The income tax department has started cracking down on cases of banknote confiscation

Mumbai, Ta. 23 September 2020, Wednesday

Considering the impact of Corona on tax revenue in the current year, the Income Tax Department has been reopening the cases of banknote confiscation. In the last one-and-a-half months, notices have been issued to individual taxpayers seeking clarification on the huge amount of cash they deposited in banks during the 2016 banknote ban.

In view of the reduction in tax collection, it seems that in the coming days, more and more taxpayers whose financial dealings seem suspicious will start getting notices. At a time when the country is currently in a recession, the market is in a frenzy as notices are being sent to taxpayers.

In a circular issued on September 15, the Central Board of Direct Taxes has instructed top officials of the Income Tax Department to start sending notices to the taxpayers, department sources said.

Corona was prevented from sending notices to taxpayers. The tax assessment for the year 2017-18 was completed in December 2016. But in some cases where new suspicious transactions are being detected and which have not been scrutinized, the concerned taxpayer is being asked to produce documents.

Taxpayers are being instructed to disclose the source of the restricted notes of Rs 500 and Rs 1,000 deposited in the banks. The notice is being served on the information provided to the department by the banks.

Under the provision of Section 13 of the Income Tax Act, the tax department can take up a case for reassessment within a period of 3 years.

The current financial year has seen a significant decline in direct tax collection. The advance tax figures for the second quarter show a 3 per cent decline in corporate advance tax and an 18 per cent year-on-year decline in individual taxpayer advance tax.