Survey,verification

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Survey,verification

  1. 1. TDS Violationsurvey/verificationByShankar BoseInspector of Income-taxMSTU, Puri
  2. 2. Common TDS violation-1 Most common Type of violation is nondeposit of tax deductedIt is common in the cases of ailing businessorganisationsIt was detected in many cases during thesurveys
  3. 3. Common TDS violation-2The normal rate of deduction was notappliedIt was found in the case of a Insurancebusiness
  4. 4. Common TDS violation-3 In the case of TPA business no TDS wasmadeSome cases have been covered undersurveyDepptt issued a circular
  5. 5. Common TDS violation-4 Non refundable advance paid againstrentTDS attracts against advance u/s 194IIt is an all India issue now
  6. 6. Common TDS violation-5 Professional fees paid by DAV college ,chandigarh to guest lecturers were shownas salaryIt should have been professionalpayments
  7. 7. Common TDS violation-6Compensation paid by the LA Collectors forcompulsory acquisition of landIt is applicable in the case other govtauthorities also
  8. 8. New area-Credit CardCredit cardissuing BankAcquiringBankRetailMerchantBill settlingAuthority
  9. 9. Some other areas Transaction fees paid by the brokers tothe stock exchange Professional fees paid by the coachingcentre to the professionals Amount recovered by the banks fromcorporates and service charges received
  10. 10. Survey /verificationSurvey /verificationSurvey is to be done u/s 133ASurvey is to be done u/s 133ABut there is statutory provision foBut there is statutory provision foverificationverification
  11. 11. Back Ground of SurveyIntroduced in the Act w.e.f 01.04.1964Power was limited to-1. The ITO2. InspectorThey were entitled to-1.Inspect the books of a/cs2.Place identification marks3.Take extracts
  12. 12. Different kinds of survey Collection of information and evidences andutilize in scrutiny proceedings Collection of information relating toTDS Verification of Depreciation Verification of Deductions and Exemptions Recovery of outstanding demands
  13. 13. Purpose of TDS survey Whether TDS has been made against theexpenditures which requires deduction Whether deduction has been made at properrate Whether the tax deducted has been depositedto Govt. account in due time Whether the statements have been filed
  14. 14. •Survey is possible even to enquire about tax deducted at source: Reckitt and Colman of India Ltd. vs. ACIT [2001] 251 ITR 306(Cal).•‰Residential premises can also be covered if somebusiness/professional work/document is being done / keptthere.•‰Business or residential premises of third parties, including aChartered Accountant, a pleader, or Income Tax Practitioner, ofwhom the assessee may be a client, are not places which couldbe entered into for the purpose of section 133A. (Circular no.7- D dt 3/5/1967)14
  15. 15. What is meant by TDS compliance?T.D.S compliance means: Compliance with TDS provisions/TCS provisions as contained inthe Income tax Act, 1961.TDS compliance includes:- deductions of TDS/TCS on payments/credits/advances whicheveris earlier deductions of TDS/TCS under the correct section and correct rateas contained in Chapter XVIIB & XVIIC of the I.T.Act, 1961 payment of TDS/TCS by the prescribed date to the CentralGovernment Account filing of TDS/TCS statements on prescribed forms by prescribeddates payment of interest due u/s.201(1A) in case of delayed payment.15
  16. 16. Selection of case Deposit of TDS is lower than earlier years TDS statements are not being filed though ithas its activity A special nature of payment where TDS isnot made by similar deductors Any petition from deductee/outsider givinginformation of non payment of TDS Deductors not following the guidelines fromCBDT
  17. 17.  ANALYSIS OF ITD DATACASES IN PROSECUTION LIST HABITUAL LATE FILERS (Late filing is closely linked to LatePayment) NON-FILERSCASES SHOWING NEGATIVE TREND (In a particular Section) CASES SHOWING SHIFT IN TDS (Particularly from 194J/194Ito 194C )17
  18. 18. OPERATION: BASIS OF SELECTIONGRIEVANCE APPLICATION FILED BY PERSONS TAX EVASION PETITIONs TRADE/NATURE OF BUSINESSANALYSIS OF NEWSPAPER REPORTS/INFORMATIONAVAILABLE THROUGH INTERNET ANALYSIS OF CASE LAW DECIDED IN FAVOUR OFREVENUE INFORMATION ARISING OUT OF DETAILS FILEDALONGWITH 197 CERTIFICATES INTERPRETATIVE ISSUES THIRD PARTY INFORMATION
  19. 19.  BE PREPARED WITH BUSINESS MODEL OF THEASSESSEE FROM T.A.R./ INTERNET WITH THE STRUCTUREDQUESTIONNAIRE FOR STATEMENT WITH THE DATA FROM THE ITDSYSTEM/ RETURN OF INCOME WITH LIST OF DOCUMENTS THAT MAYBE ASKED ON ARRIVAL AT THE PREMISES19
  20. 20. Nature of the placePlace of businessorprofessionOther placeBooks of accounts/documents orcash/stock, other valuables arekept.
  21. 21. Papers to be verifiedPapers to be verifiedTrial balanceCash BookSpecific ledger accountsP&L Accounts , Balance sheetAudit reportChallansRent agreementContract agreement
  22. 22. How to proceedHow to proceed• Identify the deductible expenses• Verify the deductions and whetherdeposits have been made• Tally with the challans• Find out whether there is anydiscrepancy• Come to the conclusion
  23. 23. BE PROFESSIONALBE PROFESSIONAL EXECUTE OPERATIONS IN PROFESSIONAL WAY FUNCTION LIKE A TEAM……DELEGATE TASKS TOMEMBERS DON’T SIT IDLE ( It sends a very wrong message toAssessee) BE COURTEOUS YET FIRM IN YOUR APPROACH KEEP THE RANGE HEAD UPDATED OF THEPROGRESS COLLECT ONLY THOSE DOCUMENTS THAT AREREQUIRED (Avoid Garbage)
  24. 24. PowersPowersBooks of a/cs and otherdocumentsCash, stock and valuablearticles1.Inspect2.Place identification3.Take extract4.Impound1.Verify2. Make an inventory
  25. 25. PrecautionThe person authorized to conductsurvey shall never remove cashor other valuables from the spotof survey
  26. 26. Record statementRecord statement u/s 133AGeneral information of the businessactivityRecord the discrepancies foundPoint out where proper deduction hasnot been made and record the reason
  27. 27. Issue 131• Where the required document couldnot be produced during the course ofsurvey, issue summons u/s 131 toproduce on a particular day
  28. 28. Report and proceedingSubmit a preliminary report within24 hours of survey completedSubmit the detailed report as earlyas possibleInitiate proceeding u/s 201(1)/201(1A) immediatelyComplete the proceeding withoutmaking delay
  29. 29. Thank You

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