Survey,verification
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This document discusses common TDS violations found during surveys conducted by the Income Tax Department. It outlines several types of common violations: 1) Non-deposition of taxes deducted, which is often seen in struggling businesses. 2) Failure to apply the normal deduction rates, as seen in an insurance business. 3) Failure to make any TDS deductions for a TPA (third party administrator) business. 4) Not treating non-refundable rent advances as attracting TDS under section 194I. 5) Misclassifying professional fees paid to guest lecturers as salary. The document provides guidance on purpose, selection, operation, and procedures for conducting TDS surveys
![•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 some
business/professional work/document is being done / kept
there.
•‰Business or residential premises of third parties, including a
Chartered Accountant, a pleader, or Income Tax Practitioner, of
whom the assessee may be a client, are not places which could
be entered into for the purpose of section 133A. (Circular no.
7- D dt 3/5/1967)
14](https://image.slidesharecdn.com/surveyverification-130514033213-phpapp02/85/Survey-verification-14-320.jpg)
Survey,verification
- 1. TDS Violation survey/verification By Shankar Bose Inspector of Income-tax MSTU, Puri
- 2. Common TDS violation-1 Most common Type of violation is non deposit of tax deducted It is common in the cases of ailing business organisations It was detected in many cases during the surveys
- 3. Common TDS violation-2 The normal rate of deduction was not applied It was found in the case of a Insurance business
- 4. Common TDS violation-3 In the case of TPA business no TDS was made Some cases have been covered under survey Depptt issued a circular
- 5. Common TDS violation-4 Non refundable advance paid against rent TDS attracts against advance u/s 194I It is an all India issue now
- 6. Common TDS violation-5 Professional fees paid by DAV college , chandigarh to guest lecturers were shown as salary It should have been professional payments
- 7. Common TDS violation-6 Compensation paid by the LA Collectors for compulsory acquisition of land It is applicable in the case other govt authorities also
- 8. New area-Credit Card Credit card issuing Bank Acquiring Bank Retail Merchant Bill settling Authority
- 9. Some other areas Transaction fees paid by the brokers to the stock exchange Professional fees paid by the coaching centre to the professionals Amount recovered by the banks from corporates and service charges received
- 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 fo verificationverification
- 11. Back Ground of Survey Introduced in the Act w.e.f 01.04.1964 Power was limited to- 1. The ITO 2. Inspector They were entitled to- 1.Inspect the books of a/cs 2.Place identification marks 3.Take extracts
- 12. Different kinds of survey Collection of information and evidences and utilize in scrutiny proceedings Collection of information relating toTDS Verification of Depreciation Verification of Deductions and Exemptions Recovery of outstanding demands
- 13. Purpose of TDS survey Whether TDS has been made against the expenditures which requires deduction Whether deduction has been made at proper rate Whether the tax deducted has been deposited to Govt. account in due time Whether the statements have been filed
- 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 some business/professional work/document is being done / kept there. •‰Business or residential premises of third parties, including a Chartered Accountant, a pleader, or Income Tax Practitioner, of whom the assessee may be a client, are not places which could be entered into for the purpose of section 133A. (Circular no. 7- D dt 3/5/1967) 14
- 15. What is meant by TDS compliance? T.D.S compliance means: Compliance with TDS provisions/TCS provisions as contained in the Income tax Act, 1961. TDS compliance includes:- deductions of TDS/TCS on payments/credits/advances whichever is earlier deductions of TDS/TCS under the correct section and correct rate as contained in Chapter XVIIB & XVIIC of the I.T.Act, 1961 payment of TDS/TCS by the prescribed date to the Central Government Account filing of TDS/TCS statements on prescribed forms by prescribed dates payment of interest due u/s.201(1A) in case of delayed payment. 15
- 16. Selection of case Deposit of TDS is lower than earlier years TDS statements are not being filed though it has its activity A special nature of payment where TDS is not made by similar deductors Any petition from deductee/outsider giving information of non payment of TDS Deductors not following the guidelines from CBDT
- 17. ANALYSIS OF ITD DATA CASES IN PROSECUTION LIST HABITUAL LATE FILERS (Late filing is closely linked to Late Payment) NON-FILERS CASES SHOWING NEGATIVE TREND (In a particular Section) CASES SHOWING SHIFT IN TDS (Particularly from 194J/194I to 194C ) 17
- 18. OPERATION: BASIS OF SELECTION GRIEVANCE APPLICATION FILED BY PERSONS TAX EVASION PETITIONs TRADE/NATURE OF BUSINESS ANALYSIS OF NEWSPAPER REPORTS/INFORMATION AVAILABLE THROUGH INTERNET ANALYSIS OF CASE LAW DECIDED IN FAVOUR OF REVENUE INFORMATION ARISING OUT OF DETAILS FILED ALONGWITH 197 CERTIFICATES INTERPRETATIVE ISSUES THIRD PARTY INFORMATION
- 19. BE PREPARED WITH BUSINESS MODEL OF THE ASSESSEE FROM T.A.R./ INTERNET WITH THE STRUCTURED QUESTIONNAIRE FOR STATEMENT WITH THE DATA FROM THE ITD SYSTEM/ RETURN OF INCOME WITH LIST OF DOCUMENTS THAT MAY BE ASKED ON ARRIVAL AT THE PREMISES 19
- 20. Nature of the place Place of business or profession Other place Books of accounts/documents or cash/stock, other valuables are kept.
- 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. How to proceedHow to proceed • Identify the deductible expenses • Verify the deductions and whether deposits have been made • Tally with the challans • Find out whether there is any discrepancy • Come to the conclusion
- 23. BE PROFESSIONALBE PROFESSIONAL EXECUTE OPERATIONS IN PROFESSIONAL WAY FUNCTION LIKE A TEAM……DELEGATE TASKS TO MEMBERS DON’T SIT IDLE ( It sends a very wrong message to Assessee) BE COURTEOUS YET FIRM IN YOUR APPROACH KEEP THE RANGE HEAD UPDATED OF THE PROGRESS COLLECT ONLY THOSE DOCUMENTS THAT ARE REQUIRED (Avoid Garbage)
- 24. PowersPowers Books of a/cs and other documents Cash, stock and valuable articles 1.Inspect 2.Place identification 3.Take extract 4.Impound 1.Verify 2. Make an inventory
- 25. Precaution The person authorized to conduct survey shall never remove cash or other valuables from the spot of survey
- 26. Record statement Record statement u/s 133A General information of the business activity Record the discrepancies found Point out where proper deduction has not been made and record the reason
- 27. Issue 131 • Where the required document could not be produced during the course of survey, issue summons u/s 131 to produce on a particular day
- 28. Report and proceeding Submit a preliminary report within 24 hours of survey completed Submit the detailed report as early as possible Initiate proceeding u/s 201(1)/ 201(1A) immediately Complete the proceeding without making delay
- 29. Thank You