Slap Heavy Penalty For Misreporting Income: CBDT To I-T Dept
The Central Bureau of Direct Taxes (CBDT) has asked the taxman to go after taxpayers who have filed a revised income tax return (ITR) after demonetisation. The CBDT has told the Income-Tax (I-T) Department to slap a "higher tax rate" in case there is any hint of unaccounted money in such cases.
The policy-making body of the I-T Department has issued a two-page directive to all regional chiefs of the department on November 24, suggesting ways to assess cases where suspicious financial activity is after recorded.
The CBDT also ask the taxman that claim of "enhanced sales (especially by business category of taxpayers) may be compared with the central excise/VAT returns”.
"The idea behind the CBDT directive is that the legal provision of filing a revised or belated ITR (income tax return) is not misused and black income is not shown as white in the aftermath of demonetisation by a taxpayer. The assessing officers will comply with these new directions or guidelines in conducting over 20,000 cases of scrutiny, already selected by the department based on their financial activity after note ban," a senior I-T official explained.
Issuing a stern warning to assessees trying to misuse the provision of revising I-T returns, the CBDT had earlier said that those “drastically” altering the forms to revise income would face scrutiny and penal action, including prosecution.
The provision to file a revised return under the I-T law had been stipulated for revising any omission or wrong statement made in the original return of income and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income, the CBDT had earlier said.
Under Section 139(5) of the I-T Act, a revised ITR can only be filed if a person who has filed a return discovers any omission or any wrong statement.
The CBDT has also asked the assessing officers to check the "genuineness and creditworthiness" of those people to whom the assessee has reported the additional sales in the revised returns, after the note ban of November 8 last year.
"The source of cash in hands of the person who had made payments to the assessee has to be verified carefully and the past profile of the assessee concerned should be thoroughly analysed," the directives issued on November 24 said.
The CBDT also directed the taxman to minutely check and stressed that it would be "crucial to examine the trend and business practices of a particular assessee while ascertaining the legitimacy of the transactions disclosed in a belated return, filed post demonetization”.
In such cases which were already chosen for scrutiny, it said, some instances "might indicate that assessee had filed revised or belated return merely as a cover up to explain the cash deposits in bank accounts”.
The tax department had conducted 900 searches between November 9, 2016, and March this year, leading to seizure of assets worth Rs 900 crore, including Rs 636 crore in cash. The searches had led to the disclosure of Rs 7,961 crore undisclosed income, official data show.
During the same period, the department conducted 8,239 survey operations, leading to detection of Rs 6,745 crore of unaccounted money.
With inputs from Housing News