Calling unnecessary documents in Scrutiny assessments

Calling unnecessary documents in Scrutiny assessments

During Scrutiny assessment the A.O waste not only his assessee time but also other parties with whom his assessee had entered into transactions. For verification purpose , notices are issued calling for information, documents, and evidences and sometimes for personal appearance as well.

However calling of information cannot be questioned. But whenever un-necessary information is called for it is a clear case of harassment. Today’s IT world wherever much information are available to the AO at a click of mouse and can be verified online or with reference to AO of other party should not be called for from the third parties.

Information which has no relation with the transactions of assessee should not be called from third party.

Wastage of time of all the person involved in scrutiny assessment :

Calling for unnecessary information, evidences, and documents is wastage of time of tax authorities and un-necessary piling of documents. The conclusive documents are enough so there is no need to just collect so many documents to make files bulky to show to higher authorities. This causes wastage of valuable time of tax authorities and staff.

Harassment practices can be in different forms like:

  1. Very Less short time is allowed.
  2. Unnecessary information is called for.
  3. Information which are readily available online on a click of mouse are called for in form of hard copies of such bulky documents like ITR, annual report etc.
  4. When personal appearance is required, lots of time is taken while hearing.
  5. Un-necessary questions are asked during personal appearance.
  6. Even when transactions are reflected in online information like 26AS TDS returns, AIR return with PAN, details are asked for which are available or have been furnished to the authorities by other party.


In the following table in the left column, examples of information called for by some assessing officers for verification of loan / deposit taken by his assessee are given

Information asked by AO of debtor Remarks
1 Proof of existence of assessee  (loan giver- third party)/ notice,  like Trade Licence, Electricity Bill, Telephone Bill. Why AO cannot rely on his assessee who has furnished information?
2 Copy of ITR for the A.Y. 2014-15 relevant to the F.Y. 2013-14 along with Computation of Income and Tax there on. No purpose of these documents as for loan verification these documents are not relevant. In any case ITR is available at a click of mouse.
3 Copy of Audited books of accounts – P/L account, Balance Sheet and Audit Report for the A.Y. – 2014-15. No purpose of these documents as for loan verification these documents are not relevant. In any case in ITR, which is available at a click of mouse, most of relevant information is provided.

In case of companies, in balance sheet consolidated amounts appears and any individual loan given cannot be verified from balance sheet. So there is no purpose of collecting balance sheet.

4 Copy of Ledger accounts of M/S. ….. (my assessee) in the books of M/S.  …. Third party. This is also not much relevant when information provided by assessee are sufficient and which are checkable with reference to TDS return, TDS claims, and ITR of both parties.
5 Details of All Bank Accounts with Bank Statement and Bank Reconciliation Statement for the A.Y. 2014-15. In fact this should also not be required. When the assessee/  party receiving money has shown his bank statement showing money received by way of cheque/ e-cheque and credited to his account by bank after realization of funds on cheque/ e-cheque issued by the loan creditor. Now-a-days bank statements , generally shows the manner of credit and party from whom funds have been received. In any case:

Why all bank accounts?

Why Bank reconciliation statement?

Copy of relevant Bank Statement can be sufficient, if at all one require to satisfy source of capital provided.

6 Duration of functioning from the present premises. This is not at all relevant. In case of companies, and other assessees filing returns,  in ITR date of birth /  incorporation is available.
7 Nature of Business / Brief description of Profession activity / Office Premises. This information are filled in ITR which is available at a click of mouse.
8 Scale of your Business. This is also not relevant.
9 Principal Person of the Company, Details of Directors and contact address/ mobile No/ Phone No. These are also not much relevant. In any case this information is also available in ITR which is available at a click of mouse.
10 Mode of Quantum of Loan to Assessee . PAN –    ) These information are already provided by loan debtor ( assessee)
11 Source of Loan Given. This is relevant, and can be asked for further queries.

Enquiry should be relevant to the purpose of enquiry:

The collection of information should be restricted to the extent required for the purpose of enquiry. e.g., if the  purpose of enquiry is to examine genuineness of transactions  like  loan given or taken, this  can be prima facie verified, if one find that the assessee company has deducted tax, which has been claimed by the creditor on income disclosed by him to his AO. This information is available in his ITR Of income tax website.

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