Slap higher tax on dubious ITRs, I-T told

New Delhi: The Central Board of Direct Taxes (CBDT) has asked the taxman to go with a fine tooth-comb scrutiny after cases, where a taxpayer has filed a revised income tax return (ITR) post demonetisation and directed them to slap a “higher tax rate” in instances where black money is detected.

The policymaking body of the I-T has issued a two-page instruction/directive to all regional chiefs of the department on November 24, stipulating the way forward, while assessing scrutiny cases selected for suspicious financial activity, post note ban.

“Unaccounted income so assessed in scrutiny assessment is 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,” the CBDT instructions said, asking the taxman that claim of “enhanced sales (especially by business category of taxpayers) may be compared with the central excise/VAT returns”.

“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. The assessing officers will comply with these new directions or guidelines in conducting over 20,000 cases of scrutiny, already selected by the department based on their financial activity post note ban,” a senior I-T official explained.

Issuing a stern warning to assessees trying to misuse the provision of revising I-T returns, the CBDT had earlier 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 and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income, the CBDT had earlier said.