1. HOW TO SELECT & CONDUCT SURVEYS U/S 133ABY
S.MOHD.MUSTAFA, IRS,
JCIT, TPO, CHENNAI

2. SURVEYS U/S 133A – WHY?
SURVEY IS A TOOL FOR COLLECTION OF INFORMATION –
1. USEFUL FOR ASSESSMENT
2. USEFUL FOR RECOVERY
3. USEFUL FOR ENFORCING TDS/TCS
PROVISIONS

3. SURVEYS FOR ASSESSMENT
TO COLLECT INFORMATION, i.e., TO VERIFY- 1. ACTUAL STOCK ON HAND/WORK-IN-PROGRESS 2. ACTUAL CASH ON HAND 3. UNACCOUNTED/SUPPRESSED/UNBILLED SALES 4. BOGUS/INFLATED PURCHASES/SALES 5. INFLATION OF EXPENSES 6. IF ALL “WORKING PARTNERS” ARE WORKING 7. IF ASSETS INSTALLED/PUT INTO USE 8. PERSONAL/DIVERTED USE OF ASSET/EXPENSE CONTD..

4. SURVEYS FOR ASSESSMENT (CONTD.)
9. UNACCOUNTED INVESTMENTS/BANK A/C
10. GENUINENESS OF PAYMENTS TO RELATIVES
11. GENUINENESS OF LOAN/TRADE CREDITS
12. CORRECTNESS OF CLAIM OF DEDUCTIONS
13. INADEQUATE/EXCESSIVE DRAWINGS
14. MAINTENANCE OF BOOKS OF ACCOUNT
15. ACUAL COST OF CONSTRUCTION
16. ON-MONEY/BOGUS CLAIMS FOR CAP. GAINS
17. STEEP FALL IN G.P.

5. SELECTION OF CASES
1. SUSPECT STOCK SUPPRESSION IF: -CL. STOCK IS MUCH LOWER THAN OP. STOCK -CL. STOCK IS TOO LOW WHEN COMPARED TO TURNOVER OR SIZE OF SHOP (UNLESS SHOP IS PROPOSED TO BE CLOSED/SHIFTED) - CL.STOCK IS CONSTANT DESPITE INCREASE IN SALES - NO CL. STOCK OF WORK-IN-PROGRESS & RAW MATERIALS IN MANUFACTURING CASES - CL.STOCK VALUE NOT MATCHING WITH QUANTITY (CLAIMED AS DUE TO LIFO, OBSOLETE/DEADSTOCK, ETC) - NO CL.STOCK WHEN THERE MUST BE SOME (HOTELS).

6. SELECTION OF CASES (CONTD.)
2. SUSPECT SALES SUPPRESSION IF: -SALES FIGURE IS EQUAL TO/LESS THAN CL.STOCK -DAILY SALES FIGURE (SALES/NO. OF WORKING DAYS) IS TOO LOW WHEN COMPARED TO STOCK, SIZE OF SHOP, NO. OF EMPLOYEES, ETC -UNBILLED SALES IS COMMON TO THE BUSINESS (e.g. JEWELLERY, ETC) -DIFFERENT SOFTWARES ARE USED FOR SALES & ACCOUNTS -LESS BUSINESS INCOME BUT MORE MISC./EXEMPT INCOME -INCREASE IN BALANCE SHEET TOTAL WITHOUT PROPORTIONATE INCREASE IN INCOME - FALL IN TURNOVER IS NOT EXPLAINED BY NEW COMPETITION, ETC -SEVERAL BILLING MACHINES ARE USED -SALES AMOUNT IS IN ROUND FIGURES

7. SELECTION OF CASES (CONTD.)
3. SUSPECT BOGUS/INFLATED PURCHASE IF:
PURCHASE FIGURE OF MARCH IS MUCH MORE THAN OF OTHER MONTHS (BUT SALES IS NOT)
SAME BALANCE, AS PER LAST BALANCE SHEET, OF SEVERAL TRADE CREDITORS CONTINUES
PURCHASE BILLS PRODUCED IN HEARING DO NOT APPEAR TO BE GENUINE (e.g. NO FOLDINGS, CONSECUTIVE SL.NO., NO VAT/GST/PHONE NO.)
CASH PURCHASE IS PERMITTED UNDER RULE 6DD
INCREASE IN TRADE CREDITORS FIGURE WITHOUT INCREASE IN STOCK/TURNOVER
CONSUMPTION OF RAW MATERIAL IS MORE THAN NORMAL
TAX-EXEMPT DOUBTFUL CREDITS IN CAPITAL ACCOUNT

8. SELECTION OF CASES (CONTD.)
4. SUSPECT BOGUS SALES IF:
CASH SALES AT MUCH HIGHER THAN NORMAL FIGURES RECORDED PRIOR TO CASH DEPOSITS
ESPECIALLY IF VAT/GST RATE/GP MARGIN IS LOW
5. SUSPECT INFLATION OF EXPENSES IF:
- SUPPRESSION OF PURCHASES IS NOT POSSIBLE
HUGE TURNOVER AND/OR G.P. BUT LOW N.P.
UNCOMMON OUTSTANDING LIABILITIES
VOUCHERS NOT PRODUCED DURING SCRUTINY
TAX-EXEMPT DOUBTFUL CREDITS IN CAPITAL ACCOUNT
AMOUNTS ARE IN ROUND FIGURES

9. SELECTION OF CASES (CONTD.)
6. SUSPECT “WORKING PARTNERS” IF:
-HUGE REMUNERATION IS DEBITED TO SEVERAL PARTNERS, ESPECIALLY LADIES, NOT HAVING MUCH INCOME FROM ANY OTHER SOURCE
THERE IS TAX ARBITRAGE
7. SUSPECT DATE OF INSTALLATION/USAGE IF:
-BOUGHT CLOSE TO 30TH SEP & 31ST MARCH
- DEPRECIATION CLAIM IS HUGE

10. SELECTION OF CASES (CONTD.)
8. SUSPECT PERSONAL/DIVERTED USE OF ASSET/EXPENSE IF:
MORE THAN ONE ASSESSEE, WITH TAX ARBITRAGE, IS IN SAME PREMISES
DEPRCN. CLAIM FROM MANY HIGH-END CARS
9.SUSPECT GENUINENESS OF TRADE CREDITS IF:
TRADE CREDITS SOURCE FIXED ASSETS
SAME BALANCES CONTINUE FROM LAST YEAR

11. SELECTION OF CASES (CONTD.)
10.SUSPECT GENUINENESS OF LOAN CREDITS IF
LOANS ARE FROM EMPLOYEES & CLOSE RELATIVES EVEN IF ASSESSED TO TAX
LOANS ARE FROM NON-ASSESSEES
11. SUSPECT GENUINENESS OF PAYMENTS TO RELATIVES IF:
-THEY ARE FOR COMMISSION, BROKERAGE, ETC
-THERE IS TAX ARBITRAGE
- EVEN IF PAID BY CHEQUE AFTER TDS

12. SELECTION OF CASES (CONTD.)
12. SUSPECT DRAWINGS IF:- -INADEQUATE -EXCESSIVE 13. SUSPECT CLAIM OF DEDUCTIONS IF: -SUPPORTING EVIDENCES NOT READILY FILED - ELIGIBILITY CRITERIA IS NEAR BORDERLINE

13. SELECTION OF CASES (CONTD.)
14. TO ASCERTAIN COST OF CONSTRUCTION & SOURCES: -TO FIND OUT ACTUAL COST OF LARGE CONSTRUCTIONS BY COLLECTING DELIVERY CHALLANS OF MATERIALS USED & EVIDENCE OF LABOUR EMPLOYED - TO FIND OUT ACTUAL SOURCES FOR CONSTRUCTION 15.IF ON-MONEY/FALSE CLAIMS OF SOURCES OR IMPROVEMENTS ARE SUSPECTED IN PROPOSED TRANSFER OF PROPERTIES FOR HUGE AMOUNTS:- BY CONDUCTING SURVEY BEFORE EXECUTION OF SALE DEED- (1) EVIDENCE FOR ON-MONEY & FALSE CLAIMS OF IMPROVEMENTS MAY BE FOUND (2) FALSE CLAIM OF TAX-FREE SOURCES MAY BE PREVENTED

14. SELECTION OF CASES (CONTD.)
16. SUSPECT FALL IN G.P. RATE IF: -G.P. RATE DECREASE WITHOUT SUBSTANTIAL INCREASE IN TURNOVER -ABNORMAL VARIATIONS IN G.P. RATE OVER THE YEARS - GROSSLY LESS THAN NORMAL G.P. RATE