Centre issues new circular to deal ‘firmly’ with tax evaders

Even though Finance Minister Nirmala Sitharaman has asked taxmen to firmly deal with tax evaders, a detailed strategy advisory was circulated on July 11 for handling demonetisation cases, which has even spelt out the first set of questions to be asked to assessees.

A senior I-T officer told BusinessLine that the advisory is a technique to micromanage tax collection from North Block (New Delhi) in demonetisation cases. It has pointed out that I-T returns of fiscal 2013-14, 2014-15, and 2015-16 could be scrutinised in demonetisation cases.

Judgments of past cases have also been cited in the advisory so that the I-T officer is well aware of the nuances of the law and that the tax demand raised by the I-T officer is watertight, the officer said.

The demonetisation tax collection needs to be completed by December 31, 2019, as a large number of cases fall under the period of limitation clauses (time bar) as prescribed under the Income-Tax Act. In 2020, the picture will become clear on the amount of black money held by people before demonetisation and the amount of tax demand raised by the department, the officer said.

The officer pointed out that in the advisory the first question to be asked to the assessee is to explain all the entries in the books of accounts. Such a question will bind the assessee and he will not be able to change his stand later.

It has also asked to examine the difference between the opening balance on April 1 and the closing balance on March 31 of the previous fiscals as the balance amount cannot be more than returned income of the assessees.

For example, if assessees claim substantial amount as opening balance for 2015-16, then his earlier tax returns would be opened, and notice under section 147 of the Income-Tax could be served. Section 147 is a special tool of the department, which can reassess income and turnover of the previous years.

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