DRAFT MEMORUNDUM TO BE SUBMITTED TO HON FINANCE MINISTER/CBDT CHAIRMAN

To,

Honorable Minister for Finance

Govt. of India

New Delhi.



Respected Sir,



Re: Standard Operating Procedure (SOP) to be followed by the Assessing Officers in verification of Cash transactions relating to demonitisation



Dear Sir,



This communication is in regard to Instruction No. 03/2017 dated 21st February, 2017 laying down Standard Operating Procedure (SOP) to be followed by the Assessing Officers in verification of Cash transactions relating to demonetization. No doubt, it is an attempt to obviate all sorts of inconvenience and possible harassment to the people of the nation and is appreciable. But, it is meaningful only if it is carried out in letter and spirit and there is no mental stress and inconvenience to general public and concerns.



Salient features worth appreciation to ensure objectivity are as follows:



1.      The Online verification should be focused and limited to the issue under verification the outcome of which is either Acceptable or Non-Acceptable. The queries raised should be relevant and limited in number since this is a preliminary verification process only.



2.      The Assessing Officer will also be able to send a request for additional information, if required. The information request would be communicated to the PAN holder with a Hyperlink for uploading the information. The uploaded information can also be downloaded by the Assessing Officer.



3.      It is reiterated that no independent enquiry or third party verifications are required to be made by the Assessing Officer outside the online portal. Whatever information is necessary during verification, the same has to be collected through the person under verification using online platform only. Even telephonic queries are to be avoided.



4.      It should be ensured that the communication made on line with persons under verification should be in very polite language without containing any element of threat or warning. No show cause of any kind should be given.



5.      A holistic view should be adopted looking into the various aspects of the circumstances leading to deposit of cash (e.g. family-size, financial status and background of person) and uniformity in approach must be adopted while forming a view about quantum of undisclosed income.



However, at the same time, there are certain other features granting ample discretionary room without any effective check for coercion & misuse:



1.      Determination of ‘Acceptable’ or ‘Non Acceptable’ Categories

2.      In case the person under verification does not respond within time frame prescribed, it might lead to a possible inference that the cash deposit under verification is prima-facie undisclosed and consequently the AO may treat these cases under the ‘Non Acceptable’ category with relevant remarks.



3.      Undisclosed Income quantification?



We take this opportunity to point out that this is an appreciable step to ensure that the process is to be carried out online and that there is no personal interaction with the assessees which is evident from the instruction that even telephonic queries are to be avoided.



It is regretted that despite instructions dated 21st February, 2017, Income Tax Authorities have started carrying out mass Surveys for the purpose in utter disregard to the stated Instructions of the CBDT on one pretext or the other causing utter panic amongst people & consequent adverse impact like unnecessary mental stress and mental pressures besides raising many questions, who are responding to the course of action as per CBDT instructions. It is beyond logic as to the need for swarming the premises of the assessees despite very clear instructions dated 21st February, 2017 that the process of verification has to be carried out on line without any interface with the assessees.



There is an instruction that it should be ensured that the communication made on line with persons under verification should be in very polite language without containing any element of threat or warning & that no show cause of any kind should be given but ground root realities are totally different corroborated by the Surveys as well as unofficial visits of IT Officials to assessees premises. Recent Press Conference by the Department at Jalandhar on 26th February, 2017 conveying warnings tantamount to threats to the people is in total contradiction to the stated instructions that there should not be any element of threat or warning.



Though IDS, 2016 and PMGKY are, no doubt, appreciable steps though with very higher rates of levies but undue influence, coercion and thrusting of things by undue use of office result in loss of grace and credibility of the Schemes besides causing irreparable damage to the image of the Government in the eyes of people.



So, it is urged that strict steps be taken to ensure the mandatory implementation of the Instructions dated 21st February, 2017 and if these are not to be followed in letter and spirit, then these are as good as No Instructions & are virtually redundant without any mandate.



Finally, we would appreciate the Instructions dated 21st February, 2017 laying down Standard Operating Procedures for verification of cash which clearly spell out the intention of the Government to ensure fairness and to obviate possibility of any harassment. Anyway, the objectives can be achieved only, if these instructions are implemented and followed in its true spirits.



Thanking you



Yours faithfully,








1          The Chairman, CBDT

2.         The Chief Commissioner of Income Tax, Ludhiana

2.         All the Principal Commissioners of Income Tax, Jalandhar

4.         All Print Medias

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