Taxmen can now dig in past 10 years of returns to unearth black money
In a significant move to check black money, Income Tax (I-T) Department can now scrutinise I-T returns of previous 10 years if any search leads them to undisclosed deposits or property of over Rs 50 lakh.
The present ceiling for scrutiny of past returns of income is six years.
- UK's Hammond hits budget deficit target, bigger tests ahead
- Modi's reforms agenda: PM has political will, now bureaucracy must deliver
- India is world's fifth largest military spender, US tops list
- Greece blows EU-IMF bailout targets away with strong budget performance
- HTC U 'squeezable' smartphone to be unveiled on May 16
In the Budget for 2017-18, Finance Minister Arun Jaitley has proposed to increase the scrutiny period to 10 years.
"What we have said now is (that) if during a search we find there is any asset or income worth over Rs 50 lakh which is not disclosed and is older than four years, then we can go back to 10 years," Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said at a post-Budget seminar in New Delhi.
According to the memorandum to the Finance Bill 2017, the amendment to the I-T Act will take effect from April 1, 2017. This means that the books of accounts of an assessee can be reopened by taxmen back till 2007.
The amendment seeks to check tax evasion where "tangible evidences" in the form of undisclosed investment in assets are found during a search or seizure operation.
The tax returns can be opened only when undisclosed income and asset of over Rs 50 lakh are unearthed in a search operation and not mere survey by the tax department.
The amendment to the I-T Act empowers tax officials to issue notices to such assessees up to the 10th assessment year, beyond the sixth assessment year already provided for in the I-T Act.
As per the amendment, notices can be issued if the assessing officer has in his possession books of accounts or other documents or evidence which reveal that the income that has escaped assessment amounts to Rs 50 lakh or more in a year or in an aggregate of four assessment years.
The notices can also be issued if the income which escaped assessment is in the form of assets.
"The amended provision of Section 153A shall apply where search under Section 132 is initiated or requisition under Section 132A is made on or after April 1, 2017," the memorandum said.
In a case of undisclosed foreign assets, the government had allowed tax authorities to reopen cases up to 16 years.
The move to extend the period for the reopening of tax cases is part of the overall exercise of the government to unearth black money through a host of initiatives.
The government had earlier come out with disclosure schemes for foreign and domestic black money holders. In November, it demonetised high-value currency notes and provided black money holders one last opportunity to disclose unaccounted cash holding in Pradhan Mantri Garib Kalyan Yojana (PMGKY).
"Finance Act 2016 provided that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme(IDS), 2016, and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice of the I-T Act is issued by the Assessing Officer. We have omitted this clause," he said.