I-T department has launched a campaign for non-responding persons to catch tax evaders to collect due taxes and penalties from them

The Income Tax (I-T) Department has identified a noticeable number of persons who have deliberately chosen to ignore notices calling for enquiry and verification of the tax returns. These persons have ignored the emails, the SMSs (short message service) and even the physical notices in some cases.

However, now it would be difficult for them to avoid outreach of the I-T Department as the technology-driven Faceless Assessment Scheme has been operationalized, said the sources in the Department of Revenue (DoR). The I-T department has launched a nationwide campaign to spot such non-responding persons to catch tax evaders to collect due taxes and penalties from them. In one of such a case, an individual at Rajkot, Gujarat who showed his income less than Rs 5 lakh a year and has bank accounts with cash deposits of nearly Rs 10 crore and cash withdrawal of Rs 7.5 crore, the sources said.

This scamster did not respond to six notices, over 10 SMS alerts and other means to contact him. A survey operation was conducted during which the individual was not traceable and the business premises shown in the income tax return was of someone else. His home was traced from the bank but he appears to have absconded. Now, the process to attach his bank account and other assets have been initiated.

Sources said that these unscrupulous tax evaders have probably mistaken the taxpayer facilitating approach of I-T department to mean laxity in follow up action but the department is quite watchful with non-intrusive means of data analytics and Artificial intelligence (AI) and it will not be possible for a dishonest tax evader and fraudsters to escape from BIFA tool and tech-driven tax system.

A highly placed source in the Ministry of Finance said on the condition of anonymity that the I-T department is committed to honouring the honest taxpayers while penalizing tax evaders/fraudsters.

He cited a case of Mumbai, where an individual suggested his income of less than Rs 5 lakh a year but had made cash deposits worth Rs 12 crores. Later, a pre-survey examination revealed cash deposits were of about Rs 60 crores. During the survey, diaries were impounded as the individual does not maintain books of accounts.

Further enquiries are underway to pinpoint the source of cash, he said.
Similarly, in yet another case wherein an individual from Alwar, Rajasthan had deposited in his bank account cash of Rs 27 crores in FY 2017-18 and Rs 22 crores in FY 2019-20 and had shown his income in the range of Rs 3 to Rs 5 lakhs only.

The individual now under survey is being investigated, said the sources, adding that the Faceless Assessment Scheme along with improved Form 26AS and pre-filled ITRs is robustly tuned to make a distinction between honest taxpayers and deliberate tax evaders/fraudsters and the IT department would not hesitate to take required coercive actions against non-responding persons and tax evaders who have misused the trust reposed on them.

DoR sources in the know of the matter told to have learned that approximately in 6,000 cases the devious tax evaders have tried the route of no-response in an apparent bid to escape from the rigours of the law.
Earlier, in the pre-faceless era, such tactics of being non-responding may have paid dividends for tax evaders. But now, with the Faceless Assessment Scheme, the I-T department collates and matches transactions with the ITRs of taxpayers/entities and selects tax returns for the scrutiny that show wide discrepancies in financial transactions viz-a-viz the income shown in the tax returns.

These discrepancies are unearthed by the application of risk analysis developed through AI as well as from the experiential and domain knowledge of the tax officials.

One must not forget, said the sources, that the Faceless Assessment Scheme is a data-driven model of tax compliance. It presumes voluntary and honest conformity with tax laws by the persons and is based on the aggregation of financial transactions of a taxable entity that are collected by the various regulatory and facilitation agencies like the Sub-registrars of properties or the banks and other Non-Banking Financial Companies (NBFCs) and shared with the I-T Department.

“It’s just not possible to dupe the tax administration now fastened with the Faceless Assessment System,” said the source.

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