The Central Board of Direct Taxes clarified on Monday that effective and stringent action will be taken only in known and big cases of tax evasion to tell compliant tax payers that the laws are fair.

In a clarification, the CBDT said that the Discussion Paper circulated during the All India Conference of Chief Commissioners and Director Generals of Income Tax on May 25-26 had been taken out of context.

The CBDT said it had not told its officers to go beyond raids and searches to target tax evaders.

“It may be appreciated that the need of the hour is to provide effective deterrence since soft action in extreme and big cases of tax evasion affects the behaviour of the compliant tax payers,” the statement said.

It further added that the discussion during the All India Conference of Chief Commissioners and Director Generals of Income Tax was ‘Lack of Credible Deterrence through Penalty and Prosecution – Causes and Ways to Improve’.

The discussion was within the limited context of cases where action under Section 132 of the I-T Act 1961 for search and seizure had been undertaken by the Investigation Division of the Department.

Exceptional cases “These are exceptional cases which are selected for intrusive action after detailed intelligence gathering and due diligence on the basis of credible evidence and are not the norm for routine cases,” the CBDT’s statement added.

It also added that only 537 searches were conducted in 2014-15 fiscal in which admitted undisclosed income was to the tune of ₹10,288 crore.

“In such cases where after intensive fact assessment, the Department undertakes search and seizure action as permissible under the law, mere tax collection does not have deterrence value and these need to be taken to their logical conclusion in terms of levy of penalty and launching of prosecution as per the provisions of the Income Tax Act,” the CBDT said.

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