Cash deposit after note ban: CBDT sets deadline for completing assessment of 87,000 non-filers – The Hindu BusinessLine

The Central Board of Direct Taxes (CBDT) has set a deadline of March 31 for completing assessment for 87,000 non-filers who deposited ₹10 lakh or more in their bank accounts following the demonetisation announcement in November 2016.

The Department had served notices on nearly 3 lakh non-filers who deposited ₹10 lakh or more in their bank accounts following the demonetisation announcement. Of these, over 2.1 lakh filed their returns by the March 31, 2018, deadline. The remaining assessees have not filed their return of income in response to the notice issued under Section 142 (1) of the Income Tax Act for the filing of returns of income pertaining to assessment year 2017-18 (financial year 2016-17). Now, the board has come out with a Standard Operating Procedure (SOP) with seven-point guidelines to deal with this.

The most important feature of the SOP is the use of ‘best judgment assessment.’ Related provision in the Act prescribes that if any person fails to comply with all the terms of a notice issued under Section 142 (1)1, the Assessing Officer shall after giving the assessee an opportunity of being heard, make the assessment of total income or loss to the best of his judgment.

It has been decided that in the ‘best judgment assessment’ order being framed, the Range Head will mandatorily issue directions from time to time. Further, he/she would also monitor framing of the final assessment order. Through local enquiries, the Assessing Officers should endeavour to identify possible addresses of the assessee.

It has also been provided that while gathering material, section 133(6) of the Act should be suitably invoked by the Assessing officers so as to gather additional information about persons, transactions and fund flow from the banks where the suspected transactions took place.

Such notices will be issued by the concerned Assessing Officer after a careful appraisal of information at his disposal so that maximum possible additional information can be culled out. Further, a detailed analysis of past income tax returns, if available, should also be made to form an opinion on the nature of transactions. On the basis of all the material and evidence gathered by the officer, during the course of assessment proceedings, the assessee would be duly provided with an opportunity to explain his/her case.

In cases where ultimate beneficiary of a transaction has been established, the concerned Assessing Officer will forward the material available at his/her disposal to the officer having jurisdiction over the ultimate beneficiary so that appropriate action can be initiated.

Further, information regarding the entry operators in a particular chain should also be forwarded to the concerned jurisdictional Assessing Officer for taxing the unaccounted commission receipts.

To aid fair play

“Though the CBDT directions provide that a notice should be given to taxpayers providing them an opportunity of being heard before completing the ‘best judgment assessment’, the law doesn’t require this, since a notice under section 142(1) has already been issued in these cases,” Rakesh Nangia, Managing Partner at Nangia Advisors, said.

Further, he said the measure would not only deal with tax non-compliers but would also ensure integrity in the conduct of assessment proceedings.

Imposing a check by the senior authorities on the work conducted by tax officers and also, affording a chance to tax payers for explaining their case would aid fair play.

via Cash deposit after note ban: CBDT sets deadline for completing assessment of 87,000 non-filers – The Hindu BusinessLine

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