Taxmen are using the lockdown to build stronger cases against defaulters : 11-05-2020

The government has asked its tax officers to start collecting and analysing data on all major tax disputes as they are unable to hit the ground due to Covid19 pandemic.

The Central Board of Direct Taxes (CBDT) has asked the tax officers to not issue any notices for now but collect data that will help settle half the pending litigation.

In a note to the tax officers CBDT said that identifying issues in all major tax issues would be crucial during next three months.

Many suspect that due to the increased ground work by the revenue department the tax demands may become more in-depth and lead to more companies paying up.

“There is a major shift in the approach of the government wherein the emphasis is more towards qualitative rather than quantitative measures. The focus is more on identification and strong preparation of cases which are worth picking up for reassessment, said Rahul Garg, partner, Asire Consulting.

For now the CBDT has asked that the tax officers not to even approach or question any of the taxpayers.

“..no communication with the assesses having adverse effect on him/her is to be done during this period till fresh guidelines in this regard are issued by the board,” the CBDT interim action plan released on Friday read.

Tax experts say that in the past, large number of these cases was challenged in the courts on various grounds. The revenue department has not had a very good run with the success rate in tax litigation. Currently, there are about 5 lakh direct tax cases pending in various appellate forums — Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court and Supreme Court. The tax department loses about 65% of all the cases at various forums.

Tax experts say that the government’s focus on the big data analytics combined with the ground work put in by the tax department could yield results in the coming months. The tax department, say insiders is planning to focus on the large litigation that could impact their revenues.

To make effective use of the lockdown period, CBDT has also directed the senior tax officers to dispose of all the applications filed by trusts received by March end this year. “This should help bring certainty for this class of taxpayers and the analysis by the taxmen will ensure that the activities of trusts are genuine. This is an important area considering the strong focus of CBDT to curb tax avoidance and evasion,” said Garg.

Source : PTI