Valuation Cell referral required for assessments when an assessee claims building construction or suspected understatement of property value.
Refer to the Valuation Cell where, during a pending assessment, an assessee claims to have constructed a building and declares the cost of the whole building at or above the Board's prescribed high threshold; this is in addition to existing instructions to refer cases of suspected understatement in immovable property value that meet the earlier threshold, and assessing officers must be notified of these combined referral requirements.

Salary definition for gratuity calculation clarified: periodic pay counts, allowances excluded; year means calendar year.
Salary for clause (10) means periodical payments by an employer to an employee as compensation for services; allowances, perquisites, bonus or gratuity are excluded unless an allowance is merged into salary. The word year (except in "year of completed service") denotes a calendar year (January-December); "each year of completed service" means successive twelve-month periods reckoned from the date of joining, so averaging periods refer to calendar years immediately preceding the year of payment.

Discretion to treat disputed tax liabilities as non-default while appeal is pending, while undisputed taxes must be recovered.
An assessing officer may, in his discretion, treat an assessee as not being in default as to amounts that are specifically disputed while an appeal remains pending; that discretion applies only to disputed taxes. Assessing officers must nonetheless actively recover undisputed taxes and must not allow assessees to withhold payment of undisputed demands because an appeal has been filed, with senior officers supervising compliance.

Refund claims timing: complete refund proceedings promptly to avoid statutory interest for delayed grants under income tax rules.
The Board instructs that refund proceedings under the Income tax refund provision must be completed expeditiously within the statutory six month period from the date of claim; delays until the end of the general assessment time limit are not permissible where returns or revised returns are filed under the return provisions, because failure to grant refund within six months attracts statutory simple interest payable by the Government.

Personal guarantees for directors should be exceptional; lenders must seek undertakings barring any consideration received or paid.
Guidelines require that personal guarantees of directors should not be taken routinely and only where genuinely warranted after appraisal; when management quality, managerial stake, viability and satisfactory financial position are established guarantees are ordinarily unnecessary, including for widely held or professionally managed companies. Guarantees may be appropriate for closely held concerns, to ensure continuity or controlled management changes, for unsecured advances to lower-rated public companies, for subsidiaries or companies with unsatisfactory finances, and where interlocking of funds exists. Where guarantees are obtained, lenders must secure undertakings prohibiting payment or receipt of any commission, brokerage, fees or other consideration, and include this as a specific facility condition.

Centralisation of tax investigations: prioritise complex suspected concealment; territorial commissioners to screen and propose transfers promptly.
Commissioners must transfer completed assessment files that no longer require investigation from Central charges to territorial charges, and select for centralisation only those cases where suspected substantial concealment necessitates sustained examination of books and enquiries. Territorial Commissioners have primary responsibility to screen and propose transfers in consultation with Central Commissioners, while Central Commissioners may initiate proposals when they have relevant information. Transfers must be completed and a compliance report submitted within the prescribed timeframe.

Disallowance under Section 40A(3) prompts postponement of assessment completion pending government consideration of rule amendments.
An administrative instruction directs that assessments should not be completed in cases where payments for business expenditure are to be disallowed under Section 40A(3) pending Government consideration of amendments to the Rules; assessments not involving that provision should proceed normally.

Tax rate restructuring increases progressivity and adds targeted rules on trusts, wealth and withholding consequences.
Finance Act, 1970 revises income tax and withholding rate structures, expands a consolidated investment deduction for specified financial assets, narrows exemptions and tightens accumulation and forfeiture rules for charitable and religious trusts (with new filing obligations), subjects private discretionary trusts to a flat tax regime with limited exceptions, brings capital gains on agricultural land in defined urbanised areas within charge with a rollover relief, disallows domestic entertainment and non holiday guest house deductions, creates Additional Commissioners with allocated functions, and reforms wealth tax and gift tax rates and exemptions.

Last assessed income determination affects scheme eligibility; partnership cases excluded if any pending year exceeds threshold.
The instruction clarifies that last assessed income means income last assessed as on the first day of the financial year. For partners' cases, if the returned income for any pending assessment year exceeds the scheme threshold, the partnership case is excluded from the Small Income Scheme. Loans or cash credits up to the indicated small balance-sheet amount may be accepted without further enquiry, that limit having been fixed on the basis of balance-sheet figures.

Bank information access restricted; general requests barred, specific bank records obtainable only via formal summons procedure.
General requests to banks for information to identify agricultural wealth-tax assessees are prohibited to protect rural banking and deposit mobilisation. Information in specific cases may be obtained only by issuing a summons on the bank concerned under the statutory summons procedure, and officers are directed to communicate this restriction to all staff.

Power of survey: systematic door-to-door inspections to uncover undisclosed income and ensure comprehensive tax coverage.
Power of survey is mandated as a primary tool to detect undisclosed income and wealth through methodical door-to-door and shop-to-shop inspections, with Commissioners required to plan comprehensive multi-year coverage prioritising affluent areas and markets. Local property registers must be used to ensure no premises are omitted. Inspectors are to conduct integrated enquiries for all direct taxes on owners and occupants and produce precise factual reports, while survey circles must test-check a portion of inspectors' work and report monthly to DI(IT&A).

Valid return principle: late-filed loss returns before assessment preserve entitlement to loss carry forward under tax law.
A return filed claiming a loss at any time before assessment is a valid return and does not automatically forfeit the taxpayer's entitlement to loss carry forward; the Board's earlier instruction to disallow carry forward where the loss-return missed the prescribed time is superseded and assessing officers should apply this approach and reconcile pending appeals accordingly.

Advance tax accounting: collections to be recorded under Income tax on companies sub head, changing adjustment and refund procedures.
Revises accounting procedure so that advance tax collections from companies are recorded under a new sub head "Advance payment of tax" subordinate to the minor head Income tax on companies, with challan annotation until printed forms are available and transfer of previously booked gross collections into the new sub head. Adjustment memos to Treasury on completion of assessments are discontinued; prior Treasury adjustments must be reversed by contra debits in 1970 71 accounts and consolidated statements sent to Accountants General. Refunds of advance tax are to be accounted under the sub head "Other refunds" within Income tax on companies using regular refund vouchers.

Adjustment of advance tax requires removal of misclassified demands and corrective transfer entries after system abolition.
The Board directs that amounts wrongly shown as awaiting adjustment of advance tax under Taxes on Income other than Corporation Tax be removed by requesting Accountants General to effect transfer entries; Commissioners and Additional Commissioners (Recovery) must ensure no demands are shown as awaiting such adjustment. The Board further notifies abolition of the adjustment system for Corporation Tax effective 1 April 1970 and requires urgent corrective action so misclassified demands are cleared before the next quarterly statement.

Implementation of appellate orders: directive to liquidate tax arrears using allocated officers by a specified deadline.
The Board directs Commissioners and Additional Commissioners of Income-tax (Recovery) to give effect to appellate orders and liquidate arrears arising from non-implementation of such orders by the specified deadline, emphasizing governmental priority on arrears reduction. Additional Income-tax Officers have been posted for recovery work and CsIT/Addl. CsIT(Recovery) are instructed to utilise these officers and the annexed charge-wise arrears statement to expedite and monitor implementation.

Characterisation of property as joint family does not constitute transfer under gift tax, department to withdraw appeals.
The Supreme Court held that declaration impressing self-acquired assets with the character of joint Hindu family property does not amount to a transfer under the Gift Tax Act. The Board directs withdrawal of departmental appeals on this point and requires that in assessee appeals the point be conceded, with Commissioners and Gift-tax officers issuing instructions and noting the legal position.

Revisionary powers under income tax law assigned to additional commissioners, reallocating administrative functions and staff advances authority.
Additional Commissioners were authorised to perform revisionary powers under sections 263 and 264 of the Income tax law, with Commissioners retaining jurisdiction over recruitment examinations. The intention also transferred sanctioning of special loans and advances from Provident Fund accounts for non gazetted staff to Additional Commissioners, reflecting a reallocation of specified administrative and non statutory technical functions.

Penalty for concealment of income: false cash credit explanations alone do not warrant penalty; deliberate concealment required.
Penalty for cash credits requires evidence that the amount represented assessable income and that the assessee consciously concealed income or deliberately furnished inaccurate particulars; an assessment finding alone is not conclusive and penalties imposed merely because an explanation is false should be dropped or withdrawn where no cogent evidence exists. The same standard applies under the corresponding later provision except where a statutory amendment made penalties leviable even for non deliberate inaccuracies in returns filed after that amendment.

Penalty review under section 271(1)(a): sample checks ordered to assess routine levy and report findings.
Directs officers to sample-check penalty imposition under section 271(1)(a) by selecting four specified Circles, choosing 100 random cases per Circle (e.g., every 5th or 7th from the G.I.R.), examining one assessment per case completed on or before 31-3-1967, and recording particulars in Proforma 'A'; aggregate statistics on delayed returns, proceedings started, penalties levied, deleted, upheld or under appeal must be reported in Proforma 'B' to the Board by 30-9-70.

Communication of search orders required so affected person can appeal only when reasons are disclosed.
An order under section 132(8) should invariably be communicated to the person concerned because the order is appealable and the assessee cannot appeal unless informed of the reasons; prior Board instructions are modified to this extent, and the Board has approved filing an appeal before the Division Bench in the present case.