Alert! Ignoring Income Tax Notices? IT Department To Levy Full Scrutiny

The income tax department has strengthened its approach with the new guidelines to ensure taxpayers comply with income tax returns. The IT department will now be strict with the taxpayers who are ignoring income tax notices. In addition, the IT department stated clearly “Those individuals will have to go through the full scrutiny who chooses to ignore the I-T department notice regularly. 

To tighten the grip on tax evaders, the tax department revealed some new guidelines to break down the problem of non-compliance. As per the guidelines introduced by the (Central Board of Direct Tax) CBDT, the department will start examining the cases where the assessees did not respond to the tax notices.

Moreover, the CBDT has highlighted its intention to increase scrutiny in situations where law enforcement agencies or regulatory authorities furnish specific information pertaining to tax evasion. This measure aims to uncover and tackle tax fraud and illicit financial activities.

As per the guidelines, the tax officer will deliver a tax notice to the assessees u/s 142(2) of the income tax act by 30th June regarding the discrepancies in income. Then the department will determine the tax returns depending on the place where these notices were served or undertaken u/s 142(1) and 148 in matters of tax evasion.

The CBDT stated that it would prioritize cases where a law enforcement agency provides specific information regarding tax evasion for the relevant assessment year, and the taxpayer has filed a return for that year.

The Income Tax department will address cases based on specific information indicating potential tax evasion for a specific year, as shared by a law enforcement agency. It is necessary for the taxpayer to file their tax returns for the corresponding assessment year. Additionally, the department will also examine cases where a notice has been issued under section 148, regardless of whether the taxpayer has filed a tax return in response to the notices.

In instances where a taxpayer neglects to file a tax return in response to a notice issued under section 142(1), their case will be subject to scrutiny by the Income Tax Department. The purpose of issuing a Section 142(1) notice is to seek additional clarification or information regarding the filed tax return.

Furthermore, if the Income Tax Department has conducted a search and seizure either before April 1, 2021, or thereafter, it will necessitate a scrutiny process. Similarly, if the department has either not granted or canceled registration under sections 12A, 12AB, 35(1)(ii)/(iia)/(iii), 1023(C), etc., but the taxpayer is still claiming tax exemption or deduction, their income tax return (ITR) will be subject to scrutiny. 

However, cases in which the order of withdrawal or approval has been reversed or set aside in appellate proceedings will not undergo scrutiny.