CBDT: Jail only for big tax evasion

Central Board of Direct Taxes (CBDT) said that the 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.

“Effective and stringent action only in known and big cases of tax evasion would go a long way in demonstrating to the large number of compliant tax payers that the tax laws are just and fair and also encourage voluntary tax compliance,” said CBDT.

CBDT termed factually incorrect recent reports based on a discussion paper circulated during a conference of chief commissioners and director generals of income-tax —that the board has told its officers to go beyond raids and searches to target tax evaders.

CBDT said that the discussion was within the “limited context” of cases where action under Section 132 of the I-T Act 1961 for search and seizure had been undertaken by the investigation division of the department.

“These are exceptional cases which are selected for intrusive action after detailed intelligence gathering and due diligence on the basis of credible evidence and are not the norm for routine cases,” said CBDT.

Infact, it pointed out only 537 searches were conducted in financial year 2014-15 in which admitted undisclosed income was to the tune of Rs 10,288 crore. “In such cases where after intensive fact assessment, the department undertakes search and seizure action as permissible under the law, 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 as per the provisions of the Income-Tax Act,” added CBDT.