Tax evaders beware! Revenue authorities identifying potential cases of tax non-compliance

By: | Updated: October 20, 2018 2:17 PM

Income Tax Department is analysing the deposits made during the demonetisation period. Accordingly, suspicious transactions are being brought under scrutiny and notices are being issued.

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If you thought that the storm of demonetisation has ebbed, then think again. For, unaccounted cash deposits made during the demonetisation period still keep attracting the taxman’s attention. As per media reports, revenue authorities have already issued notices to around 10,000 people post demonetisation, seeking the source of income details under the Benami Law, while many other depositors and tax evaders are likely to get similar notices soon.

Tax experts say the Income Tax Department is analysing the deposits made during the demonetisation period. Accordingly, suspicious transactions are being brought under scrutiny and notices are being issued.

Everyone is now aware of the fact that during the demonetisation period, many people deposited cash in their bank accounts, which did not belong to them. For example, “rich individuals might have used the accounts of their servants or a person might have used the account of his wife or relatives to deposit his unaccounted money. The amount deposited during that period, however, must correspond to one’s income and if it doesn’t, then I-T notices are being issued. In cases where notices are being issued, both the bank account holder and the one who deposited the amount would have to face the consequences,” says CA Abhishek Soni, Founder, tax2win.in.

Use of Data Analytics

The big move of the Modi Government, i.e. demonetisation of high-value notes, has brought several suspicious transactions under the tax department’s scrutiny. Therefore, “to strengthen the system and capture the maximum cases of tax evasion, the Income Tax Department is using advanced technology. They are using the big data analytics for the purpose of collection and segregation of data. This includes data collected through various sources like phone records, credit card and PAN details, tax returns and even social media platforms,” says Soni.

Action taken

Initially, government authorities have issued notices to around 10,000 people seeking the source of income details under the Benami Law. Further, in the coming weeks, many other tax evaders could also get similar notices. You need to know that not just the IT department, but several other departments also can use the data for future investigations.

“There has been increased focus on tax compliance and detecting cases of tax avoidance. Recent steps like demonetisation, introduction of GST, linking of Aadhaar with PAN, etc are all steps in this direction. Post demonetisation, revenue authorities have collected a lot of information and now with use of data analytics, the potential cases of non-tax compliance are being identified and called for necessary information and explanation,” says Vikas Vasal, National Leader Tax – Grant Thornton India LLP.

More such steps are expected as revenue authorities have information from different sources like income tax return, GST returns, information provided by financial institutions in their annual information filings, etc. “Tax payers, therefore, need to be cognizant of their tax compliance obligations and should file their tax returns with all necessary disclosures in the return forms to avoid any dispute at a later stage,” says Vasal.

Conclusion

The cash deposits made during demonetisation have now attracted the attention of the Income Tax Department. Notices are being issued for transactions which are suspected to be unaccounted. Therefore, do ensure the deposits made by you at that time have proper explanation and correspond to your income. If that is not the case, then be ready to face the consequences.

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