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AIR

Deep (OTHER) (30 Points)

22 June 2009

Whats is Annual Information Return? i read some where that "Payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to two lakh rupees or more in the year." i have a credit card and i always prefer using it and not my debit card or CASH. my average bill is Rs. 25000 per month. i am paying all my bill on time in one time full payment. do i have to worry about "Annual Information Return" ?

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Sourabh Sharma (CS CA (Final) M.com NCFM Derivative Capital Market Mutual Funds) (771 Points)
Replied 22 June 2009

Section 285BA empowers the Central Government to prescribe rules requiring specified information from any assessee or any of the various government authorities listed therein like local authorities, registration department, postal authorities, land acquisition authorities, Securities and Exchange Board of India (SEBI), Reserve Bank of India, depositories under the Depositories Act, 1996 or any officer of the Central Government notified for this purpose.

The information may be required on specific financial transactions, which may relate to sale or purchase of property, any service agreement, works contract, investments, loans and deposits which may be prescribed and which may exceed the specified value in respect of each such class of transactions, but subject to the condition that the value of the transaction in no case shall be less than Rs. 50,000. Such return in Form No. 61A (notified as Form 65 earlier) is required to be filed voluntarily before the prescribed authority and if not so furnished it has to be so done after notice from the assessing officer.

The time allowed under such notice is not exceeding 60 days from the date of such notice. The Director General of Income-tax (Systems), ARA Centre, E-2, Jandewalan Extension, New Delhi, has been nominated as the "Annual Information Return-Administrator". National Securities Depositories Ltd. (NSDL), Trade World, 4th Floor, Kamala Mills Compound, Mumbai-13, is authorised to receive such annual information return, which should contain the folio number, which will be the TAN of the principal place of business initially with the regular folio number, which will be computer generated and allotted, cited in subsequent returns.

Rule 114E has now prescribed the following information to be furnished by the parties mentioned against each such information for the first time for the financial year 2004-05 in respect of transactions from April 1, 2004.

(i) A banking company — deposits in savings bank of Rs. 10 lakh and more and any payment in respect of a credit card of Rs. 2 lakh and more; (ii) mutual funds — receipt of Rs. 2 lakh or more for acquiring units in the fund; (iii) companies and institutions — receipts exceeding Rs. 5 lakh or more for acquiring bonds or debenture issued by the company or institution and any amount received in excess of Rs. 1 lakh and more for acquiring shares in the company; (iv) registration department — purchase or sale of any immovable property exceeding Rs. 30 lakh and more in value; and (v) Reserve Bank — any amount received in excess of Rs. 5 lakh and more for bonds issued by it.

The return has to be furnished in computer readable media in the form of floppy or CD-ROM or digital video disc (DVD) along with the printout on paper in respect of information relatable to the period from April 1, 2004 and this is required to be furnished for each financial year. It can also be furnished at option through on-line transmission of electronic data to a server designated "Annual Information Return Administrator".

Sec. 272A provides for penalty of Rs. 100 for each day of default during which the default continues.

It may be seen from the above that the information return is now confined to major transactions and that no firm or individual assessee is now required to furnish such information.

But it can certainly be expected that the provision is only the thin end of a wedge, which can be expected to be enlarged by further amendments to the Rule in future.

For the time being, the scope of the information return is limited.

But the power under Sec. 285B is no bar to the assessing officer demanding any information under the powers already available to him for information regarding any specific case under Sec. 131, 133, 133A, 133B and 134 apart from the normal power of enquiry under Sec. 142(1) and 143(2) of the Income-tax Act.

There is an enormous reservoir of information available with the Income-tax Department from the files of the assessing officers themselves in respect of transactions of assessees with others and the information periodically obtained from various quarters. But they are not all digested and put to use. The present information required in computer media should enable easier verification, if they are matched assessee-wise with respective returns where filed and on enquiry otherwise. If the computer is harnessed, it would certainly mean that the Income-tax Department would be better organised, but at the same time the human element in respect of information in feeding the computers or on further enquiry necessitated by the computer output is unavoidable.

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RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 01 July 2009

THERES IS NOTHING TO WORRY ITS JUST THAT YOU COME IN THE EYES OF it DEPARTMENT THAT YOU ARE EXPENDING THAT MUCH.SO YO U JUST HAVE TO JUSTIFY YOUR EXPENSES BY YOUR INCOME AS SHOWN BY YOU IN YOUR RETURNS

Deep (OTHER) (30 Points)
Replied 01 July 2009

Originally posted by :RITESH KOTHARI
"	THERES IS NOTHING TO WORRY ITS JUST THAT YOU COME IN THE EYES OF it DEPARTMENT THAT YOU ARE EXPENDING THAT MUCH.SO YO U JUST HAVE TO JUSTIFY YOUR EXPENSES BY YOUR INCOME AS SHOWN BY YOU IN YOUR RETURNS	"

Thanks for the reply. my concern regarding AIR is --- should i avoid using a single credit card for more than 2lakhs per year and use multiple credit card instead ?