Staying mum to queries under faceless assessment to bring tax evaders under I-T lens

New Delhi, Dec 24 (SocialNews.XYZ) The government's faceless tax assessment scheme will not completely relieve taxpayers from frequent scrutiny by tax authorities to check evasion.

The Income Tax Department has decided to crack down on taxpayers who use the faceless platform to file returns but avoid responding to queries generated online calling for enquiry and further verification of records.

Such cases will be treated on priority by the tax authorities and all efforts would be made by the Department to see that loss of physical interface between officials and taxpayers under the faceless system does not encourage tax evasion.

"...tax evaders should not be mistaken that the taxpayer facilitating approach of I-T Department means laxity in follow up action. The Department is quite watchful with non-intrusive means of data analytics and AI & ML and it won't be possible for a dishonest tax evader and fraudsters to escape from BIFA tool and tech-driven tax system," said a source in the Finance Ministry.

The fresh approach of tax authorities follows a noticeable number of persons deliberately choosing to ignore the notices calling for enquiry and verification of the tax returns.

These persons, who have ignored the emails, the SMSs and even the physical notices in some cases, will now face difficulty in avoiding outreach of the Income Tax Department as the technology-driven Faceless Assessment Scheme gets operationalised, sources said.

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 Gujarat's Rajkot who showed his income less than Rs 5 lakh a year has the bank accounts with cash deposits of nearly Rs 10 crore and cash withdrawal of Rs. 7.5 crore. This scamster, Department of Revenue sources said, 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 has been initiated.

A highly placed source in the Ministry of Finance said that the I-T Department is committed to honour the honest taxpayers while penalising the 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 of Rs 12 crore. Later, pre-survey examination revealed cash deposits were of about Rs 60 crore. During the survey, diaries were impounded as the individual does not maintain books of accounts. Further enquires are underway to pinpoint the source of cash.

Similarly, an individual from Rajasthan had deposited in his bank account cash of Rs 27 crore in FY 2017-18 and Rs 22 crore in FY 2019-20 but had shown his income in the range of Rs 3 to Rs 5 lakh 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 I-T 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 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 law. Earlier, in pre-faceless era, may be such tactics of being non-responding have possibly paid dividends for tax evader but now with the Faceless Assessment Scheme, the I-T Department collates and matches transactions with the ITRs of taxpayers/entities and selects for scrutiny tax returns that show wide discrepancies in financial transactions viz-a-viz the income shown in the tax returns. These discrepancies are unearthed by application of risk analysis developed through AI as well as from the experiential and domain knowledge of the tax officials.

The Faceless Assessment Scheme is a data driven model of tax compliance. It presumes a voluntary and honest conformity with tax laws by the persons and is based on 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 NBFCs and shared with the Income Tax Department. It's just not possible to dupe the tax administration now fastened with the Faceless Assessment System, said the source.

Source: IANS