No Income Tax Scrutiny Selection for ITR-1, ITR-2 of senior citizens and small tax payers with GTI up to 10 lakhs except on the basis of credible information

CBDT has issued a press release on 14th March, 2011 wherein it had provided for a blanket exemption from scrutiny to senior citizens and small tax payers. The release stated that ITR-1 and ITR-2 filed by the following class shall be selected for scrutiny only on the basis of credible information;

(a) Senior citizens, and
(b) Small Taxpayers with Gross Total Income not exceeding Rs. 10 lakhs

Thus, the exemption from the scrutiny was not made available to:
1. Assessees with business income who file ITR-4
2. Assessees who are partners in a firm and not carrying a business who file ITR-3

The word credible information has not been defined but it includes information gathered from various sources like, Annual Information Return (AIR) Integrated Taxpayer Data Management System (ITDMS), 26AS, Central Information Branch (CIB), third party sources etc.

The criterion as per the press release though issued with respect to FY 2011-12, is supposed to be followed in subsequent years also.

The said press release is extracted hereunder:

No.402/92/2006-MC (07 of 2011)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 14th March 2011
PRESS RELEASE

Streamlining procedure for scrutiny of income-tax returns

Scrutiny of income tax returns is an important mechanism for ensuring taxpayer compliance and to counter tax-evasion. However, it has evoked some concern from small taxpayers and senior citizens about prolonged enquiries. Concerns have also been raised about selection of the same cases in scrutiny year after year.

Appreciating the concern of these taxpayers and with a view to mitigate their hardships, Central Board of Direct Taxes has reviewed its scrutiny selection procedure. In order to redress the grievance, it has been decided that during the financial year 2011-12, cases of senior citizens and small taxpayers, filing income-tax returns in ITR-1 and ITR-2 will be subjected to scrutiny only where the Income Tax department is in possession of credible information.

Senior citizens for this purpose would be individual taxpayers who are 60 years of age or more. Small taxpayers would be individual and HUF taxpayers whose gross total income, before availing deductions under Chapter VIA, does not exceed Rupees ten lakh.

Download the Press Release Click Here >>

Income Tax Procedure and Criteria for different Financial Years Click Here >>

Income Tax Scrutiny Procedure and Criteria for Computerised or Manual Selection Click Here >>