The Central Board of Direct Taxes (CBDT) has tightened the noose around black money hoarders with its latest directive. Issuing a stern warning to assessees trying to misuse the provision of revising I-T returns, the CBDT said that those “drastically” altering the forms to revise income will face scrutiny and penal action including prosecution. The provision to file a revised return under the income tax law has been stipulated for revising any omission or wrong statement made in the original return of income. Here are the five crucial points that you need to know about the latest notification by CBDT:
1. The CBDT has asked the taxman to go over with a fine tooth-comb scrutiny cases where a taxpayer has filed a revised income tax return (ITR) post demonetisation and directed them to slap “higher tax rate” in instances where black money is detected. “The idea behind the CBDT directive is that the legal provision of filing a revised or belated ITR is not misused and black income is not shown as white in the aftermath of demonetisation by a taxpayer,” a senior official said.
2. The unaccounted income so assessed in scrutiny assessment will be liable to be taxed at a higher rate without any set-off losses, expenses etc. under section 115BBE (treatment of tax credits) of the I-T Act.
3. Under Section 139(5) of the I-T Act, a revised ITR can only be filed if any person who has filed a return discovers any omission or any wrong statement therein.
4. The CBDT has also asked the AOs to check the “genuineness and creditworthiness” of those people to whom the assessee has reported the additional sales in the revised returns, post the note ban of November 8 last year.
5. 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 demonetisation.
It must be noted that the tax department has conducted 900 searches between November 9, 2016, and March this year, leading to the 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.