Income-tax officials must cross-check with its tax payer profiling portalInsight before initiating any proceeding, the Central Board of Direct Taxes has said. The tax department has come out with detailed guidelines on the reopening of assessment proceedings and initiation of action following a Rs 50-lakh fine imposed on the department by the AllahabadHigh Court.

An internal circular issued by the CBDT — accessed by The Telegraph — showed the department has directed its officers to carry out due verification and also give an opportunity of being heard to the taxpayer before initiating the proceedings. It has issued instructions to all its officers that for initiating proceedings under Section 148/147 of the Act, any information available on the database/portal of the department should be verified before drawing any adverse inference against the taxpayers.

The instructions further state that “the information made available/data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature technical nature, etc”. The circular also stated that “if the result of enquiry/information available suggests that the income chargeable to tax has escaped assessment, the AO shall provide an opportunity of being heard to the assessee by issuing a show cause notice u/s 148A(b) of the Act. The notice shall provide between 7 to 30 days to the assessee for submitting the reply”.

“If an assessee requests for a personal hearing, the same may be dealt,” the circular stated adding that “the AOshall mandatorily pass as peaking order u/s 148A/d) in all cases with the prior approval of the specified authority’ irrespective of whether issuance of notice u/s 148 is being recommended or not”.

Analysts said this is an admission by the CBDT that the information uploaded on the basis of which assessments have been reopened was/may not be correct.