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IT upgrade to end I-T nagging: Tax scrutiny
January, 27th 2011

Income tax department is upgrading its system to ensure an assesse, scrutinised for a particular financial transaction, does not land in trouble the year after.

The income tax department has undertaken intensive upgrade of its software and systems responsible for picking up cases for intensive scrutiny. "We are upgrading the system," a senior Central Board of Direct Taxes official said.

Once the system is in place, a taxpayer who has undergone scrutiny for a large ticket transaction in an assessment year will not be investigated again when he puts those funds to use.

"The software will be able to make that distinction," he said adding that these measures were part of income tax department's initiative to minimise inconvenience to tax payers.

The CBDT has already exempted taxpayers from personal attendance if they are selected for scrutiny on the basis of a transaction reported in the annual information return. They can provide written reply in this case.

At present, the department carries out scrutiny of up to 2% of the total number of tax returns. The computer-aided scrutiny selection (CASS) system selects the cases at random-based on parameters based on intelligence and annual information return.

The Parliamentary Standing Committee on finance had asked the CBDT to intensify scrutiny as it helps it detecting tax evasion.

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