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  1. Planning to revise last year’s Income-Tax return? Think again

Planning to revise last year’s Income-Tax return? Think again

TAX smart cash hoarders may feel that there are ways and means of playing around with the provision of law to evade taxes and go scot free even after demonetisation.

By: | Published: December 19, 2016 8:06 AM
Taxpayers exercise due diligence while filing income tax returns. But sometimes, taxpayers file their income tax return in a haste to meet the deadline, and forget to disclose some income or claim some deductions. Taxpayers exercise due diligence while filing income tax returns. But sometimes, taxpayers file their income tax return in a haste to meet the deadline, and forget to disclose some income or claim some deductions.

TAX smart cash hoarders may feel that there are ways and means of playing around with the provision of law to evade taxes and go scot free even after demonetisation. The government has explicitly warned tax evaders that they are bound to come under the scanner if they misuse the provisions relating to revision of income-tax returns to whitewash their black money.

Genuine mistake

Taxpayers exercise due diligence while filing income tax returns. But sometimes, taxpayers file their income tax return in a haste to meet the deadline, and forget to disclose some income or claim some deductions. If you have filed your return well before the deadline but there was an omission or mistake made in return of income, you can file a revised return of income tax under Section 139(5). The tax law offers you an opportunity to revise your tax return, provided the omission of wrong statement in the original return was due to a bonafide mistake. Use of word “omission” or “wrong statement” makes it clear that such revision is permitted only if the error is “unintentional” or “under bona fide belief earlier of such statement being correct”.

Intentional concealment

However, intentional concealment/ false statement would not be covered within scope of revision. In revised return, changes can be made to any information provided in original return, such as income/ expenditure details, details of assets/ liabilities in balance sheet, personal information, bank account details, etc. Those making major changes to opening/ closing balance of cash, increase in cash sales, reduction in cash expenditure, reporting of any loan or any other cash transaction (including gifts), not reported in original return may attract scrutiny. They shall be asked to substantiate the reason behind the change so made, since the onus to prove the bonafide of the mistake is on the taxpayer. Especially where any tax return is revised post-demonetisation involving changes to cash balance/ cash transactions, taxpayers must be ready with appropriate and reasonable explanation as to why these changes are being made. Misusing the provisions of law to make changes to the income and expenditure declared in the original return drastically altering the substance of the original return is bound to raise questions.

Not a false alarm

Any such instance which raises suspicion about manipulation in the amount of income, cash-in-hand, profits, etc., and fudging of accounts shall necessarily lead to a scrutiny of the tax return in order to ascertain the correct income of the year. The government will not shy away from penalising the wrong-doers and may even levy penalty/initiate prosecution if it deems fit.

The writer is executive director, Nangia & Co.

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