“Effective and Stringent” Action Only In Big Cases Of Tax Evasion: CBDT

Clearing the air regarding “unnecessarily” targeting tax evaders with stringent measures, Central Board of Direct Taxes (CBDT) has clarified that it hasn’t instructed its officials to go beyond the line to nab the tax evaders. In fact board has taken a different note altogether in the matter of searches and raids so that “effective deterrence” will be provided to willful tax evaders and trust of complaint tax payers would be established.

CBDT has issued a clarification that it is factually wrong that the board has instructed its officer to target tax evaders. “Need of the hour is to provide effective deterrence since the soft action in extreme and big cases of tax evasion affects the behaviour of the compliant tax payers. This has been brought out in the latest study conducted by NIPFP,” marked the clarification issued by the board.  CBDT is of the view that stringent action will be taken only in  known and big cases of tax evasion. This will actually give a good signal to those tax payers, who pays their taxes judiciously and will also demonstrate that tax laws are just and fair and encourage voluntary tax compliance.

Board has clearifed that cases where action under Section 132 of the IT Act 1961 for search and seizure had been undertaken by the Investigation Division of the Department, are selected for intrusive action after detailed intelligence gathering and due diligence on the basis of credible evidence. These are not the normal routine cases and compliant tax evaders shouldn’t bother about that. Actually during a recent Conference of Chief Commissioners and Director Generals of Income Tax, some discussion regarding reprimanding of tax evaders had happened, which was covered by media as “proactive approach” of the board to nab tax evaders, for which CBDT tried to clear the air.

Not to be mentioned that during FY15 537 searches were conducted in which admitted undisclosed income was to the tune of Rs.1.03 lakh crore. Board said that in these cases mere tax collection does not have deterrence value and these need to be taken to their logical conclusion in terms of levy of penalty and launching of prosecution.