December 14, 2016 1:10:43 pm
In a bid to prevent laundering of black money, the tax department today warned of penal action against those filing “drastically” revised income tax returns by including bank deposits made post-demonetisation. After the November 8 abrupt demonetisation announcement, the government had allowed depositing of scrapped 500 and 1000 rupee notes in bank accounts.
But a provision of the income tax act that allows assessees to file a revised return or declaration of income for previous years is being misused by some to include the hereto undeclared wealth and escape by paying a maximum of 30 per cent tax instead of 50 per cent of total on such deposits. “The provision to file a revised return… 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 Central Board of Direct Taxes (CBDT) said.
In a statement, the CBDT said that since November 8, some taxpayers may misuse this provision to revise the return filed by them for the earlier assessment year for manipulating income with an intention to show the current year’s undisclosed earnings in the earlier year’s filing. The CBDT, the policy making body of the income tax department, further said if the department notices any manipulation in income in previous year’s ITR (income tax return), it will conduct scrutiny.
“Any instance coming to the notice of the I-T department which reflects manipulation in the amount of income, cash-in- hand, profits etc and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty and prosecution in appropriate cases as per provision of law,” it said.
Under the 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. Post demonetisation, the government has come out with a scheme giving tax dodgers another chance to come clean by paying 50 per cent of tax on junked currency deposited in banks post demonetisation. The Pradhan Mantri Garib Kalyan Yojana (PMGKY) provides for 50 per cent taxes and surcharge on declarations of unaccounted cash deposited in banks. Declarants also have to park a quarter of the total sum in a non-interest bearing deposit for four years.
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