Limited Scrutiny Notice

comm4300

Well-Known Member
#1
hi Friends,

I've received limited scrutiny notice for AY 2015-16. I had filed losses for the year in FnO segment.

While i'm NOT scared or panicking about this as I've done the filing through a good CA, just wanted to know if any of you have had gone through this experience before.

do share details. it will help me.

Thanks.
 

DSM

Well-Known Member
#2
Just met IT offer last week, as my account had been flagged for scrutiny. The govt. is trying to get people to declare undisclosed income, (In Mumbai, 100's of roadside vada-pav and idli-dosa sellers have been raided a few days back) so as to get good numbers for the tax amnesty scheme. So while waiting to meet the officer, get to know another guy who had F&O turnover of 1,600+ crores. So accounts of many traders have come under scrutiny if the turnover is high of which, few are called for further scrutiny. Coming to my case, the I.T Officer started by saying 'We have information about your transactions.... I replied 'Yes Sir, I do trade F&O and Commodities full time' Next question was 'Your turnover is high' I replied that due to high margin available in F&O and Commodities, the turnover could be high, and gave examples of some F&O and commodity contracts' Next I was asked to produce evidence. I showed my ledger copy and transaction report, and explained a few trades. The I.T Officer was satisfied, no further questions asked.... End of matter.

Basically, all traders need to file returns as due to computerization, all information is available with the dept. But as traders, we need not worry, as there is nothing to hide nor anything can be hidden. So if you face a scrutiny, be calm, do not panic. Take all trading related doccuments especially ledger and transaction report with you, give proper explanations and do not try to hide anything.

Good luck.

hi Friends,

I've received limited scrutiny notice for AY 2015-16. I had filed losses for the year in FnO segment.

While i'm NOT scared or panicking about this as I've done the filing through a good CA, just wanted to know if any of you have had gone through this experience before.

do share details. it will help me.

Thanks.
 

VJAY

Well-Known Member
#3
Just met IT offer last week, as my account had been flagged for scrutiny. The govt. is trying to get people to declare undisclosed income, (In Mumbai, 100's of roadside vada-pav and idli-dosa sellers have been raided a few days back) so as to get good numbers for the tax amnesty scheme. So while waiting to meet the officer, get to know another guy who had F&O turnover of 1,600+ crores. So accounts of many traders have come under scrutiny if the turnover is high of which, few are called for further scrutiny. Coming to my case, the I.T Officer started by saying 'We have information about your transactions.... I replied 'Yes Sir, I do trade F&O and Commodities full time' Next question was 'Your turnover is high' I replied that due to high margin available in F&O and Commodities, the turnover could be high, and gave examples of some F&O and commodity contracts' Next I was asked to produce evidence. I showed my ledger copy and transaction report, and explained a few trades. The I.T Officer was satisfied, no further questions asked.... End of matter.

Basically, all traders need to file returns as due to computerization, all information is available with the dept. But as traders, we need not worry, as there is nothing to hide nor anything can be hidden. So if you face a scrutiny, be calm, do not panic. Take all trading related doccuments especially ledger and transaction report with you, give proper explanations and do not try to hide anything.

Good luck.
Thanks DSM sharing your real experience. .It will help any who received this type it letter and thanks to comm for start this thread.
Mostly these IT officers not know about trading ...so its always difficult to explain it to them.
 

comm4300

Well-Known Member
#5
Thank you DSM for sharing your experience. I also received this limited scrutiny letter yesterday and have an appointment with the officer on Thursday.
just to add...these scrutinty notices can be answered by email starting this year. But to be on safer side, one can also present the hard copy of all the documents to ward office.
 

lonstud

Active Member
#6
just to add...these scrutinty notices can be answered by email starting this year. But to be on safer side, one can also present the hard copy of all the documents to ward office.
"(#) applicable only in case of taxpayers whose Income-tax jurisdiction falls in the cities of
Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata or Mumbai"

This is mentioned in my notice with respect to email communication. I am from a Tier 2 city, so not applicable for me as of now. I have already responded via email with all the contract notes along with methodology used to calculate turnover along with sources. I'll also attend the meeting personally to be on the safer side.

Limited scrutiny notice is for the following reason:

"Following issues have
been identified for examination:
i. Sales Turnover Mismatch
ii. Derivative (futures) transaction
iii. Securities Transaction"
 

comm4300

Well-Known Member
#7
"(#) applicable only in case of taxpayers whose Income-tax jurisdiction falls in the cities of
Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata or Mumbai"

This is mentioned in my notice with respect to email communication. I am from a Tier 2 city, so not applicable for me as of now. I have already responded via email with all the contract notes along with methodology used to calculate turnover along with sources. I'll also attend the meeting personally to be on the safer side.

Limited scrutiny notice is for the following reason:

"Following issues have
been identified for examination:
i. Sales Turnover Mismatch
ii. Derivative (futures) transaction
iii. Securities Transaction"
I'm from Pune.

I received the exact same notice. And my CA mentioned that email is ok. And to be on safer side present hard copy to ward officer. I got the same issues as you:
Sales Turnover Mismatch.
Securities Transaction

BTW, what documents are you taking with you?

Can you list them? and what questions are you anticipating?
 

lonstud

Active Member
#8
I am from Surat.

I'll carry following documents:
1) Hard copies of all contract notes
2) Ledger of brokers
3) Copy of excel sheet which I had prepared for calculating turnover.

I anticipate questions relating to calculation of turnover and proof of trading.

As per my understanding, this is a limited scrutiny and these documents should be enough.
 

lonstud

Active Member
#9
I just received letter from Income tax department via post. The post contains 2 notices, one under section 142(1) and another 143(2) (which is of limited scrutiny)

For notice under section 142(1), I have asked to produce:
1) Copy of Return of income for A.Y. 2015-16
2) Copy of P&L A/C, Balance Sheet and Capital Account for A.Y. 2015-16
3) Details of all the bank account held during the year
 

lonstud

Active Member
#10
I have a question for people who have dealt with these notices before.

Should I insist on acknowledgment form Income Tax officer regarding the documents submitted by me?

If the answer to above question is yes and Income Tax officer refuses to provide me with acknowledgment, what are my options so that Income Tax officer cannot deny the meeting later or says that I have not filed required documents in future?
 

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