The CBDT clarification follows the CBDT Circular[7] which lays down administrative mechanism for conduct of assessment proceedings (including pending assessments). The present CBDT instruction is a welcome move which directs the Tax Authority to grant Angel tax exemption in case of past years where assessment orders were passed before the date of 2019 DPIIT Notification. The Government of India has been proactive in resolving the concerns faced by the start-ups. In order to mitigate hardship caused to the start-up companies, the CBDT has, on realization of the lacuna, issued a clarification on 9 August 2019 to relieve recognized start-ups where addition is made for Angel tax income in assessment order passed before 19 February 2019. To claim such an exemption, the start-up company is required to submit self-declaration as required in the 2019 DPIIT Notification confirming that all the conditions laid down in the said Notification are fulfilled. “Start-up” companies which satisfy the conditions prescribed under the notification[4] issued by the Department for Promotion of Industries and Internal Trade (DPIIT) [5] (2019 DPIIT Notification) are exempt from the levy of Angel tax[6].

1. The initiative was launched to reduce visits by taxpayers to income tax offices and their interface with the taxmen, thereby bringing anonymity in proceedings.
2. However, where assessee has retracted from disclosure made during the Survey, such cases will be considered for scrutiny.
3. Accordingly, start-up companies which are recognized and have filed requisite declaration to the CBDT may apply for rectification of assessment order passed by the Tax Authority within the time limit prescribed under the ITL.
4. Moreover, assessees should declare their income earned within a financial year while filing their taxes and pay their tax liabilities within the due date.
5. As income tax is a type of direct tax and the Income Tax Department monitors income tax collection by implementing taxes, the IT department operates according to the guidelines laid down by CBDT through its periodic notices and circulars.
6. The tax department has, however, reserved the right to allocate an assessment case to a tax officer where complexity is involved.

It consists of a Chairman and six members, all of whom are appointed by the Central Government. The Chairman is the head of the CBDT and is responsible for the overall supervision and control of the direct tax administration in the country. The members are responsible for various functional areas such as legislation, assessment, collection, investigation, and human resource management. Central Board of Direct Taxes is the apex authority responsible for formulating policies & overseeing the administration of direct taxes in India. Taxation law is not only very complex as it requires specialised knowledge and expertise to implement, but also it necessitates various kinds of deterrent actions to ensure compliance by taxpayers.

119 of the IT Act for proper administration of the Act and for relieving the rigour of too literal a construction of the law for the benefit of the assessee in certain situations would be binding on the Departmental authorities. The Central Board of Direct Taxes (CBDT) also advises the government on all direct tax matters, drafts legislation relating to the issues concerning direct taxes promotes voluntary compliance, etc. The ITD has introduced several measures for taxpayer convenience, including simplifying tax return forms, enabling electronic transactions, and offering pre-filled tax return forms to reduce errors and save time. After that, in 2002, computerised returns processing was introduced all over India. In 2007, the All India Tax Network (TAXNET) was set up and it established a connection between 700+ offices across 500+ cities. 36 Regional Computer Centres the cbdt is a statutory authority functioning under the (RCCs) were consolidated into a single centralised database and the authorities launched an Integrated Taxpayer Data Management System (ITDMS) to draw a 360° taxpayer profile.

The list of prosecutable offences under the Act specifying the approving authority is annexed herewith. (iii) Persons responsible for paying any consideration to Indian residents for transfer of VDAs are obliged under Section 194S of the Act to deduct tax at source (TDS) at 1% with effect from 1 July 2022. He is placed above the officers of the rank of Lieutenant-General, Vice-Admiral or Air Marshal, CBI Director and Deputy Comptroller and Auditor General in the Order of Precedence.

Authority, yet the assessee has been found to be claiming tax-exemption/deduction in the return. The CBDT is empowered to issue directions and orders from time to time by way of relaxation of any of the provisions of various specified sections of the Income-tax Act. It is empowered to issue orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act. ► FB 2019 proposed to extend exemption from angel tax currently available for investment by a Venture Capital Company or a Venture Capital Fund (being a sub-category of Category-I AIF) in a Venture Capital Undertaking to investment by Category-II AIFs also. This left out other sub-categories of Category-I AIFs like infrastructure fund, social venture fund, SME fund etc. The clarification issued on 9th August,2019 provided that the provisions of the section 56(2)(viib) of the Act shall also not be applicable in respect of assessment made before 19th February, 2019 if a recognised Startups has filed declaration in Form No.2.

Has been confirmed at the 1st stage of appeal in favor of revenue or subsequently; even if further appeal of assessee is pending, against such order. C) any compounding application for an offence had been rejected previous ly solely for technical reasons. All communications between the National e-assessment Centre and the assessee will be exchanged exclusively by electronic mode. Finance Act 2018 had introduced three new sub Sections – 3A to 3C to Section 143 with a view to notify a new e-assessment scheme, where the assessment proceedings will be conducted in electronic mode, which will almost eliminate person-to-person contact to the extent it is technologically feasible. The Assessing Officer shall upload the underlying documents, on the basis of which notice u/s 148 was issued, on ITBA, for access by NaFAC.

Give basic details of the Central Board of Indirect Taxes (CBIC)?

It also enforces various tax laws and imposes fines on assessees for late filings and tax evasion. Subsequently, in July 2019, the Finance (No.2) Act, 2019 introduced several measures to ease the tax burden in the hands of start-ups and their promoters[4]. Thereafter, as promised by the Finance Minister in Budget Speech on 5 July 2019, the CBDT laid down a specific administrative mechanism for pending assessments of start-ups involving angel tax and other issues. This recent initiative by the CBDT is aimed to ease the compliance issues for start-ups. The CBDT Order is the latest in a series of proactive steps undertaken by CBDT to provide impetus to Start-up industry and clarify the ambiguities under the ITL. Earlier, on 5 March 2019, the CBDT issued a Notification to provide exemption from angel tax to start-ups satisfying the prescribed conditions.

Powers

The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex officio capacity also function as a division of the ministry dealing with matters relating to the levy and collection of direct taxes. The CBDT is headed by a chairman and also comprises six members, all of whom are ex officio special secretaries to the government of India. ► FB 2019 proposed to introduce claw back provision for “angel tax” exemption availed of by start-up companies in the event of breach of any of the notified conditions.

Simplified Income Tax Return Filing

O In case of “limited scrutiny with multiple issues” or “complete scrutiny” where assessment is conducted in case of other issues along with examination of levy of angel tax, the issue of angel tax shall not be pursued by the Tax Authority. Angel tax, under the Indian Tax Laws (ITL), refers to a tax on premium received by a closely-held company on issue of shares in excess of the fair market value (FMV) of the shares. • In addition, the provision does not apply when shares are issued to a class or classes of persons as notified by the CG.

• In case of unquoted shares and securities other than equity shares in a company not listed in any recognized stock exchange, as per Rule 11UA, the FMV is the estimated open market value as may be determined by a Category I MB or Accountant. (iv) Cases where registration/approval under various sections of the Act such as 12A, 35(1)(ii)/(iia)/ (iii) , lO(23C), etc . Have not been granted or have been cancelled/withdrawn by the Competent Authority, yet the assessee has been found to be claiming tax-exemption/deduction in the return.

“Angel tax” refers to taxation of excess premium received by a closely-held company from a resident investor (i.e., consideration received in excess of fair market value of shares). But, the claw back was proposed for the whole premium (consideration received in excess of face value of shares), instead of only excess premium. Established in 1922, it consists of various roles and responsibilities under the Indian government’s administration. The CBDT oversees the department, providing regulations for direct tax policies. Online services like e-filing and tax payments are managed by the department, enhancing taxpayer convenience. The 2019 DPIIT Notification, however, did not explicitly provide any relief where the assessment proceedings are pending with the Tax Authority.

Where such cases are not centralized and no Return of Income is filed in response to notice this 153C, the Assessing Officer concerned shall serve notice u/s 142(1) of the Act calling for information. Where such cases are not centralized and Return of Income is filed in response to notice u/s I 53C, the Assessing Officer concerned shall serve notice u/s 143(2) of the Act. Where such cases are not centralized and no Return of Income is filed in response to notice u/s 153C, the Assessing Officer concerned shall serve notice u/s 142(1) of the Act calling for information. Transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned. These Notifications are issued so as to confer exemption or qualification for eligibility to institutions referred to in section 10 of the Act. The Department has also closely monitored large cash deposits made by people post demonetization.

As per section 279(1) of the Act, the sanctioning authority for offences under Chapter XXII is the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. For proper examination of facts and circumstances of a case, and to ensure that only deserving cases below the threshold limit as prescribed in Annexure get selected for filing of prosecution complaint. Such sanctioning authority shall seek the prior administrative approval of a collegium of two CCIT/DGIT rank officers, including the CCIT/DGIT in whose j urisdiction the case lies. The Principal CCIT(CCA) concerned may issue directions for pairing of CCslT/DGIT for this purpose. In case of disagreement between the two CCITIDGIT rank officers of the collegium, the matter will be referred to the Principal CClT(CCA) whose decision will be final. As the Department’s apex body charged with the administration of taxes, the Central Board of Revenue came into existence due to the Central Board of Revenue Act.