Every year the tax department selects several cases of tax assesses for the purpose of scrutiny. This calls for a closer look at the details based on which there would be a final assessment made for the income declared and the details that have been filed by the individual for a specific financial year.
There is a closer look by the tax department of the income tax returns that are filed by several taxpayers. This is undertaken to ensure that there is no income that is escaping the attention of the tax man as well as that the various details that are mentioned in the tax returns have done so properly.
This will usually involve getting additional details of the various incomes that has been mentioned including minute details and proof of the expenses and income figures that are mentioned in the tax return.
The tax authorities would then go through this and then decide as to whether some income needs to be added or some expenses have to be disallowed.
There are several conditions that are laid out by the tax department that will trigger the possibility of a tax scrutiny. There are two ways in which this procedure is actually triggered. One is a random process whereby the computer system pulls out several returns that would come under the scrutiny.
The other condition would be when there are specific conditions that are fulfilled by the taxpayer and in this case the tax authorities would manually decide that this is the return that has to be scrutinised and hence further action as required would be undertaken.
It is thus very vital that the individual takes a look at the various conditions that are mentioned for the return to come under the scrutiny list.
One of the ways in which the individual tax payer would be covered and thus would be required to submit the various details for scrutiny is when there are conditions that are triggered automatically.
This would include things like a very large amount of tax free income that exceeds the figure that has been set by the tax authorities for this purpose. It could also happen when there are large scale changes in the condition that is shown by the tax returns and hence this results in a need for the tax authorities to look at the details with greater attention.
There could also be situations wherein if there is a notice given under certain sections of the income tax act then the individual would be covered for scrutiny.
The arising of such a condition would require the individual to submit various details for the purpose of completion of the assessment. This becomes important because the individual needs to keep all the required details ready with them so that they are able to give the required proof when necessary.
Often the homework is not done whereby when they are called for there is a scramble to get the various documents and this could lead to several of them being missed out.
The end result of this is that the individual would end up having to pay higher tax on the whole income because several of the expenses for which there is no adequate proof would be disallowed and hence this is something that has to be watched out for.
There is a need to be ever alert and ready and hence the collection of the proof and details of the various income and expenses is essential.
