Orders setting aside assessments must be forwarded quarterly to zonal members in addition to previously required submissions.
The Board directed that, in addition to submitting six selected orders each quarter, the assessing authority must every quarter forward copies of orders setting aside the assessments to its Zonal member, ensuring centralized visibility of assessment annulments for administrative oversight.

Disposal of obsolete refund vouchers: retain partly used, cancel unused, collect, register and destroy securely with certified record.
Procedure requires ITOs to retain partly used refund voucher books for counterfoil reference and cancel unused vouchers; IACs/(Admn) to collect completely unused voucher and advice note books from ITOs, forward them to the Commissioner with register entries and receiving signatures; and Commissioners to ensure collection and arrange secure destruction by cutting and burning in the presence of a responsible officer, with particulars entered in a special register and a certification of destruction recorded.

Discontinuance of departmental statements: two recurring income tax reporting requirements have been withdrawn under MIS reform.
The CBDT ordered discontinuance of two recurring internal reports under its MIS reforms: the Telegraphic Report Indicating Monthly Disposal of Income tax Assessments and the Monthly Review on the Work of the I.A.C. (Assessment), effective June 1985, and directed that the instruction be circulated to subordinate officers.

Audit compliance under section 44AB: penalty under section 271B not initiated if audit report obtained and self assessment tax paid.
The Board directs that penalty proceedings for failure to comply with the audit obligation should not be initiated in the transitional year where the prescribed audit report is obtained by the Board's extended deadline and self assessment tax is paid within the normal return filing period, noting the recent notification of the procedural rule and practical difficulties in meeting the original specified date.

Order of recall by appellate tribunal not final; remedy via writ petition or special leave petition available.
An order of recall by the Appellate Tribunal for passing a fresh order on merits does not finally dispose of the matter; such recall orders are interlocutory and are more appropriately challenged by writ petition or by special leave to appeal, guiding the choice of forum for challenging tribunal recall decisions.

Deeming of tax proceedings as Civil Court enables prosecution on complaint by tax authority under penal law.
Proceedings before income-tax authorities are treated as judicial proceedings and the Finance Act, 1985, deems an income-tax authority to have Civil Court status to permit complaint-driven prosecutions under the penal law, while excluding applicability of specified criminal procedure provisions; the amendment operates from the commencement of the revised criminal procedure code.

Income tax reform: comprehensive restructuring of rates, deductions, withholding and wealth tax provisions affecting taxpayers and banks.
The Finance Act, 1985, comprehensively revises direct taxation by prescribing new income tax rates and withholding schedules for assessment year 1985 86 and financial year 1985 86, reduces corporate and personal tax rates while abolishing surcharge for non corporate taxpayers, retains a company surcharge subject to a deposit option, and preserves partial integration of agricultural income for advance tax. It enacts targeted Income tax amendments raising exemption limits and modifying salary reliefs and perquisites, introduces sectoral deductions (including for tea growers and know how), substitutes export incentives, tightens compliance and penalty provisions, reforms wealth tax exemptions and rates, and discontinues interest tax on scheduled banks.

Capitalisation of post commissioning interest disallowed, so such interest cannot support investment allowance or depreciation.
Interest attributable to the period after installation and commencement of production may not be capitalised; amounts capitalised for such post commissioning interest, including future interest, do not qualify for investment allowance or depreciation. An earlier Board instruction misstated the statutory effective year by oversight; that reference is corrected to reflect the statute's actual commencement date, and officers should note the clarification.

Jurisdiction of income-tax officers: concurrent jurisdiction for ITOs, with search cases and senior scrutiny allocation specified.
Persons posted as Income-tax Officers at an IAC headquarters are to be given concurrent jurisdiction over all Range cases at that station, except that search and seizure cases will be specially allocated to a limited number of officers and will not be concurrent. Concurrent ITOs will normally handle both scrutiny and summary assessments, with higher-value and randomly selected prior summary cases routed to scrutiny and allocated to a few senior ITOs sufficient to meet action-plan targets.

Search and seizure priority mandates completion of cases within prescribed period and redeployment of officers to handle investigations.
Redeployment orders prioritise search and seizure cases for completion within prescribed periods with dedicated officers; next, senior officers must handle scrutiny cases with a focus on thorough investigation and prosecution referrals; thereafter, Inspectors and ITOs will complete summary assessments under existing instructions with expanded Inspector authority in company circles. Administrative staff are to be reassigned to post-assessment tasks including record linkage, computation checks, order and notice preparation, and dispatch to ensure smooth workflow.

Deductions under Section 80G: donations to Indira Gandhi Memorial Trust eligible without ceiling, effective assessment year 1985-86.
Donations to the Indira Gandhi Memorial Trust are placed on par with funds of national importance and qualify for deduction under section 80G without any ceiling, effective for assessment year 1985-86 and subsequent years; donations made prior to 21 February 1985 are also eligible if other statutory conditions are met.

Weighted deduction under Section 35B: commissions for procuring orders excluded per Madras High Court guidance.
The Board reiterates that weighted deduction under section 35B is available only where statutory conditions of subsection (1)(b) are strictly met; commission payments to agents qualify only if they relate to the specified works and services and are not in the nature of remission or trade discount. The Madras High Court decision that commissions paid solely for procuring orders are not covered must be followed when deciding such claims.

Reopening assessments under section 147 is not justified solely by higher advance tax declarations; concealed income remains assessable.
Reopening assessments under section 147 cannot be founded solely on a taxpayer's declaration of a much higher income for advance tax; established judicial principles must guide any reopening or roving inquiries. A higher advance tax estimate cannot be offset against income concealed in an earlier year, which remains assessable in that year; voluntary disclosure and application for relief from penalty and interest are the appropriate taxpayer remedies.

Inter-corporate deposits treated as loans under company law; statutory restrictions apply to intra-group advances.
The Law Ministry advised that deposits kept by one company with another qualify as loans and therefore the statutory provisions applicable to loans between companies are attracted to inter corporate deposits, a position informed by prior judicial authority.

Revenue deduction for security deposit allowed on payment under tax law; refund is taxable when returned.
The Board advises that the security deposit for a telex connection may be treated as a revenue expenditure deductible in the year of payment if claimed, because it does not earn interest while the equipment is installed. When the Postal Authorities refund the deposit on closure of the connection, the refund must be treated as income of the assessee in the year of refund.

Penalty initiation threshold raised; routine penalty proceedings curtailed and pending minor cases to be dropped.
Instruction No.1622/CBDT requires that penalty proceedings be initiated only after application of mind and establishment of a prima facie case, with return annotations and other records considered; it increases the administrative de minimis threshold for commencing penalty actions and directs that pending proceedings below that threshold be dropped. Officers must record a footnote when penalty is not pursued, issue self speaking well reasoned orders when penalty is levied, and avoid cyclostyled printed penalty orders.

Search and seizure procedures: expedite completion and quantify concealed income within prescribed timeframes to protect revenue.
Administrative instructions require rotational deployment of authorised officers for searches, immediate telex reporting of core search particulars to headquarters and the Director of Inspection, and a detailed follow-up report identifying seized assets, persons, premises, and the assessing officer. The Investigation Wing is limited to hot pursuit enquiries; assessing officers must complete scrutiny and quantify concealed income promptly, aiming to finalise quantification within 120 days, retain sufficient seized assets where large demands arise, and continue investigations notwithstanding settlement applications.

Approval of gratuity funds: transferability of equitable interest on voluntary exit should not bar statutory approval where fund compliance exists.
Approval to a gratuity fund should not be refused solely because it permits transfer of an employee's equitable interest to another approved gratuity fund when the employee leaves service voluntarily before the specified retirement age; if the fund otherwise complies with Part C of the Fourth Schedule to the Income-tax Act and the relevant Income-tax Rules, approval should be granted.

Sample scrutiny selection requires random sampling of summary assessments, documented folders, stamping, inspections, and central reporting requirements.
Selection for sample scrutiny requires a Commissioner determined random start and interval selection from the prior year's summary assessments, decision of selected cases in August, maintenance of case lists by ITO and IAC, and certification to the Director of Organisation & Management Services(I.T) by 15th September; each selected case must have a folder and be rubber stamped and initialed to show selection, with some cases inspected annually and Board inspections verifying compliance.

Intensive scrutiny of tax assessments to detect evasion and prepare prosecution-ready files while preserving evidence.
The instruction mandates intensive scrutiny of selected assessments to detect errors and tax evasion, guiding officers to use reputational information, inter office intelligence, abnormal wealth changes, and account irregularities to identify potential prosecution cases. It prescribes investigative steps: review prior profit and wealth records, examine audit and cost auditor notes, obtain wealth statements, and apply trade specific account investigation methods. Where fraud is found, original documents and statutory statements must be preserved, independent evidence collected, expert opinions obtained, witnesses' statements recorded without coercion, counsel consulted, and administrative approval secured before prosecution.