Circular No. 40/2016
                                               Government of India
                                                Ministry of Finance
                                           Department of Revenue (CBDT)

                                                                                               th
                                                          North Block, New Delhi, the 9             of December, 2016


Subject: - Directions under section 119 of the Income-tax Act, 1961-regd.-

            Recent initiatives of the Government to curb the black economy in the country has encouraged
people to shift towards digital mode of payment while making financial transactions. By adopting digital
mode of payment, no financial transactions would remain undisclosed and consequently an enhanced
turnover of business might get reflected in the books of accounts. Under the circumstances, an
apprehension has been raised that increased turnover in the current year may lead to reopening of
earlier years' cases involving lower turnover u/s 147 of the Income-tax Act, 1961 ('Act') by the Assessing
Officer causing undue harassment to tax payers.







2.          It is hereby clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing
Officer "has reason to believe that any income chargeable to tax has escaped assessment for any
assessment year" and not merely on the basis of any reason to suspect. Mere increase in turnover,
because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to
believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to
reopen past assessments in cases merely on the ground that the current year's turnover has increased.


3.           The above may be brought to the notice of all for necessary and strict compliance.

4.            Hindi version to follow.






                                                                                                              (Rohit Garg)
                                                                                                      Director-ITA.II, CSDT
(F. No. 225/326/2016/ITA.II)

Copy to :
       I.      Chairman, CBDT and all Members, CBDT
      ii.      PS to Revenue Secretary
     iii.      All Pr.Chief-Commissioners/Pr. Directors-General ofIncome-tax
     iv.       All JS/CsIT, CBDT
   V.          ADG(PR,PP & OL) with request for placing on official handle of the department
  VI.          Add!. CIT, Data base Cell for uploading on Departmental Website
 VII.          Web manager for uploading on incometaxindia.gov.in & placing in public domain
VIII.          ITCC, Central Board of Direct Taxes (3 copies)
  IX.          ProDGIT(Vigilance), N.Delhi
   X.          C&AG, N.Delhi
  XI.          Guard file

                                                                                                               (Rohit Garg)
                                                                                                      Director-ITA.II, CSDT