I-T crackdown: Over 100,000, mostly HNIs, come under lens for AY12-13

Taxman will identify cases based on data profiling and reporting of taxpayers
Over 100,000 taxpayers across the country, particularly high networth individuals, have come under the scanner of the income-tax (I-T) department for the assessment year (AY) 2012-13. 

According to sources in the know, the department has issued notices under Section 148 of the I-T Act to reopen returns for scrutiny, saying some portions of income had escaped assessment. The notices were issued mostly between March 15 and March 31, amid fear of revenue slippage. The last date for reopening the tax assessment for AY2012-13 was March 31, 2019.

The identified taxpayers have been asked to provide income details along with profit and loss for AY2012-13 within 30 days. Business Standard has reviewed some of the notices.  

“I have reasons to believe your income chargeable to tax for the assessment year 2012-13 has escaped assessment within the meaning of Section 147 of the I-T Act... I, therefore, request you to assess/reassess the income/loss for the said assessment year and hereby require you to deliver this within 30 days from the service of the notice, a return in the prescribed form for the said assessment year,” one such notice read.

While notices were issued under Section 148, tax sleuths derive the po­wer under Section 147. An assessing officer said the notices were served after obtaining the necessary satisfaction from chief commissioners. 

“These are more than the regular scrutiny notices pertaining to certain income related to other sources, which might not have emerged during the course of assessment proceedings and thus hold the merit to reopen it,” said a tax official, adding that the notices might also be withdrawn after getting full facts checked.

Explaining the reopening of the tax assessment, another official said that once a case gets reopened, an assessing officer looks beyond the issue for which it got opened. If the officer is satisfied, he would not make any addition on the tax part, he added. Sources said many of these notices were issued hurriedly as the deadline ended on March 31.

Tax experts say reopening of tax assessment has increased in recent years due to data profiling and enhanced reporting about taxpayers.

“The tax department armed with insights from bid data and 360 degree profiling of assessees has lately used reassement under Section 147 much more than in the past. The reassessment u/s 147 can only be done if there are concrete reasons to believe that income has escaped assessment. We believe several such notices will be challenged on the lack of reasons to believe,” said Amit Mahe­shwari, partner, Ashok Ma­he­sh­wary and Associates Llp, a CA firm.

While tax officials can normally go as back as six years for reopening cases, they can reopen even 10-year-old cases if search operations reveal undisclosed income and assets of over Rs 50 lakh. The latter power was given to the officials in 2017, to check tax evasion where “tangible evide­nce” in the form of undisclosed inve­s­tment in assets are found during a search or seizure operation. In cases of undisclosed foreign assets, the government had allowed tax authorities to reopen cases up to 16 years.

Widening the net

  • Tax department reopens tax assessment under Section 147 of I-T Act 
  • Taxman will identify cases based on data profiling and reporting of taxpayers 
  • Currently, officers can go back up to six years for scrutinising the books of accounts of assessees
  • March 31 was the deadline for re-assessment of matters of AY2012-13 

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