CBDT tells field officers to complete a probe into these cases by March end, outlines SOPs.
In a sign that the government will show little tolerance to those who deposited huge sums of presumably untaxed cash in banks during the demonetisation period unless they turned tax-compliant, the Central Board of Direct Taxes (CBDT) has asked senior income-tax officials to go after over 87,000 people who are yet to file income tax (I-T) returns in response to the notices issued to them. The assessment in all these cases should be completed by March-end, the board said, in a missive to the field formations.
Tax officials have been instructed by the board to gather additional information about the above persons and establish a trail of the funds deposited by them. Further, a detailed analysis of any past income tax returns of these people should also be made to ascertain the nature of their transactions during the demonetisation period (November 8 to December 31, 2016), the CBDT said.
“In cases where ultimate beneficiary of a transaction has been established, the concerned assessing officer (AO) shall forward the material available at his/her disposal to the AO having jurisdiction over the ultimate beneficiary so that appropriate action can be initiated in that case as per relevant provisions of the Act,” the CBDT said. Further, the board said, any information regarding the entry operators — those who launder cash by issuing bogus bills to clients — in a particular chain should also be forwarded to the concerned jurisdictional AO for taxing the unaccounted commission receipts.
As FE reported earlier, the income-tax department had identified 23.5 lakh permanent account numbers (PANs) for post-note ban cash deposits being inconsistent with income profiles under the Operation Clean Money (OCM) programme.
Subsequently, the department issued statutory notices to 3 lakh among these. Of these 3 lakh PANs, “a total of 2.1 lakh personsfiled income-tax returns and total amount of self-assessment tax was Rs 6,560.88 crore,” the department had told FE, in response to a RTI filed by the paper earlier. So some 90,000 of these people haven’t filed returns despite receiving statutory (Section 142-1) notices, whose cases are now being followed up.
The department had further said that of the original 23.5 PANs, over 17 lakh filed e-returns after receiving communication. Out of these, over 14.5 lakh PANs filed their income-tax returns for last 3 assessment years — AY2015-16,2016-17 & 2017-18. As on January 7, 2019, out of the 23.5 lakh persons, a total 4.15 PANs had never filed income-tax returns.
Just before demonetisation, the government had launched the Voluntary Income Disclosure Scheme which ran from June 1 to September 30, 2016. It managed to mop up Rs 12,700 crore in tax from 71,726 persons who had declared undisclosed income of Rs 67,382 crore under the scheme.
Additionally, coinciding with demonestiation, the government had launched another income disclosure scheme namely the Pradhan Mantri Garib Kalyan Yojana which was open from December 2016 to March 31, 2017. However, the response to this scheme was lukewarm as only 21,000 persons declared Rs 4,900 crore of undisclosed income, eventually yielding Rs 2,451 crore in tax.
“The measure would not only deal with tax non-compliers but would also ensure integrity in the conduct of assessment proceedings. Imposing a check by the senior authorities on the work conducted by tax officers and providing a chance to tax payers for explaining their case would aid fair play,” Rakesh Nangia, managing partner, Nangia Advisors (Andersen Global), said.