Guidelines for Conducting Surveys under Section 133A by S. Mohd Mustafa, IRS
Explore detailed insights on selecting and conducting surveys under Section 133A by S. Mohd Mustafa, covering the importance of surveys for assessment, recovery, and enforcing provisions like TDS/TCS. Understand the crucial role of surveys for gathering information related to stock verification, cash on hand, unaccounted sales, expenses, and more. Learn the criteria for selecting cases for survey, including identifying stock, sales, and purchase suppression.
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HOW TO SELECT & CONDUCT SURVEYS U/S 133A BY S.MOHD.MUSTAFA, IRS, JCIT, TPO, CHENNAI
SURVEYS U/S 133A WHY? SURVEY IS A TOOL FOR COLLECTION OF INFORMATION 1. USEFUL FOR ASSESSMENT 2. USEFUL FOR RECOVERY 3. USEFUL FOR ENFORCING TDS/TCS PROVISIONS
SURVEYS FOR ASSESSMENT TO COLLECT INFORMATION, i.e., TO VERIFY- 1. ACTUAL STOCK ON HAND/WORK-IN-PROGRESS 2. ACTUAL CASH ON HAND 3. UNACCOUNTED/SUPPRESSED/UNBILLED SALES 4. BOGUS/INFLATED PURCHASES/SALES 5. INFLATION OF EXPENSES 6. IF ALL WORKING PARTNERS ARE WORKING 7. IF ASSETS INSTALLED/PUT INTO USE 8. PERSONAL/DIVERTED USE OF ASSET/EXPENSE CONTD..
SURVEYS FOR ASSESSMENT (CONTD.) 9. UNACCOUNTED INVESTMENTS/BANK A/C 10. GENUINENESS OF PAYMENTS TO RELATIVES 11. GENUINENESS OF LOAN/TRADE CREDITS 12. CORRECTNESS OF CLAIM OF DEDUCTIONS 13. INADEQUATE/EXCESSIVE DRAWINGS 14. MAINTENANCE OF BOOKS OF ACCOUNT 15. ACUAL COST OF CONSTRUCTION 16. ON-MONEY/BOGUS CLAIMS FOR CAP. GAINS 17. STEEP FALL IN G.P.
SELECTION OF CASES 1. SUSPECT STOCK SUPPRESSION IF: -CL. STOCK IS MUCH LOWER THAN OP. STOCK -CL. STOCK IS TOO LOW WHEN COMPARED TO TURNOVER OR SIZE OF SHOP (UNLESS SHOP IS PROPOSED TO BE CLOSED/SHIFTED) - CL.STOCK IS CONSTANT DESPITE INCREASE IN SALES - NO CL. STOCK OF WORK-IN-PROGRESS & RAW MATERIALS IN MANUFACTURING CASES - CL.STOCK VALUE NOT MATCHING WITH QUANTITY (CLAIMED AS DUE TO LIFO, OBSOLETE/DEADSTOCK, ETC) - NO CL.STOCK WHEN THERE MUST BE SOME (HOTELS).
SELECTION OF CASES (CONTD.) 2. SUSPECT SALES SUPPRESSION IF: -SALES FIGURE IS EQUAL TO/LESS THAN CL.STOCK -DAILY SALES FIGURE (SALES/NO. OF WORKING DAYS) IS TOO LOW WHEN COMPARED TO STOCK, SIZE OF SHOP, NO. OF EMPLOYEES, ETC -UNBILLED SALES IS COMMON TO THE BUSINESS (e.g. JEWELLERY, ETC) -DIFFERENT SOFTWARES ARE USED FOR SALES & ACCOUNTS -LESS BUSINESS INCOME BUT MORE MISC./EXEMPT INCOME -INCREASE IN BALANCE SHEET TOTAL WITHOUT PROPORTIONATE INCREASE IN INCOME - FALL IN TURNOVER IS NOT EXPLAINED BY NEW COMPETITION, ETC -SEVERAL BILLING MACHINES ARE USED -SALES AMOUNT IS IN ROUND FIGURES
SELECTION OF CASES (CONTD.) 3. SUSPECT BOGUS/INFLATED PURCHASE IF: - PURCHASE FIGURE OF MARCH IS MUCH MORE THAN OF OTHER MONTHS (BUT SALES IS NOT) - SAME BALANCE, AS PER LAST BALANCE SHEET, OF SEVERAL TRADE CREDITORS CONTINUES - PURCHASE BILLS PRODUCED IN HEARING DO NOT APPEAR TO BE GENUINE (e.g. NO FOLDINGS, CONSECUTIVE SL.NO., NO VAT/GST/PHONE NO.) - CASH PURCHASE IS PERMITTED UNDER RULE 6DD - INCREASE IN TRADE CREDITORS FIGURE WITHOUT INCREASE IN STOCK/TURNOVER - CONSUMPTION OF RAW MATERIAL IS MORE THAN NORMAL - TAX-EXEMPT DOUBTFUL CREDITS IN CAPITAL ACCOUNT
SELECTION OF CASES (CONTD.) 4. SUSPECT BOGUS SALES IF: - CASH SALES AT MUCH HIGHER THAN NORMAL FIGURES RECORDED PRIOR TO CASH DEPOSITS - ESPECIALLY IF VAT/GST RATE/GP MARGIN IS LOW 5. SUSPECT INFLATION OF EXPENSES IF: - SUPPRESSION OF PURCHASES IS NOT POSSIBLE - HUGE TURNOVER AND/OR G.P. BUT LOW N.P. - UNCOMMON OUTSTANDING LIABILITIES - VOUCHERS NOT PRODUCED DURING SCRUTINY - TAX-EXEMPT DOUBTFUL CREDITS IN CAPITAL ACCOUNT - AMOUNTS ARE IN ROUND FIGURES
SELECTION OF CASES (CONTD.) 6. SUSPECT WORKING PARTNERS IF: -HUGE REMUNERATION IS DEBITED TO SEVERAL PARTNERS, ESPECIALLY LADIES, NOT HAVING MUCH INCOME FROM ANY OTHER SOURCE - THERE IS TAX ARBITRAGE 7. SUSPECT DATE OF INSTALLATION/USAGE IF: -BOUGHT CLOSE TO 30THSEP & 31STMARCH - DEPRECIATION CLAIM IS HUGE
SELECTION OF CASES (CONTD.) 8. SUSPECT PERSONAL/DIVERTED USE OF ASSET/EXPENSE IF: - MORE THAN ONE ASSESSEE, WITH TAX ARBITRAGE, IS IN SAME PREMISES - DEPRCN. CLAIM FROM MANY HIGH-END CARS 9.SUSPECT GENUINENESS OF TRADE CREDITS IF: - TRADE CREDITS SOURCE FIXED ASSETS - SAME BALANCES CONTINUE FROM LAST YEAR
SELECTION OF CASES (CONTD.) 10.SUSPECT GENUINENESS OF LOAN CREDITS IF - LOANS ARE FROM EMPLOYEES & CLOSE RELATIVES EVEN IF ASSESSED TO TAX - LOANS ARE FROM NON-ASSESSEES 11. SUSPECT GENUINENESS OF PAYMENTS TO RELATIVES IF: -THEY ARE FOR COMMISSION, BROKERAGE, ETC -THERE IS TAX ARBITRAGE - EVEN IF PAID BY CHEQUE AFTER TDS
SELECTION OF CASES (CONTD.) 12. SUSPECT DRAWINGS IF:- -INADEQUATE -EXCESSIVE 13. SUSPECT CLAIM OF DEDUCTIONS IF: -SUPPORTING EVIDENCES NOT READILY FILED - ELIGIBILITY CRITERIA IS NEAR BORDERLINE
SELECTION OF CASES (CONTD.) 14. TO ASCERTAIN COST OF CONSTRUCTION & SOURCES: -TO FIND OUT ACTUAL COST OF LARGE CONSTRUCTIONS BY COLLECTING DELIVERY CHALLANS OF MATERIALS USED & EVIDENCE OF LABOUR EMPLOYED - TO FIND OUT ACTUAL SOURCES FOR CONSTRUCTION 15.IF ON-MONEY/FALSE CLAIMS OF SOURCES OR IMPROVEMENTS ARE SUSPECTED IN PROPOSED TRANSFER OF PROPERTIES FOR HUGE AMOUNTS:- BY CONDUCTING SURVEY BEFORE EXECUTION OF SALE DEED- (1) EVIDENCE FOR ON-MONEY & FALSE CLAIMS OF IMPROVEMENTS MAY BE FOUND (2) FALSE CLAIM OF TAX-FREE SOURCES MAY BE PREVENTED
SELECTION OF CASES (CONTD.) 16. SUSPECT FALL IN G.P. RATE IF: -G.P. RATE DECREASE WITHOUT SUBSTANTIAL INCREASE IN TURNOVER -ABNORMAL VARIATIONS IN G.P. RATE OVER THE YEARS - GROSSLY LESS THAN NORMAL G.P. RATE
