I-T Dept warns assessees against drastic revision of returns

The Central Board of Direct Taxes (CBDT) on Wednesday warned of penal action against those filing ''drastically'' revised income tax returns by including bank deposits made after demonetisation.

The Income Tax Department allows fresh filing of returns by assessess in case they needed to revise their earlier statements but have warned of close scrutiny in cases of drastic revision post demonetisation.

After the 8 November demonetisation announcement, the government had allowed depositing of scrapped Rs500 and Rs1,000 notes in bank accounts till 30 December.

But the provision of the income tax Act that allows assessees to file a revised return or declaration of income for previous years is being misused by some to include the hitherto undeclared wealth and escape by paying a maximum of 30 per cent tax instead of 50 per cent on such deposits, under the new income disclosure scheme, 'Pradhan Mantri Garib Kalyan Yojana'.

''The provision to file a revised return… has been stipulated for revising any omission or wrong statement made in the original return of income and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income,'' the CBDT said.

Any instance coming to the notice of the I-T department which reflects manipulation in the amount of income, cash-in-hand, profits, etc, and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty and prosecution in appropriate cases as per provision of law,'' it said.

The CBDT has indicated that it would focus on tax returns revised by taxpayers in order to ensure that taxpayers with unaccounted cash do not circumvent the higher tax and penalty provisions by including the unaccounted income as part of the revised tax return for a previous year.''