New Fear for Companies, CBDT Seeks Explanation for Major Discrepancies in Their Reported Incomes

The income tax department has furnished 10,000 reopening notices to the companies and individuals in major cities asking for explanations for the differences in their notified incomes.

Alongside the Central Board of Direct Taxes’ (CBDT) current directive to track rampant cash transactions in sectors like hotels, luxury brand sales, hospitals, and IVF clinics, suggesting the department approach these cases in a “non-intrusive” manner, the same measure arrives.

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The notices pertinent to the 2018-19 assessment year are to be issued by August 31, post to which these matters could not be reopened. This suspected undisclosed income for these matters amounted to as much as Rs 15000 crore, engaging entities in cities like Delhi, Mumbai, Bengaluru, Pune, Chennai, and Hyderabad.

Many of such matters engage the suspected fake charitable donations that have been availed u/s 80G of the Income Tax Act and high-value overseas transactions, like property acquisitions.

The reopening notices have a broader effect via the tax department to extend its reach into the former assessments particularly provided the recent budget proposals.

Such proposals permitted the income tax assessments to be reopened beyond the standard 3-year duration if the escaped income is Rs 50 lakh or exceeding that, expanding the time duration to 5 years from the finish of the assessment year. In the matter of search, the time limit has been diminished from 10 years to 6 years.

The tax officials before a reopening notice is furnished compute whether the reassessment is important. The assesses are indeed furnished with a chance to answer and proceedings may be dropped when their statement is effective.

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The assessee in some matters is permitted to file the amendment returns if the differences are considered genuine.

Also, CBDT has furnished the guidelines for the Income tax department to concentrate on recovering the arrear demands which witnessed a surge from Rs 24.51 lakh crore in April 2023 to Rs 43 lakh crore by April 2024.

To address the same special teams headed by a Principal Commissioner of Income Tax are made in every region to act on the top 5000 matters that contribute to the same demand.

CBDT is deploying data mining and analytics to find the potential assesses. New opportunities for the identification of the potent assesses have begun because of the data mining and data analytics, the board mentioned, stressing the significance of using the same data to expand the assesses base.