for distributing inducements. Liquor supply chains. The geography of how money and material flow into a constituency when an election is on.

We exchange phone numbers. That is the real deliverable of the meeting.

Then the Collector. District Collector and District Election Officer, Salem. 

She manages eleven constituencies simultaneously. She knows the machinery.

I also meet the Commissioner of Police. That is three institutional meetings in a single afternoon. Three sets of phone numbers saved. Three relationships established.

The foundation is being laid.

Then I leave Salem for Edappadi.

Forty-two kilometres west. The road passes through Tharamangalam. The landscape opens into the kind of small-town Tamil Nadu that runs on agriculture, granite, and local commerce. The Mettur Dam, one of the largest in India, sits at the edge of this constituency.

I arrive in the late evening. The temperature is 36 degrees. My accommodation is an Inspection Bungalow. 

I meet the Assistant Expenditure Observer and the Returning Officer's team. These are the people who will actually run the expenditure monitoring on the ground every day. Block-level officials. Taluk-level officers. People who know every lane in this constituency.

I explain the shadow register. This is the most important tool in my kit. A parallel ledger maintained independently by my team, recording every observed campaign activity and its estimated cost based on the DEO's rate charts. When a candidate declares they spent fifteen lakh and my shadow register shows thirty-five lakh of observed activity, that gap is where the questions begin.

I set up the daily reporting protocol with the AEO. Summary every evening by 8 PM. Seizures reported immediately. No delays. No filtering.

They save my number. I save theirs. And a whatsapp group is created.

Here is what I have learned on Day 1.

The machinery exists. The teams are being assembled. The infrastructure is taking shape. Salem district has a competent Collector, a sharp SP, and a police commissionerate that is engaged. At the constituency level, the AEO and RO team are in place.

Whether the machinery works under pressure is a different question. That is what the next four days are for. I will inspect check posts. I will visit Flying Squads in the field. I will meet State Excise officials. I will walk through the Expenditure Sensitive Pockets identified in this constituency. I will look at registers and formats and verify that the teams are not just formed on paper but actually functioning on the ground.

There is something I keep thinking about.

In tax administration, the stakes are revenue. Important, certainly. A nation runs on what it collects.

In election monitoring, the stakes are the process itself. Every rupee of unaccounted expenditure is a small crack in the integrity of a democratic exercise. Every cash envelope distributed to a voter is an attempt to convert a citizen's choice into a transaction. The expenditure monitoring system exists to hold that line.

I am not being dramatic about this. It is just a fact. The line holds because someone is watching. The observer is not only a checker of registers. The observer is a signal that someone is counting.

A note on language.

I do not speak Tamil. This is, to put it mildly, a limitation when you are posted in Tamil Nadu.

But I have discovered that vanakkam, said with folded hands and a genuine smile, opens every door. That nandri, said often, builds goodwill faster than any official letter. And that sari, meaning OK, meaning understood, meaning let us proceed, is the single most useful word in the working vocabulary of Indian governance.

My Liaison Officer, Thiru. Duraisamy, handles the rest with a patience I find remarkable. The block-level officials speak enough English that we get by. In government, the real language is not Hindi or Tamil or English. It is the language of registers, formats, reports, and deadlines. That language, I speak fluently.

It is late now. The ceiling fan turns. The night outside is warm and full of the sounds of a Tamil Nadu small town: insects, a distant temple speaker, the occasional auto-rickshaw.

I open my diary and write the day's observations. Four meetings. Two cities. One overnight transformation from a tax officer in Delhi to an election observer in a constituency I had never visited before this morning.

I have four more days in this visit. Then back to Delhi for a week. Then back here on the 30th of March when the gazette notification drops. Then continuously from the 5th of April through polling day on the 23rd.

The work has begun.

Vanakkam, Tamil Nadu. 

A Third Of The Seats, but a Whole New World: The Implications Of Women’s Reservation Bill

Some of the main questions surrounding the debate on the women's reservation bill are:

- How effective will the bill be in increasing the representation of women in politics?

- Will the bill create a situation where women are elected just because of their gender, rather than their merit?

- How will the bill address the issue of financial independence and literacy, which are often seen as barriers to women entering politics?

- Will the bill cause more division along gender lines in society, and is it possible to overcome these divisions?

- Does the bill go far enough in addressing issues of gender-based violence and discrimination?

- How will the bill be implemented in practice, and what are the potential roadblocks?

- Is it fair to reserve seats for women in a society where there is a gender gap in education and literacy?

- How can we ensure that women who are elected under this bill are actually able to make decisions and influence policy?

- Does the bill apply equally to women from different socioeconomic backgrounds, or will it only benefit a small group of women?

- What about transgender people, who are often excluded from these debates and policies?

Kindly refer to this interesting story which comes from ancient Hindu texts, which often portrayed women as being equal to men and even as goddesses. In Hindu scriptures, women were often referred to as "Janani", which means "mother". This suggests that women were seen as powerful and respected figures in ancient Indian society. There are also stories of women who were skilled warriors and leaders, such as the legendary warrior queen, Rani Lakshmibai. These stories show that women were not just seen as homemakers or caregivers, but as capable and intelligent individuals who could hold their own in a male-dominated society.

But this status of women gradually declined over a period of time, there are a few reasons that scholars have identified. One is that during the medieval period, as Islam spread in India, there was a shift in the social norms and laws around women. For example, practices like purdah (segregation of women from public life) and polygamy became more common. In addition, there was also a shift in the economic structure of society, with a move away from small-scale farming to large landholdings, which made women's contributions to the household economy less visible and valued.

Well, the historical decline of the status of women has led many people to argue that some sort of affirmative action is needed to help women achieve equality. Some have argued that women's reservation, or quotas for women in government and other institutions, are necessary to help redress historical inequalities. Others argue that this approach can be counterproductive and create a backlash against women's rights. They argue that rather than quotas, what is needed is structural reforms to address the underlying causes of inequality, such as improving access to education and employment opportunities for women.

There are many examples of how women in India are still not treated equally with men in different spheres of life. One example is in the area of employment. Despite laws that prohibit discrimination on the basis of gender, many women still face discrimination in the workplace, including unequal pay, fewer opportunities for promotion, and sexual harassment. Another example is in the area of health and nutrition. Women in India are more likely to be malnourished and have worse health outcomes than men. They are also more likely to be denied access to medical care and other resources. Even in the home, many women face violence and discrimination, including domestic abuse.

Dr. Amartya Sen, who is a Nobel Prize-winning economist and philosopher, has written on gender equality, poverty, and development. He has argued that a focus on women's capabilities, rather than just their income levels, is important for understanding gender inequality. Sure thing. Other than Dr. Amartya Sen, I would add Dr. Gita Sen, who is an Indian feminist economist and activist. She has written extensively on gender inequality and development. She has argued that gender inequality needs to be seen in the context of class and caste inequality as well. Other notable names are Dr. Nivedita Menon, who is a feminist theorist, and Dr. Kancha Ilaiah, who is a Dalit intellectual.

There are many examples of government policies and initiatives that have been implemented in recent years to address gender inequality in India. For example, there is the Beti Bachao, Beti Padhao ("Save the Daughter, Educate the Daughter") campaign, which aims to reduce sex-selective abortion and promote education for girls. The government has also introduced measures to increase women's representation in elected bodies, such as reserving one-third of all seats in local governments for women.

But in this scenario, answering the following questions become critically important:

- Are the policies being implemented effectively, and are they reaching the women who need them the most?

- Are these policies addressing the root causes of gender inequality, or are they just treating the symptoms?

- Are these policies sustainable in the long term, or are they dependent on political will?

- Do these policies address intersecting forms of inequality, such as those based on caste, class, and religion?

Let’s look at the case study of the village of Piplantri in the state of Rajasthan. In Piplantri, there is a unique custom: whenever a girl is born in the village, 111 trees are planted in her name. The initiative is meant to make the birth of a girl a cause for celebration, rather than disappointment. This is a powerful example of how custom and culture can be used to challenge the deep-rooted stereotypes about girls and women. It also highlights the need for measures like the Women's Reservation Bill, which aim to change the way women are viewed in society.

Sociologically, the Women's Reservation Bill can be seen as an attempt to address what sociologists call "structural gender inequality". This refers to the idea that gender inequality is built into the very structure of society, in things like laws, institutions, and cultural practices. By reserving seats for women in elected bodies, the Women's Reservation Bill is an attempt to change the structural inequalities that have kept women from achieving equality. It's a way of trying to level the playing field and ensure that women have a voice in the political and social decision-making processes.

If we were to look at the Women's Reservation Bill through Durkheim's lens, we could see it as an example of what he called "social integration". Durkheim argued that social groups must have a certain amount of cohesion and solidarity in order to function properly. By increasing the representation of women in government, the Women's Reservation Bill could be seen as an attempt to bring about more social integration and cohesion in India.

All in all, I would say that it's a significant step towards gender equality in India. Despite some of the bill's limitations, it is a sign that the country is moving in the right direction when it comes to promoting women's rights and representation. It shows that the Indian government is taking the issue of gender equality seriously and is taking concrete steps to address it. It's also a sign that more and more people in India are starting to recognize the importance of women's participation in all aspects of society.

This bill is like a bright beacon of hope, illuminating the path towards a future where women are not just represented, but also empowered. It is like a ray of sunshine, which will warm the hearts of women and men across the country, and make them believe in a better tomorrow. But it will require hard work, perseverance, and patience to make this vision a reality. 

The impact of increased Advance Tax collection : Pros and Cons for India’s Economy

India's economy has seen an increase in advance tax collection, which is a sign of economic growth. However, it's important to consider the potential impacts of this increase, both positive and negative. 

An increase in advance tax collection can have positive impacts on infrastructure development, as it provides the government with additional funds to invest in public works projects. This can lead to better roads, bridges, railways, and other infrastructure improvements that can benefit the economy and improve quality of life.The additional revenue from the increased advance tax collection could be used to invest in specific infrastructure projects, such as repairing and upgrading existing roads and bridges, or building new highways and rail lines. This would create jobs in the construction sector and improve the efficiency of transportation, which can lead to more productivity and growth in the overall economy. It would also reduce travel times and the cost of transportation, benefiting both businesses and individuals.

One example is the Golden Quadrilateral highway project in India, which was partially funded by increased tax revenues. This project constructed thousands of kilometers of highways across the country, connecting major cities and improving transportation infrastructure. It reduced travel times, led to the development of new businesses and industries along the highway corridors, and created thousands of jobs in the construction sector. 

However, there are some potential negative impacts. For one, an increase in advance tax collection could lead to a decrease in disposable income for individuals and businesses, as they have to pay more taxes. This could lead to less spending and investment, and may slow down economic growth. Another potential negative impact is that increased tax collection could lead to higher prices for goods and services, as businesses pass on the cost of the increased taxes to consumers. This could hurt consumers and lead to inflation.

When a company pays more taxes, it reduces the amount of money they have available to invest in production and expansion. This can lead to a decrease in supply and an increase in prices, which has a negative impact on consumers. However, this increased tax revenue can have positive impacts for the country as a whole, such as reducing the deficit and funding important government programs.

From a microeconomic perspective, in general, increased taxes mean that consumers have less disposable income, since they have to pay more for consumer goods. This could lead to decreased demand for certain goods, as consumers become more price sensitive. It could also lead to a shift in demand, as consumers look for less expensive alternatives to their usual purchases. On the other hand, increased government spending on infrastructure can lead to lower prices for consumer goods in the long run.

Now let’s look at the macroeconomic perspective. The first thing to consider is how an increase in advance taxes will affect aggregate demand. An increase in taxes will reduce consumer spending, since people will have less money to spend. This will shift the aggregate demand curve to the left, since people are buying less at each price level. Additionally, this decrease in spending could slow economic growth and cause unemployment to rise. Let’s understand The Phillips Curve here which shows the relationship between unemployment and inflation. In general, when unemployment is low, inflation tends to be high. This is because when people are employed, they have more money to spend, which drives up prices. Now, if unemployment increases due to a decrease in aggregate demand, inflation will tend to decrease. Essentially, the Phillips Curve plots the rate of unemployment on the x-axis and the rate of inflation on the y-axis. The curve shows that as unemployment decreases, inflation increases. Think of it as a tradeoff - as more people are employed, there is more spending and higher demand, which pushes up prices. But when unemployment is high, there is less spending and prices don't rise as much. This relationship isn't always perfect, but in general, it holds true.

I think there are a couple of things that the Government of India could do to further increase advance tax collection without hurting businesses. First, they could consider offering tax incentives for companies that invest in research and development or green initiatives. This could encourage companies to invest more, which would lead to increased productivity and profits, and ultimately more tax revenue. Secondly, the government could consider simplifying the tax code and making it more efficient. This could reduce the cost of compliance for businesses, while still increasing revenue.

While there are many different ideas for improving India's tax system, it's important to consider the practicality and feasibility of each proposal. The Indian government has already taken significant steps to improve tax collection and compliance, and there is room for further improvement. However, it's important to carefully consider the potential impacts of any changes to the tax system, and to prioritize solutions that are both effective and efficient. 

Imagine a future India where all goods and services are tracked by a centralized blockchain system. Every transaction is recorded and taxed automatically, eliminating the need for complicated tax codes and audits. The tax system is simple and transparent, and the government can easily track the flow of money through the economy. While this system would make taxation much more efficient, it would also raise privacy concerns. What if the government could track every transaction made by an individual or company? Would this be an invasion of privacy, or would it be a necessary tradeoff for the benefits of the system?

Well, to conclude, I couldn’t better think of anyone else other than Benjamin Franklin who famously said: "In this world, nothing can be said to be certain except death and taxes." That's a classic! 

Management Fees and Transfer Pricing Audit

The payment of management fees falls under the intragroup services that are being availed by the associated enterprises. Here I am going to discuss the striking point for the transfer pricing officer w. r. t. this transaction while doing the TP Audit. 

In one of the cases the assessee had been showing the payment of management fees to its associated Enterprises outside country and for three years in continuation the transfer pricing officer made an adjustment on account of payment of management fees which was determined at a basic minimum as it was discussed by TPO in the order that such huge amount of payment fees is not required to be made. Further it was ascertained by the transfer pricing officer that this payment of management fees falls under the category of shareholder activity. 

Subsequently for two assessment years it was seen that there was no transfer pricing reference made in the case under section 92CA(1). During the course of transfer pricing audit it was noticed that the assessee has shown various expenditure heads in its form 3CEB. These expenditure heads appeared to be dubious as they all fell into the category of intra group services. Hence in order to investigate this transaction further form 3CEB was called for for the previous five assessment years and the transactions reflected in the year under consideration were compared with the transactions reflected in the previous five assessment years. The detailed investigation revealed that the assessee in order to avoid the TP adjustment under the head payment of management fees had shown this excess payments under various different heads falling into the category of intra group services. Interestingly payment of management fees was not shown in the year under consideration. So the assessee had cleverly disguised the payment of management fees into various different other kinds of payments made in the year which were all new transactions occurring for the first time. The important point to note here is that there has been no significant change in the FAR analysis of the assessee. 

Hence it is important for the transfer pricing officers to keep their eyes and ears open while concluding the transfer pricing audits. 

Cheers!

Tryst with Transfer Pricing

Hello everyone

Hope you all are Leading a focused life with clear written goals. They are so very important in bringing clarity in what you are doing and what we plan to do. I just thought of penning my thoughts down as I am at such an important juncture of my life wherein I have to take some very important decisions which would mark a new beginning and Pave a way for my future. Seven years in Mumbai have come to an end. 

This is my second year in transfer pricing as a transfer pricing officer in Mumbai. I have thoroughly enjoyed my tenure the first year has gone by and the second year has begun with some new experiments some new learning some new thoughts. Transfer pricing as a subject is quite technical but after having experienced it and practised it for one year I realised the fact that it is more of a common sense. Nevertheless there is no substitute for a thorough understanding of the subject as they say that knowledge is power and the knowledge of the subject brings a lot of power in the forms of confidence greater understanding and analytical bent of mind. 

Transfer pricing basically pertains to determination of arms length price of the transactions between the related parties. Herein, we try to compare the transactions between two related parties with the transactions between the AE and non-AE And then try to determine whether the price charged by the assessee from the AE is at arm’s-length or not. Then we have certain methods prescribed in the income tax act and we have the comparability analysis the statue makes it very clear As to which method is to be applied when. The income tax rules becomes very significant here as a detailed analysis of the methods prescribed are delineated along with the use of multiple year data and examples thereof. 

The transfer pricing was introduced in India by the Finance act 2001 and since then we are almost about to come to an end of the second decade. The subject has evolved and so have the rules. I have met so many chartered accountants during my one-year tenure in this field and I have heard them saying that transfer pricing is of no use because it is based on estimation. But my dear friends have forgotten that with the rise of globalisation the companies are having more number of international transactions between them there are so many multinational corporations coming up and they have their own subsidiaries and related parties set up in different countries for ease of business. Here comes the role of transfer pricing to investigate whether there is any evasion of tax or shifting of profits from High tax jurisdiction to low tax jurisdiction on account of related party transactions. In view of this how can the role of transfer pricing become insignificant in the new world order. 

I am open to queries on the fundamentals of transfer pricing and its usage. 

Cheers!

Photoshop hands-on

During my tenure as Deputy Director of Income Tax in Intelligence and Criminal Investigation, I happened to design an advertisement for the Income Tax Department on a new return that needs to be filed by the eligible entities. I am sharing the image here:

This advertisement was really liked by my seniors and we decided to take its print out on a flex. This was then installed in all the Income Tax Buildings in Mumbai and also all across the cities in the Country. This was in larger public interest and was educative in nature.

Intelligence and Criminal Investigation

Hello friends,

I am back to blogging! Yes, this happening after a very long time. My current stint as Deputy Director of Investigation (DDIT) in Intelligence and Criminal Investigation has been very enriching. Mumbai has given me lot of exposure and immense experience of variety of cases which I can cherish and boast for life. Most memorable being an action on a Credit Cooperative society detecting a cash deposit of more than 2000 cr! Special Projects also excites me a lot. Most importantly, I have been able to follow my passion for photography and creativity. We conducted an All India Conference at Madh Island, Mumbai where I completely made use of my NIKON D750 (24-120mm). I took the stills as well as videos and then created a movie with all the special effects and tag lines which everyone liked and appreciated. More than anything else, I felt satisfied and content. The movie which I created is very close to my heart.

These days, we are conducting OUTREACH PROGRAMMES – Workshop on uploading of Statement of Financial Transactions u/s 285BA of the Income Tax Act, 1961. The presentations have all gone well. This again is my area of interest (i.e. giving presentations) which I love doing and which i am able to pursue here. Sharing some of the pics here.

P.S. : Keep pursuing your hobbies along with your work. I consider myself lucky that in my work, I have been able to pursue them.

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/-


 

 

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.

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.

Cheers......:-)

2nd Departmentals

Finally,


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. 


Cheers..!!

My First Survey

Friends,

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 :

S.No.

Metal Used

Description

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.

cheers..!!

2nd OJT

Hey,


   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.

IRS Leverage: Failure and Success

After the selection in Civil Services examination, the life seems to have changed. We all have an inherent desire to gain an advantage of the position we hold in society. This sudden rise in the position on the ladder of social stratification took some time to sink in. During the UPSC preparation times, nobody used to pay extra attention to our requests. But now, a mere fact that I belong to IRS gets the work done. This success may lead to the evolution of some fatty egos. I, too, was about to join this battalion but was somehow shown the right path by a clerk in the RTO Office.

I was under the impression that me being an IRS Officer is enough to get the things done for myself. But, I was highly mistaken. Interestingly, since long time, the address on my Driving License was wrongly written. I never had the courage to deal with the RTO authorities as I was told that getting a new driving license is easier than getting it altered. Post selection, I paved my way to the RTO Office with my head held high as if a lesser known mortal has turned into a greater known one. I thought of meeting the highest graded officer but no one was found in the office. Then, somehow, I managed to get in touch with the person dealing with the alteration issues. I told him my issue and asked him to do my work instantly. Since an Officer was sitting inside my head, I was assured that the going would not get tough. The person concerned said that he cannot do my work and asked me to come through a proper channel. I got furious. I asked him whether there is no relaxation in the rules for the Officers from Income Tax Department. Then, it was the time for him to get furious. He said, “What has the Income Tax Department done for people like us? Why should we show them the favors?” I was astonished to hear the reply. That was the time when I convinced myself about the fact that there are certain rules also which exist in this country and I’ll gain nothing by entering from the back doors. This was the leverage stint which went down the drain. May be because, I was a new kid on the block.

Few months later, I was travelling by a train from Lucknow to Delhi. This train had an amusing departure time. It was 12.05am. I had booked the ticket myself. When the TT came to check the tickets, he discovered something in my ticket which was very unpleasant for me. The ticket which I had booked was for Saturday – 12.05am. But I had to travel on Sunday – 12.05am. The TT said angrily, “Your train had already left yesterday early morning.” I was in a fix. I told him politely that I belong to IRS and was going to Delhi to attend some felicitation function. His behavior changed dramatically. He suddenly stood up and assured me of his help. He ended up not only giving me a seat to sleep but also didn’t even charge a penny for that. He feared that if he takes money from me, I will lodge his complaint to his boss, and consequently he may get fired. Here, IRS was at work. I didn’t have to do anything in this case. Mere introduction was enough.

Next and most interesting event happened when I was on my way from Lucknow to NADT, Nagpur via road. It was near Sagar in Madhya Pradesh and our car’s petrol tank was about to finish. I asked the localites about the petrol pump and almost everybody pointed to the one nearby as there was none after that till some 50 miles. After reaching the place, I found it closed. In the nearby Dhaba, I thought of doing some investigation. Fortunately, there was Police truck parked in the vicinity. I talked to the Policeman sitting inside it. He was having a laid back attitude and was not in a mood to respond. I gave him my ‘introduction’. Then, inquisitively, he asked, “you must have cleared UPSC ?”. I said, ‘Yes’. He suddenly popped up from his seat and wore his shoes and shouted to the tea man to bring tea for me. I told him my problem. He gave all his assurance to pacify me. Instantly, he called up two beat constables from the nearby Police station and told me that they know where these petrol pump operators sleep during the night. The beat constables took us to that petrol pump, wakened up the sleeping helpers, got our petrol tank fuelled, and then escorted us till the main highway to see us off.

This incidence taught me something very noble. We should always be very polite and humble no matter what designation we hold. Merely getting selected in the Civil Services Examination is not an end in itself. People may not follow or obey you until you are nice to them. The leverage which IRS as a Service has given to me is appreciable. It shows the respect which the service commands in society.

CHEERS…!!!