“Ensuring compliance from identified non-filers with potential tax liabilities is key to widening of tax base,” said the Income Tax Department’s Central Action Plan for 2016-17, presented at the recent conference of tax officials.
“Under Section 271F, if a person who is required to furnish a return of his income, as required under sub-section (1) of section 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, Rs 1,000 to Rs 5,000.”
Under Section 276CC of the Income Tax Act which provides for prosecution for non-filing of return of income, the non-filer shall be punishable with rigorous imprisonment of 3 months to 7 years and a fine. Hence, The tax officers have been provided with the list of cases for further processing under section 276CC. As per the Action Plan, the tax officers shall be liable to “examine every such case of non-filer to arrive at a decision whether a particular case was fit for prosecution under section 276CC. If so, the further necessary action is to be taken expeditiously”.
This step is deemed to be mandatory for conveying a strong message and improvising overall compliance to direct tax laws. Also, as per the statistics are shown by the Action Plan an increase in the pendency of cases before CIT(A) from 2.32 lakh to 2.58 lakh has been observed hence, the disposal target has been set at 1.33 Lakh cases for the current fiscal. Almost half of the direct tax to be collected will come from Mumbai and Delhi circles alone hence, the Direct tax collection target for 2016-17 has been pegged at Rs 8.47 lakh crore.Penalty and prosecution for non filers of income tax returns
As different practices in different regions, as well as trade and industries, are followed by assessees, instructions has been given to each Principal CIT/CIT by I-T Department to prepare and regularly review and update ‘Statement on Strategy of Assessment’ for their respective charge, with a focus on the quality of assessment.
“The Department expressed concern over Rs 62,233.14 crore demand outstanding on account of short payment, short deduction, late payment interest and late filing fees.”
Though the huge demand lying in the records is a matter of serious concern, it is also
an opportunity to augment revenue collections. The reason behind not pursuing the demand relating to ‘Short deduction’ might be that the deductee might have paid the taxes.
“However, other defaults, particularly of short payment, late deduction interest, late payment interest, late filing fee, interest u/s 220(2) are clearly liabilities of the deductor that have arisen based on the information furnished in the respective statements and corresponding matching with the challans reported by the banks must be acted upon appropriately,” it added.