Income tax scrutiny procedure

Question

Accepted Answer

Income tax scrutiny procedure involves the examination of a taxpayer's financial records and tax returns by the tax authorities.

Income tax scrutiny is a process where the tax authorities review a taxpayer's financial records and tax returns to ensure compliance with tax laws.
During scrutiny, the tax authorities may request additional information or documents from the taxpayer to verify the accuracy of the reported income and deductions.
The scrutiny procedure can be initiated either randomly or based on certain criteria, such as high-value transactions, suspicious activities, or discrepancies in the tax return.
Once selected for scrutiny, the taxpayer may receive a notice from the tax department specifying the documents and information required for examination.
The taxpayer is usually given a specific time period to respond and provide the requested details.
During scrutiny, the tax authorities may conduct a thorough examination of the taxpayer's books of accounts, bank statements, invoices, and other relevant documents.
They may also conduct interviews or seek clarification from the taxpayer regarding certain transactions or financial activities.
Based on the scrutiny findings, the tax authorities may either accept the tax return as filed, make adjustments to the reported income or deductions, or initiate further investigation for potential tax evasion.
It is important for taxpayers to maintain proper documentation and records to support the accuracy of their tax returns and facilitate the scrutiny process.
Non-compliance with the scrutiny procedure or failure to provide the requested information may lead to penalties, fines, or legal consequences.

Accepted Answer

a Notice under This Provision is to be issued with in six month from the end of the Financial year of Filing Return u/s 143(2)

Income tax scrutiny procedure

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