I-T notices harass seniors who do not even have taxable income

The income tax department is on an overdrive and its notices of potential tax evasion are harassing retired people, senior citizens, homemakers and widows. Worse, the I-T department has even sent notices in time-barred cases that are over a decade old and to people without a taxable income
 

On the day, the Union Finance Minister presented Vote on Account for 2014-15 in the Parliament, the Income Tax (I-T) Department went on an overdrive.  It issued a press releases saying - “Letters to be sent to 23 lakh assesses for not filing returns”. Around then a news report said, “40.72 lakh high spenders under tax lens”. It now turns out that the I-T department has sent out notices to lakhs of people who include women homemakers, widows, pensioner or senior citizens. The department thinks these people are tax evaders when most of them do not even have any taxable income or have an income that is well below the permitted no-tax slab. 

 

Let me discuss two cases that I have personally looked at. Both are housewives and have received similar notices – one is a senior citizen, who had been filing regular tax returns as long as she had taxable income. She ceased to do so after her income went down below the taxable limit. Another had income only from an investment in debentures. Both cases were apparently picked up from the Annual Information Reports (AIR). While the process is fine, the tax department could have avoided creating a needless scare only applying its mind to the tax status of the two women, based on their permanent account number (PAN). Instead it shot off evasion notices, forcing them to seek professional help to file appropriate replies.

 

I myself have been served notices, not once but thrice, even though I have retired few years ago. Worse, the notices pertain to 1994-95, a period for which the law does not even require me to maintain documents. As a chartered accountant, I am among the few people who does not discard old documents, so I was able to pull out information and responded to the notices adequately. But that hasn't stopped the department from sending me more.
 

Assessment Year

Demand

Status

1994-95

Rs477

Assessment duly completed and refund order for Rs1,080 received

2000-01

Rs48,076

Revised return filed for tax payable of only Rs78

2001-02

Rs10,276

Assessment completed on 31/03/2004 refund order for Rs3,051

2010-11

-

Order of 18/10/2010 wrongly adjusts 1994 refund Rs477 and Rs633 for 2000

 








 

 

To add insult to injury the tax deducted at source (TDS) refund of Rs10,000 due to me for AY 2012-13 is held up only because of their not resolving the issues mentioned above. This was brought to the attention of the Jurisdictional Assessing Officer 11(3)1 at Mumbai and the CPC at Bengaluru by submitting copies of assessment and refund orders on 24 October 2013 and on 3 May 2013 and by updating the Compliance – I-T e-filing on the CPC site on 21 March 2014.

 

The AIRs are meant to help the tax department catch evasion, it is not a tool of harassment through reckless application or to frighten senior citizens. The Offices of Jurisdictional Income Tax at various locations in the country, which assess those who have filed returns, as well as the assesses, are at a loss for explanation of how this happened. The Centralised Processing Centre (CPC) at Bengaluru, conveniently choose not to respond to the taxpayers’ clarificatory letters and has continued to issue follow-up notices.

 

Based on the information picked up from the annual information return (AIR), the I-T Intelligence and Criminal Investigation Directorate, based at Delhi, has been routinely shooting out stereotyped computer-generated notices. These notices are being sent to a cross section of citizens for perceived ‘potential evasion of taxes’ in earlier years and also calling upon them to inform the I-T Department, whether they have filed tax returns. 

 

According to the news report, based the AIR, they claim to “have located potential ‘tax evasions’ (?) of 40.73 lakh persons who have made cash deposits of Rs10 lakh and more, 40.40 lakh purchased mutual fund (MF) units of Rs2 lakh or more, bonds and debentures of Rs5 lakh or more, purchase of company shares worth Rs1 lakh or more, RBI bonds of Rs5 lakh and above, 15.55 lakh purchased or sold immovable property worth Rs30 lakh or more, 20.61 lakh made credit card payments exceeding Rs2 lakh and had interest income of more than Rs50,000 from banks and purchased bullion or jewellery worth Rs5 lakhs or more”.

 

The I-T department coolly boasts, “We have identified 23 lakh people, who have invested money, but have not filed returns. We will be sending out letters, asking those details of their tax returns. We have already issued letters in 2.45 lakh cases.” A simple check would show the Central Board of Direct Taxes (CBDT) that there are overlaps in the numbers of perceived ‘evaders’ mentioned above. 

 

A media report says “The Finance Ministry is also developing a module on the e-filing portal that will provide individual taxpayers’ details of returns not filed, ITR-V not submitted, demands not paid as steps towards greater transparency”.  In my opinion, this comment comes rather late. Even today, PAN data is a part of know your customer (KYC) requirement and is embedded in practically every transaction passing through the bank accounts. It also appears in all applications for shares, MF units, bonds, debentures, credit card payments to banks, as also purchase and sale documents for immovable property.

 

All that is required to resolve this concern is to the track a sample of a few high value transactions by matching the respective names and PAN with the Jurisdictional Officer and/or the CPC to ascertain the veracity of the transaction. Only after due confirmation, should the I-T Department send out notices to people. These notices not only cause needless panic, but also increase the work load at the tax department.  

 

To elicit the desired information from the presumed “non–return fillers” they could be required to furnish a simple listing/ declaration of the amounts/ sources during a year of incomes from:

        Interests from all bank deposits savings, FD, RD, Swipe etc. with account numbers

        Income from Dividends

        Income from units of Mutual Funds

        Capital gains on sale of shares or redemption of MF instruments

        Income from House Property

        Income from other sources

        Less: All permissible deductions and exemptions

        Total income during the year

 

If the income is ultimately found to be not taxable the matter needs to be closed.

 

(Nagesh Kini is a Mumbai based chartered accountant turned activist.)

Comments
Rasik Dagli
3 years ago
Inform me of new comment
Rasik Dagli
3 years ago
Rasik Dagli
3 years ago
Binsy
7 years ago
My mother who is houswife receives regular monthly cash of Rs 50000 to take care of household expenses .whatever savings she deposits the money in her SB account. Suddenly she receives notice from IT that AIR shows huge cash deposits for the last 6 asst years and AO has taxed the entire credits . Please suggest with relevant case law.
Ganesh Kamat
8 years ago
Simple Laws-Solves most Problems,
________________________________

(A)....After the Budget...

Most members of the House say,

that the Budget is…

Either, Pro-Poor or Anti-Poor….

Though these members would not even knows,

their own Liabilities,

Due to the Complex Laws,

Rules & Regulations in the Budget.

They make Complicated Laws &

unreasonable Procedure, to accommodate whom?

So our Democracy is no doubt,

BY:- the people, but

OF:- the Leaders? &

For:- the Administrators?

Simple Laws-Solves Problems,

OF:- the people,

FOR:- Growth-Prosperity to all.

Are you for Simple Laws?

____________________________________

(B)....Rail Reform...

Why, Passenger Train is important ?

1) British gave us Mail/ Express and Passenger Trains.

2) We added Super Fast Trains in place of Passenger Train.

3) Passenger train are helpful for rural area farmers to
sell their farm product to Taluka/ District places, without
middleman hence creating Employment & better value to our farmers.

4) Now a day they are talking about bullet train !
they call this as their vision?

5)Today we are in need of MORE passenger Train First
Which cost hardly anything, for our farmer.

Unfortunately No M.P. Raise this Question In our Parliaments.


________________________________________________________________

(C)....TAX Reform Agenda ....

People are fed up with so called Development Agenda,

So Simple Agenda is:- 1% Tax on Gross Receipt, All other Tax abolition.

All are talking about Problems i.e.-Corruption, Inflation, Red-Tape,
Black Money, Unemployment etc.


Only new Laws may NOT be the solution.

We need Tax Reform, Administrative reform, Bank Reform..
with solution NOT words, but by action.

If we go to Public with such Reform solution..

1)How they get their work done with simplicity,
is the issue today for the people.

2)Tax Reform....1%+1% =2% Tax on gross receipt from other's.
1%..Tax + (1%>>to their own Account) as Less Privilege Fund.(L.P.F.)

3)This 1% L.P.F. will give power to the people as Less Privileged Fund
is their own Money.

4)Tax Number is your mobile number.
Bank Account Number is your mobile number.

5)Tax payment will be as easy, as payment of post paid mobile charges.

6)Salaried people will be happy as they have to pay less.

7)Government will get more Tax collection at least Two times,
as money transaction/ circulation is always at least 20 times or more.
No Black money problem.

8)All other Tax will be abolished, so all others are happy, can increase their
income & Concentrate more on the Business/ Work/ Services
& thus generate more employment.

9)In Administration Reform create simple procedure for various permits/ license.


10)Cash transaction is way of life in India, yet if system is simple,
Tax % Minimum All will pay Tax.

"Apple a day keeps Doctor away"... if apple costs Rs.10/-Each.
but if apple costs Rs.100/-Each???

Our development cost so high, so all our Netas, are all for, development.

Development is like cube of ice, Actual user may get, only cold palm.

So More Government means more development of Netas & Babus.
Less Government means more development of common man.

Let's NOT create any more problems and then try to solve it.
and to have Simple pay Tax & Proceed policy.

Let's Not stay like chor, by avoiding Tax, but by paying simplified minimum Tax.
So our new born baby's hand will not be with Tattoo-"Mera Baap Chor Hai".

Any Party want to work with such Agenda?

Awaiting Feedback..

gan[email protected]

Ganesh Kamat 9820867755
B.E.(civil), M.S.(U.S.A.)

BMC: Structural Audit Engineer -42 yrs. Exp.
Pioneers Low Cost, Green, Speedy RCB Housing.

http://www.AffordableConstruction.in

http://www.GanakaMotel.com
Ashok m Rane
8 years ago
It is painful to know that Senior Citizens are harassed like this by IT Dept.
If they utilise this time to search the resources of Politicians, Big Professionals, they will help our nation in true spirit.If they are loyal to their duties they should try it.
Ashok M Rane
Gopalakrishnan T V
8 years ago
The IT officials do not seem to have fertile imagination and chase fellows who make hell of a money in the economy.With the boom of the economy after itsliberalisation the Construction industries have expanded and the number of flats and houses built have increased leaps and bounds increasing employment and business opportunities left and right particularly in cities making the labour costly and rarely available. This boom has generated a lot of small businessmen doing Carpentry, furnishing and providing varieties of small services and charging the service takers in lakhs and lakhs. For instance just for carpentry work to cover a balcony and a two bed room kitchen ward robes, they charge anything betweenRs 15lakhs and Rs 20 lakhs and most of the service providers do not take take cheque or any other mode of payment other than cash. It is doubtful whether these persons have heard of sales and Income tax.There are thousands of such businessmen and like this there are several big fish as well avoiding and evading taxes.Leaving them the IT dept is after the retired pensioners and harassing them for a pittance if any at all is something strange and not comprehensible.The evasion of tax is plugged the fiscal defit can be wiped out and there can be suufficient surpluses to reduce the rate of Income tax and better compliance.
Ashok Gokhale
8 years ago
The Central Processing Centre (CPC)Bangalore is a fraud perpetrated on the long suffering honest income tax payer by a Finance Ministry & Income Tax Department that need to do their homework on how to operate an efficient, transparent & accountable tax collection system.

I am an 83 year old former Government official who has been regularly paying taxes for close to 60 years. The above comment is based on my most recent experience with running from pillar to post for more than an year to get a refund of Rs 17,000 or so on my Return for AY 2012-13 in which the entry for an advance tax of Rs 48,300 paid by me in March 2012 was botched by a State Bank of India clerk who entered the wrong PAN number.

Consequently,even after the error was rectified, CPC kept sending me in a mindless, mechanical manner a demand for arrears of tax starting with Rs 34000 & ending up with a demand for Rs 82000! Letters by Speed Post elicited neither acknowledgement nor reply & telephone calls to the designated numbers, which were usually inaccessible, got parrot like replies that offered no clarification. Fortunately,I was able to get my refund a few days ago through the good offices of my Ward Income Tax Officer.

The Ministry of Finance, Govt of India & the Income Tax Department need to realize that computerization by itself without an efficient, accountable & income tax payer- friendly back up is a recipe for complications & harassment instead of simplification & speedy tax collection.
A.B.Gokhale
PRABHAT
Replied to Ashok Gokhale comment 8 years ago
IN CASE OF MISMATCH , TAX PAYER MUST BE ASKED TO APPROACH A PARTICULAR AUTHORITY WITH ORIGINALS TO COMPLETE THE ASSESSMENT ?
Hemlata Mohan
8 years ago
How else do you think the IT dept can be kept busy? When the mismatch of Pan card happens at the bank level, instead of penalizing the bank, the customer has to run from pillar to post- And the big cases are never harassed- for both sides "take care" of each other. Hope this ends with a new FM and a new Govt
RAMESH ASWATH
8 years ago
very true..came across a situation where the primary investor (first name) has been filing tax returns promptly. He has added his parent (aged over 80 yrs) as a joint holder for his investments. Tax dept sends notice to that senior citizen saying you have done so much investment and not filing tax return!! Can't they figure out on their own that the joint holder is not the primary tax assesse?

ramesh
ajit
8 years ago
ACTUALLY SENIOR CITIZENS SPECIALLY RETIRED SERVICEMAN MUST GET THERE LIMIT UP as they have more to look after all family member so as they should take care of them
Pradeep R Hattangadi
8 years ago
Agree with you sir. Now they have gone one step ahead when you write to CPC they send you a letter saying that your file has been transferred to the Jurisdictional officer and ask you to go the E- Filing site to find your Jurisdictional officer for further action on the matter. When you go to the Jurisdictional Officer they say they do not have any records. So you end up running from pillar to post
PRABHAT
Replied to Pradeep R Hattangadi comment 8 years ago
THAT IS WHAT I MEAN . NO CONVENIENCE TO TAX PAYERS , ONLY HARRESMENT .
MOHAN
8 years ago

CBI arrests two I-T officers in Thrissur on bribe charges

http://www.business-standard.com/article...


http://www.youtube.com/watch?v=T5nzQNdAk...
MOHAN
Replied to MOHAN comment 8 years ago
Mediaone channel is ignorant. they are showing commercial tax office for income tax office!! Hope Jamaat-e - islami "Amir' knows the difference!!
PRABHAT
8 years ago
UNLESS I TAX OFFICER HERRACE THE PUBLIC AT LARGE , HOW THEY CAN EARN MONEY . EVEN ON TDS MISMATCH, PASSING ASSESSMENT ORDER WITH PENALTY AND INTREST , WITHOUT ASKING FOR ORIGINAL TDS CERTIFICATE .GOVT. IS ALSO HAPPY WITH THIS ATTITUDE , AS GETTING REVENUE .
Abhijit Gosavi
8 years ago
No social security for folks in their golden years, but instead harassment from a non-performing government!
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