Income tax returns: Taxmen use AI to identify non-filers with potential tax liability

By: | Updated: January 23, 2019 7:24 AM

Cases where no return is filed or no response received, initiation of proceedings under the I-T Act to be considered by CBDT.

I-T Assesment for 2018-19: No-filers with potential tax liability identified

The income tax department (ITD) has identified several persons through data analytics who have indulged in high-value transactions and have potential tax liability but have failed to file I-T returns for the assessment year 2018-19, the Central Board of Direct Taxes (CBDT) said on Tuesday.

“Non-filers are requested to assess their tax liability for AY2018-19 and file the income tax returns (ITR) or submit online response within 21 days. If the explanation offered is found to be satisfactory, matters will be closed online. However, in cases where no return is filed or no response is received, initiation of proceedings under the Income-Tax Act, 1961, will be considered,” CBDT, which is a policymaking body for ITD, said in a statement.

The non-filers monitoring system (NMS) deployed by ITD aims to identify and monitor persons who enter into high-value transactions and have potential tax liabilities but have still not filed their tax returns.

“Analysis was carried-out to identify non-filers about whom specific information was available in the database of the I-T department. The sources of information include statement of financial transactions (SFT), tax deduction at source (TDS), tax collection at source (TCS), information about foreign remittances, exports and imports data etc,” CBDT said.

READ ALSO | Haven’t filed I-T returns yet? Beware, Finance Ministry tracking non-filers using data analytics

Further, it said ITD has enabled e-verification of these NMS cases to reduce the compliance cost for taxpayers by soliciting their response online. These persons so identified need not visit any income tax office for submitting response, as the entire process is to be completed online. Taxpayers can access information related to their case from the ‘compliance portal’ which is accessible through the e-filing portal of the department.

CBDT justifies revocation of circular
After withdrawing a circular that said taxes need not be levied in cases where a company received shares of a closely-held company through fresh issuance of shares, the Central Board of Direct Taxes justified the move, saying that approach in the rescinded circular could have been prone to abuse and contrary to to the express provisions and the legislative intent of Section 56 (2) (viia).

The board added that the said circular “shall not be taken into account by any income-tax authority in any proceedings under the Act.”

Further, it said any view expressed by board through the withdrawn circular should be considered to have never been expressed.

The circular was issued on December 31, 2018, clarifying applicability of section 56(2)(viia) of the Income-Tax Act for “issue of shares by a company in which public are not substantially interested”.

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