Scope of Scrutiny Selection on the basis of AIR

The CBDT has given instructions to select the cases for scrutiny on the basis of some specific transactions if entered in by any person. Regarding these transaction Income Tax Department (ITD) is collecting the data from different authorities or companies through Annual Information Return (AIR). When we do some transaction over and above a limit through a Financial Year (FY), our cases can be selected for scrutiny on random basis which is done by ITD through Computer aided software system (CASS).

Vide Notification 95/2015, dated December 30, 2015, CBDT has modified the rules (i.e. Rule 114E r.w.s. 285AB) related to Filing of AIR. Now the AIR return will be called as Statement of Financial Transaction (SFT), where specified persons will be required to file the return, if the nature & class of the transaction falls into the list specified. These rules will be effective for the transactions entered on or after April 1, 2016. Gist of these transactions and respective specified person can be described as follows:

S. No. Nature and Value of Transaction
(1) (2)
1. (a) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating
to fifty lakh rupees or more in a financial year, in or from one or more current account
of a person.
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 50 lakhs
(b) Purchase of Bank Draft/pre-paid financial instruments
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
(c) One or more time deposits of a person
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
(d) Cash deposit (other than a current account and time deposit) of a person.
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
(e) Payment made for credit card
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 1 lakh in cash
and 10 lakhs any other mode
2. Receipt from any person of an amount (including share application money). However,
it doesn’t include amount received on account of renewal)
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
3. Buy back of shares (other than shared from the open market)
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
4. Receipt from any person for acquiring units
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
5. Receipt from any person for sale of foreign currency
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
6. Purchase or sale of immovable property (Value as per stamp valuation authority)
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 10 lakhs
7. Receipt of cash payment for sale of goods or services of any nature (other than mentioned
above)
= Aggregated Minimum Value of Transaction in a FY (Rupees in lakhs) – 2 lakhs
The above table shows a list of all those transactions which are required to be filed by respective reporting person in Form No. 61A with the Income Tax Department. On the basis of these details, the Income Tax Department can get select your case for the scrutiny.

Further, all of the reporting person as mentioned in Column (4) are required to file Return in Form No: 61A. If we leave the specific authorities/banks, in general this clause is applicable to companies or other person for S.No.2, 3, & 7 as mentioned above.

W.e.f. April 1, 2016 all companies will be required to collect the details to file the return in Form No: 61A if they entered in any transaction as mentioned above. The return in Form 16A is required to be filed by 31st May of the immediately following FY and the reporting person is also required to obtain the registration number from the Department.

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