DTRTI NEWSLETTER Issue No.38/Chennai February 22, 2019

TRAINING NETWORK RELATED NEWS

Shri S. Maruthupandian, IRS, Addl.CIT and Shri N. Gopikrishna, IRS, JCIT delivered the

inaugural and valedictory addresses of the Refresher Course for ITIs respectively

Shri R. Raghupathy, IRS, ACIT & Smt. V.K. Latha, IRS, ACIT delivered the inaugural and

valedictory addresses during the Induction Course for MTS conducted by MSTU,

Coimbatore respectively

CONTENTS Training network related news

Officer for the week

Topic for the week – Successful surveys in succession

Crossword Puzzle – Legal Phrases-4

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OFFICER FOR THE WEEK

SMT.SUSIE BABU VARGHESE, IRS

CCIT(OSD), CHENNAI

PROFILE OF THE OFFICER

Smt. Susie Babu Varghese is a 1986 batch

IRS officer. After completion of her training

in NADT, she was posted to Ernakulam,

Kerala. As ACIT/DCIT, she worked in

Assessment, ITAT, Hqrs, Exemptions and

Central circle. On promotion as Joint

Commissioner of Income Tax, she worked

as JDIT, Exemptions, Ernakulam. On

promotion as Additional Commissioner of

Income Tax, she worked as Addl.DIT

Exemptions in Ernakulam and ADDl.CIT,

Headquarters in Kochi. On promotion as

Commissioner of Income Tax in 2007, she

briefly worked as CIT(OSD) in Kochi before

moving to Mumbai.

In Mumbai, She worked as CIT(A)-4, CIT(A)-

18, CIT(A)-19, CIT(A)-39 and CIT(A)-51

from July 2009 to Jan 2015. In between, she

also worked as CIT-2, Kochi for a brief

period from 3/08/2011 to 17/09/2011.

On promotion as Principal Commissioner

of Income Tax, she worked as PCIT(OSD)

in Mumbai for a brief period of 5 months.

Later on, she served as PCIT-1, Madurai

for 2 years 4 months. She also served as

PCIT-1, Chennai for 2 months. She also

worked as PDIT(INV), Chennai from

9/01/2018 to 31/12/2018. Currently,

she is holding the charge as CCIT(OSD),

Chennai since 31/12/2018.

Investigation wing of Tamilnadu &

Puducherry has some remarkable

achievements during her tenure as

PDIT(Inv), Chennai. Under her able

guidance and leadership, the Team

Investigation, Chennai achieved the

biggest cash seizure of Rs.184 crores in

the history of Income Tax Department.

This particular search also resulted in the

seizure of 105 kg of bullion & others and

also a total seizure of assets worth more

than Rs.220 crores. She was also

instrumental in guiding the Investigation

wing, Chennai, in carrying out the biggest

search in terms of disclosure by the

Income Tax Department in a case which

resulted in the total disclosure of Rs.1350

crores and a cash seizure of Rs.15 crores.

First time in the history of the

department, under her visionary

leadership, a mofussil place like Madurai

ascended great heights by unearthing

crucial evidences to detect undisclosed

income of more than Rs.2000 crores in a

case.

In her spare time, she loves to read

everything that she can lay her hands on.

She is particularly fond of reading about

the paranormal and the mysterious i.e.

about after life, past life regression, the

sixth dimension and the power of the

mind. The book that has influenced her

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the most is “Unlimited Power: The New

Science of Personal Achievement” by

Anthony Robbins. Besides, she is a keen

gardener and an avid traveller.

FIVE POSERS TO THE OFFICER

1. What are the 3 important leadership

principles you followed which contributed

to your success?

Ans:Three important leadership principles:

Intense passion for work

3 Ds – education, dedication and

discipline

Team building and inclusivity

2. What would you say has been your

greatest accomplishment and failure and

what you learnt from them?

Ans: There are no accomplishments and

there are no failures. One has to perform a

task with full devotion and dedication. The

result or reward is not in our hands. A task

is to be done without any expectation. I

personally believe that ‘failures’ are an

opportunity to success. The Mantra is to

turn adversity into prosperity i.e., See a

Rainbow in every cloud.

3. What are your suggestions for developing

next generation of leadership in the

department?

Ans: When the department is moving

towards automation, our officers have to

equip themselves with the necessary skills

in the face of ever changing technology. As

the saying goes – Knowledge is Power.

There is no substitute for the knowledge.

There has to be continuous education/

upgradation of the new enactments

passed by the Parliament so as to enable

our officers to think ‘Out of Box’ as the

situation demands. Quick decision

making is a hallmark of a good leader.

Above all, a Tax Administrator has to be

non- adversarial, yet firm and determined

in enforcement.

4. What should be the vision for the

department for the next 5 years?

Ans: Vision for the department for next

five years:

Increased efficiency and best

practices in the department on

account of expansive use of

technology.

Detection of tax evasion by use of

precise and verifiable data from

the ‘Systems’. Increased use of

nonintrusive techniques.

Improving soft skills so as to move

towards a non- adversarial

regime.

Highly motivated work force

5. What qualities do you think will make

an officer successful in the Department?

Ans: A Successful officer is one who sees

every problem as a challenge to be

overcome. He is the one who walks the

proverbial extra mile to make the

impossible the possible. He is the one

who believes that every task, every target

is achievable and works relentlessly

towards the goal and realises it. He is the

one who reaches out even at the oddest

hours to help another in need.

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TOPIC FOR THE WEEK Successful Surveys in Succession by Shri N. Rengaraj, CIT (Admn. & TPS) Chennai

Shri N. Rengaraj, CIT had organized more

than 350 successful surveys as JCIT/

Addl. CIT in a span of 7 years. The highest

disclosures have been Rs.35 crores and

Rs. 23 crores way back in 2008. As JCIT,

he always had 15 cases in hit list at any

point of time. The excerpts from his

speech on Successful Surveys in

Succession:

The purpose of survey is to collect

evidence, make a surprise visit and get a

surprise collection.

The tips for picking up cases for survey:

1. A watch on TEP, Refund and, huge

agricultural income cases has to be kept.

2. The files have to be studied.

3. Inspectors have to be sent to field

to explore and collect information

4. Information can be obtained from

various sources like TDS returns, Market

Information, etc.

When planning for a survey, the escape

routes should be closed. Before going for

a survey, reconnaissance is a must.

Recording of a proper satisfaction note

should be ensured. Survey in one case

may turn out to be a clue for another

case.

In a survey, recording of Preliminary

Statement is a must. While recording

Preliminary Statement, evidence should

be called for; all the parties should be

questioned then and there. The

Preliminary Statement should cover the

following points:

1. Nature of business

2. Details of partners/directors.

3. Details of the last return filed.

4. Net Profit and Gross Profit

5. If books of accounts are not updated,

the assessee can be asked to update

the books in Assessing Officer’s

presence with reference to bills. The

assessee shall be allowed to update

books and then statement shall be

recorded. The opening stock as on 1st

April shall be queried.

6. What is the purchase bill date?

7. Is there anybody’s stock lying with

the assessee?

8. Is there any stock lying with the

assessee for which bill is yet to be

received?

9. Are there any sales made but bill yet

to be issued? Is there any purchase

made, but bill yet to be received?

In case of jewellery business:

10. Is there any customer’s gold lying

with the assessee for manufacturing

or repairs?

11. How much gold is lying with

goldsmith (personal also for

manufacturing)?

Note: Verify the registers

12. Is there any family member’s

jewellery available in the business

premises (Normally family jewellery

is used for display purpose).

13. Who is the manufacturer of the

jewellery items and what is the

purity of gold?

14. How much wastage is paid for

manufacturing jewellery? After

wastage, what is the stock?

15. In general, the deficient or excess

stock has to be questioned.

Investigation is simple presence of mind.

The nature of trade should be

understood.

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..

Real Estate: In case of real estate

business, the person acting as Power of

Attorney only on paper may also develop

project, plot the land, get approval and

sell it. Such cases have to be surveyed

and the MOU between the land owner

and the developer has to be looked into.

The developer has to be covered to get

the agreement, the ongoing rate, payment

received for sale of plots, etc.

Money lending: Money lenders

invariably charge 36% interest, but

money lenders and pawn brokers do not

show more than 12% as interest charged.

The balance money will always be

brought in as Sundry Creditors.

Spinning Mill: Stock taking may be a

futile exercise. Instead concentrating on

the Managing Director’s office may prove

to be fruitful.

Hospital: Attention needs to be given in

Managing Director’s Chamber,

Administration Office, all cash counters

and Operation Theatres.

Civil Contractors: Generally books of

accounts are not maintained. In spite of

that, in some cases, 44AB report is filed.

Such cases may call for stringent action

against the CAs.

Bar & Restaurant: In Kerala, Bar &

Restaurant is a popular business. The per

capita consumption of liquor is very high

in Kerala. Normally, the Gross Profit is

around 120% to 140%, but only 2% or

3% is shown. 15% to 20% profit on

turnover shall be taken to be normal.

Jewellery: Jewellery manufacturers

charge only 2.5% as manufacturing cost

and wastage, whereas in jewellery shops,

wastage starts at 8% and in case of

antique jewellery, it shall be as high as

36%. The fluctuation in gold price adds to

the profit. The Net Profit will be around

20% in retail. The details as to where

from the jewellers buy jewellery, how

much wastage is being paid (maintained

separately) should be obtained. The

readymade jewellery put in display will

be 18 carat or 16 carat or even less than

that. So while taking stock, the purity of

gold and wastage to be specifically

mentioned in statement. Normally,

estimate slip is given and torn off once

payment is made; in moffusil areas it is

written in slate and wiped off even today.

Hence, in jewellery case, the stock

difference will always be there and can

be detected only on going for survey. It is

also a general practice that the entire

stock available in small jewellery shops

may not be entirely theirs, but may

belong to bigger jewellery shops.

Blue Metal: The potential cases for

survey is blue metal quarry as it is not

perishable and has all time demand. The

profit margin is around 35%. Now with

Manufactured sand, the profit margin has

gone up to 40% or 45%. Though this

industry is subjected to Government

regulations and royalty has to be paid,

mostly unaccounted sales are done.

Hence, the evidence can be gathered from

quarries by verifying the gate passes. If

the assessee is a retailer, then the source

(manufacturer) has to be queried.

Educational Institutions and Trust:

Any school though coming under a Trust

is a business. Fee is collected in the garb

of different names. Especially, the

donation money is routed to promoters

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and claimed as building constructed. So,

the site inspection is a must in this case.

Apart from the above, in windmill

cases, AOs should visit & make the

spot inspections.

PROCEDURAL ASPECTS:

When a case is identified for Survey, a

Satisfaction Note has to be prepared

covering the following points:

What is going to be investigated in

the case?

What is the potential area?

What is the discreet enquiry

made?

What is the AO’s finding?

What are the gray areas?

Once the Survey is authorized, the

Assessing Officer has to go the premises

only with the authorization. In a survey,

AO can enter any business premises or

any place where books of accounts are

maintained, stock and cash are available.

If the assessee informs that the books of

accounts are lying with the Chartered

Accountant, a statement has to be

recorded in this regard and then the CA

can be contacted. Similarly, if books of

accounts are said to be maintained in

residence, a statement has to be recorded

and only then, the residence shall be

covered.

While recording the statement, all the

points mentioned in the Satisfaction Note

have to be covered. Once survey is over,

preliminary report has to be sent within

2 hours and completion report has to be

fed in ITBA.

In a survey, if there is excess stock, it

represents unaccounted sales made. The

entire excess stock represents income

earned from undisclosed sources. If there

is deficit stock which is on account of

inflation of purchases, entire deficit can

be taxed as income. Otherwise GP on the

value of deficit stock to be brought to tax

as sales outside books.

..

Shri Yeshwant U. Chavan, IRS, Pr.CIT

preparing DR ITIs to understand the

work-life balance

Smt. Ushaa Eswaran, Soft Skill Trainer,

cultivating the team spirit during the

Refresher course for ITIs

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LEARN THE SUBJECT THROUGH A PUZZLE-(LEGAL PHRASES-4)

1 2

3 4

5 6 7

9

10

11 12

13 14

15

16 17

18

19

20

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ACROSS:

1. An accomplished act (4, 8)

4. An additional benefit conferred upon

(6)

5. Recognised, Counted, Calculated (8)

8. A ridiculous interpretation of a very

serious statement, making a mockery of a very

serious matter (8, 2, 7)

9. Within the powers; within the

authority given by law (5, 5)

10. From the beginning (2, 6)

11. ________________ Proceeding is a

proceeding which gives Government the right

to attach (i.e. forcibly take over) any asset

from a person who is defaulter (9)

14. Almost Similar to (5)

16. Let the purchaser beware- implying

that the buyer must be cautious, as the risk is

his and not that of the seller (6, 6)

19. When an order passed by the lower

authority is superseded by the higher

authority (8, 2, 6)

20. Existing condition (6, 3)

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DOWN:

2. The right or ability to bring an

action, to be heard in Court, or to

address the Court on a matter before it (5,

6)

3. A person is deemed to die

_____________ in respect of property of

which he or she has not made a

testamentary disposition (“will”) capable

of taking effect (9)

6. A beneficiary under a trust, the

person for whose benefit the trust is

created (6, 3, 5)

7. __________ is a person for whose benefit

there exists an asset of a deceased (7)

12. By the law itself ; by the mere

operation of law (4, 4)

13. Void, gap; a situation arising that is

not covered by any law (7)

15. Scope (7)

17. Expression used to signify

something done or said by one person not

in the presence of his opponent (2, 5)

18. In position; often used in the

context of decisions or rulings about a

property or thing "left in place" after the

case as it was before (2, 4)

Please e-mail your answers to chennai.adg.dtrti@incometax.gov.in.

And the first correct entry will be rewarded. Answers will be published in the next issue

इस

Recommendation

Attention is invited

Perusal and approval

During the course of discussion

Concerned

–

इ

The Government has accepted these

recommendations.

'ख' ओ

Attention is invited to para 'B' mentioned

above.

Submitted for your kind perusal and

approval please.

ग Important decisions were taken during the

course of discussion.

इ ग

ग

The application may be forwarded to the

department concerned for further action.

Published by: Team DTRTI, Chennai