In what could be a major relief to the corporate sector, the Central Board of Direct Taxes (CBDT) has decided not to scrutinize tax returns of more than 1,000 top companies provided no serious disputes are pending against them. The annual returns of tax complying companies would not be scrutinized this year. The decision has been taken by the CBDT to encourage better tax compliance among the corporate, a senior finance ministry official, who did not wish to be identified, said. Last year, CBDT scrutinized tax returns of about 200 A group companies listed on the Bombay Stock Exchange, 500 National Stock Exchange companies and all non-banking finance companies. The tax returns of all the banks and public sector units were also checked. The decision to relax scrutiny norms follows an announcement by finance minister P. Chidambaram after the annual meeting of chief commissioners of income tax. Chidambaram had then said that the government would ensure that tax complying taxpayers are not harassed by the income-tax (I-T) department. When a firm or individual is under scrutiny, the assessing officer issues notice to the taxpayer within a year of filing the return and investigates any tax evasion by verifying claims about tax exemptions, amount in bank accounts, cash reserves, details of loans, gifts and credit cards. Under the new rule, if the I-T department has not raised tax demand of Rs10 lakh or more in addition to the deposited tax, and if it has not won any tax suit against the firm, the I-T officers would not open returns for scrutiny. But the department may consider to open tax returns of companies if they infused fresh capital of Rs50 lakh or more during last fiscal or filed for tax exemptions for the first time under any scheme. In 2007-08, the department scrutinized about 320,000 tax returns, including about 51,000 filed by corporates. This resulted in an additional tax demand of Rs73,200 crore.