Skip to main content

Serial tax dodgers can be prosecuted before assessment

Seeking to send a stern message, the income tax (I-T) department has initiated a plan to take strident action against tax evaders. This is to ensure they are prosecuted without requiring the assessment to get over.

This follows an action plan drawn up by the Central Board of Direct Taxes (CBDT) where an aggressive strategy was outlined to nab tax dodgers. The CBDT had circulated a strategy paper for the investigation team of the I-T wing, saying the taxman should prosecute tax evaders in large numbers to create a credible deterrence against the black money menace.

“Filing of prosecution complaints in cases where evidence is strong does not require completion of tax assessment,” the department said in its action plan prepared for FY-18.

“The department has tweaked its strategy from just raising tax demand to going the extra mile of taking them to courts,” said a senior tax official with direct knowledge of the plan.

Typically, the tax department launches a prosecution or charge sheets tax evaders under Section 276CC of the I-T Act after arriving at a decision post-tax assessment whether a particular case is fit for prosecution.

Section 276CC provides for prosecution and makes tax evasion punishable with rigorous imprisonment of three months to seven years along with a monetary penalty depending on the amount dodged. “When a person is found to have committed offences under the said sections and there is evidence to prove he has wilfully done so, the assessing officer can file a complaint. According to the new plan of action, a prosecution can be initiated soon after a search is conducted or the following day,” said another tax official.

“There have been chronic tax evaders who under-report their income, fudge accounts to hide their source of income, falsify statements, or disappear after being slapped with a tax demand notice to circumvent payments. A tough action plan was, therefore, needed,” the official added.

The tax department is also addressing another important area of tax subterfuge that takes place via benami transactions. The action plan emphasised on ways to investigate benami transactions under the newly enforced Benami Transactions Act.

The CBDT had asked the I-T wing to identify, examine and take prompt action against violators, and had also set a target and timeline to inspect and wind up the matter.

The tax department will have to finalise benami cases for FY14, FY15 and FY16 by the end of this month, and the remaining by March 2018. Moreover, tax officials were also given directives to dispose suspicious transaction reports they receive from banks and other Intelligence units.

According to the plan, the tax department has to first dispose of those investigations resulting in a detection of undisclosed income of Rs 100 crore and above, and to finalise them by December. In its action plan, the CBDT also revised the target of searches and seizures by tax officials.The new diktat said officials at the level of additional directorate would need to conduct at least two searches and seizures every week.

According to official figures, the I-T department conducted over 1,000 searches and surveys during the last financial year, and slapped close to 100 prosecution complaints against serial tax evaders during this period.

Business Standard New Delhi, 07th July 2017


Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …