Special Leave Petition to overturn adverse precedent; file promptly with service certificate and order copy.
Where a tribunal decision follows an earlier High Court ruling and the department's appeal on that point is pending, file a Special Leave Petition under Article 136 directly from the tribunal order rather than re raising the issue before the High Court. File within ninety days of service of the tribunal order and include a certificate of service and the copy of the served order. If the tribunal decision raises both issues covered by existing High Court precedent and other issues, seek a Reference to the High Court on all issues to avoid piecemeal progression to the Supreme Court.

Reporting instruction correction clarifies source references and restores omitted column formulas for MPR(IT) data reporting.
Correction of Annexure A in Instruction No.1653 revises source references and restores omitted column formulas for MPR(IT) reporting: column B2 should adopt figures from item 7(b)(i) of Part V B (Current); column B6(ii) should adopt figures from Col.5(b) of Part V B (Current) only; omitted entries after B6(iii) are specified as the total of Col.6(i) and Col.6(ii), the Balance as Col.5 minus Col.6(iii), and the Total of arrears and current demand as Col.A(5) plus Col.B(7) (A5 + B7).

Disclosure immunity extended: voluntary disclosure and prompt tax payment grant immunity from penalty and prosecution, late filing excluded.
Amnesty extended to September 30, 1986 for disclosures relating to assessment year 1986-87 or earlier; disclosure of true income and wealth in returns and prompt payment of taxes due under section 140A of the Income-tax Act and/or section 15B of the Wealth-tax Act grants immunity from penalty and prosecution, but immunity does not cover penal consequences of late filing where the return is not filed by the due date under section 139(1) of the Income-tax Act or section 14(1) of the Wealth-tax Act.

Pendency reduction requirement mandates staged disposal of revision petitions with quarterly compliance reporting and action plan adherence.
Instruction mandates reducing a recorded pendency of 21,255 revision petitions by implementing an Action Plan that requires staged disposal across the quarters ending 30 June, 30 September and 31 December 1986, with the objective of reducing overall pendency by 78% by 31 December 1986; administrative units must adhere strictly to the schedule and submit a compliance report at the end of each quarter in the first week of the following month.

Agent turnover classification determines audit requirement; commission-only agents versus principal-like agents treated differently for turnover
Applicability of the audit obligation under Section 44AB depends on whether an agent functions as an agent or as a principal; for agents like kachha arahtias only gross commission is counted as turnover, while for agents like pacca arahtias the total sales/turnover must be included. Characterisation requires examination of contract terms and functional indicators such as substitution of goods, liability to third parties, disclosure practices, dominion over goods, remuneration structure, personal interest in profits or losses, and indemnity arrangements.

Change of previous year risks wealth tax escapement; officers must condition or refuse changes to protect revenue.
Change of previous year must be scrutinised to prevent wealth-tax escapement because the valuation date for wealth is linked to the previous year; officers may impose conditions or refuse consent if terms do not safeguard revenue, must compare rates and deductions between original and proposed years, treat returns showing changed previous year as applications, and invoke revision powers where change causes loss of revenue.

Recognition of Provident Funds: Board clarifications instruct commissioners to apply and circulate guidance on recognition and de recognition.
The Board issued administrative clarifications concerning recognition and de-recognition of Provident Funds based on minutes of a meeting with Income tax officials; Commissioners are directed to apply those clarifications in recognition/de recognition cases and to notify officers under their charge.

Voluntary disclosure immunity: admit concealed income or wealth and pay tax to avoid penalty and prosecution under the scheme.
The circular prescribes that taxpayers making voluntary disclosures of concealed income or wealth must fully disclose amounts, file or re-file returns for the relevant years and produce evidence of tax payment within the immunity period; completed assessments require approach to the Commissioner, pending assessments require revised returns, and declarations made before detection attract immunity from penalty and prosecution provided the taxpayer admits the truth and pays taxes, subject to exclusions such as prior departmental detection and unaffected liabilities like compulsory deposits and estate duty.

Voluntary disclosure immunity prevents penalty proceedings when full disclosure, tax payment, and cooperation occur.
Direction that Wealth-tax officers shall not initiate or impose penalty proceedings for concealment or inaccurate particulars for assessment years up to and including assessment year 1985-86 where a person, prior to detection, voluntarily and in good faith made a full and true disclosure of net wealth within the prescribed period, paid the tax on that net wealth by the cutoff date, and cooperated in any enquiry relating to assessment of the net wealth.

Penalty immunity for voluntary disclosure: no initiation of penalty proceedings where disclosure, tax payment and cooperation occur.
Direction that tax officers shall not initiate penalty proceedings for concealment or inaccuracy or related failure penalties for assessment years up to and including 1985-86 where, before detection, the person voluntarily made a full and true disclosure within the specified disclosure window, paid the tax on the disclosed income by the specified cut-off, and cooperated in any assessment enquiry; the order took effect on 17 February 1986.

Voluntary higher income declaration: penalty under section ten will be considered liberally while deposit obligation remains.
Declaration of higher income suo motu before the prescribed deadline will not by itself trigger penal consequences; taxpayers will be assessed at normal rates and earlier assessments will not be reopened on that ground. For years when the Compulsory Deposit Scheme applied, the obligation to make the compulsory deposit continues, but liability to penalty under section 10 will be considered liberally in view of the reasonable cause defence, and officers are instructed to facilitate such voluntary disclosures.

Penalty under Section 10 CDS(ITP) Act not to be initiated where voluntary disclosure shows reasonable cause for default.
The Board instructs that voluntary suo moto declarations of higher income or wealth made before 31 3 1986 for assessment year 1986 87 and earlier, pursuant to Government circulars, are to be assessed at normal rates without penalty. As the 1980 amendment to Section 10 of the CDS(ITP) Act excludes penalties where there is a reasonable cause for default in making compulsory deposit, such voluntary declarations should be treated as arising from reasonable cause and penalty proceedings under Section 10 need not be initiated.

Penalty relief limited to cases where a penalty has been levied and recovery proceedings exist; requires application, hardship and cooperation.
Section 273A(4) permits the Commissioner, on an assessee's application and after recording reasons, to reduce or waive penalties or to stay or compound recovery proceedings if non exercise would cause genuine hardship and the assessee has co operated; such relief is available only where a penalty has been levied and recovery proceedings exist.

Commissioner guidance under section 119(3) is advisory only; officers must apply independent judgment and avoid quoting advice.
Section 271(4A) does not allow assessments or tax levies based on assurances between an assessee and Commissioners; Commissioners may give advisory guidance to Income-tax Officers under section 119(3) pending amendment, but such guidance is non-binding and subordinate officers must exercise independent judgment, may adopt the reasoning but should avoid quoting the advice in formal orders; voluntary disclosure determinations for penalty relief are to be judged by reference to factual replies and criteria in the cited Instruction.

Irrevocable gratuity fund protection: fund may be wound up only on employer business discontinuance, not by trustees' resolution.
Winding up of an approved irrevocable gratuity trust fund is permitted only when necessitated by the winding up, discontinuance, amalgamation, or cessation of the employer's trade or undertaking; trustee or beneficiary resolutions cannot revoke or wind up the fund while the employer's business continues. Employer contributions remain free of employer interest while held as a gratuity fund; repayment to the employer is treated as employer income and is permissible only to the extent gratuity payable to employees is lawfully forfeited under the Payment of Gratuity Act.

Timely availability of Memorandum of Appeal ensures departmental representatives receive documents to make effective hearing representations.
Directs assessing officers to send a copy of the Memorandum of Appeal to the departmental representative's office when filing a departmental appeal, and to forward decisions on cross objections-decided within thirty days-to that office. Mandates that the departmental representative's office keep received Memoranda chronologically and alphabetically for ready retrieval at hearings, and instructs departmental representatives to report any assessing officer non compliance to the Commissioner.

Interest on provisional tax refunds: allowable but payable only at the time of regular assessment.
Interest on tax refunds for excess advance tax is allowable for the refunded provisional amount but is payable only at the time of the regular assessment; adjustments to interest (increase or reduction) follow from post assessment orders arising from the regular assessment process. The prior Board Instruction treating interest as payable on provisional assessment is withdrawn.

Taxability of awards: non professional sportsmen's awards treated as non income gifts and not taxable; professional awards taxed as income.
Awards to professional sportsmen are taxable as receipts in the exercise of a profession, whereas awards to non professional sportsmen are treated as gifts or personal testimonials and are not taxable as income; the assessing officer must determine professional status on the facts of each case, and any chargeability to gift tax will be considered separately.

Seizure of jewellery limited to undisclosed or excess items; inventory each piece and compare with wealth-tax declaration.
Seizure of jewellery must be confined to assets that are undisclosed or unaccounted for; officers should apply a reasonableness standard, particularly regarding female family members. For wealth-tax assessees, compare found jewellery with declared details and seize only excess items; items not matching declared weight or description should normally be seized. Where only gross weight is declared, do not seize if gross weight approximately tallies, but record and inventory each item with individual weight.

Taxability of offshore rotation salaries: pay for off duty periods tied to services in the national Exclusive Economic Zone is taxable.
Salary paid during the alternate off duty period to non-resident technical personnel employed for rotations on offshore rigs in India's Exclusive Economic Zone is payable under the terms of employment for services rendered in the EEZ; such salary therefore accrues or arises in India and is taxable in India.