Taxmen asked to slap higher tax rate on fraudulently revised ITR

The taxpayers who filed a revised income-tax return (ITR) after demonetisation need to refurbish their financial reords. The Central Board of Direct Taxes (CBDT) has asked the taxman to go do a scrutiny of such cases and slap “higher tax rate” in instances where black money is detected, said a newspaper report.

The policymaking body of the income tax has reportedly 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, after the note ban on November 8, 2016.

“Unaccounted income so assessed in scrutiny assessment is liable to be taxed at a higher rate without any set off losses and expenses. Under section 115BBE (treatment of tax credits) of the I-T Act,” CBDT instructions were quoted by the paper as saying. 

“The idea behind 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 reportedly told the newspaper.

Earlier, the CBDT had said that those “drastically” altering the forms to revise income would face scrutiny and penal action including prosecution. It had reportedly also explained that 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.

Under section 139(5) of the I-T Act, a revised ITR can only be filed if any person who has filed a return discovers any omission or any wrong statement therein.

The CBDT has reportedly directed the assessing officers to check the “genuineness and creditworthiness” of those people to whom the assessee has reported the additional sales in the revised returns, after the note ban.

It may be noted that the tax department had conducted 900 searches between November 9, 2016, and March this year, leading to seizure of assets worth Rs 900 crore including Rs 636 crore in cash.