Arrest, detain wilful defaulters: I-T dept to officers

NEW DELHI: Challenged by increasing cases of

BACKGROUND

I-T department publishes list of 31 big tax defaulters

NEW DELHI: Following its strategy of ‘naming and shaming’ large tax defaulters, the Income Tax department on Wednesday came out with a list of 31 defaulters who owe over Rs 1,500 crore to the government.

Some of the big defaulters of income tax/corporate tax in the list are: Hyderabad-based Totem Infrastructure (401.64 crore), Pune-based Patheja Bros Forging & Auto Parts Mfg Co (Rs 224.05 crore), Hyderabad-based Royal Fabrics (Rs 158.94 crore) and Mumbai-based Home Trade (Rs 72.18 crore).

Asking the defaulters mentioned in the list to “pay tax arrears immediately”, the Income Tax Department said the assessees are either “not traceable” or they have “inadequate assets for recovery”.

This is the second such list released by the department within one month. The earlier list had names of 18 entities who owe over Rs 500 crore in tax to the exchequer.

The initiative, according to a senior tax official is aimed at publicising and putting these names in public domain so that the common man can come forward to help the department in knowing the whereabouts of these.

As per a statement given by government in Parliament, the total Corporate Tax demand pending for collection up to the month of December, 2014 was Rs 3,11,080 crore.

Government’s efforts to improve revenue collection include, surveys for identification of potential tax evaders, gathering information from various sources, regular scrutiny, audit, joining global efforts to combat cross-border tax evasion and tax fraud and to promote international tax compliance.

defaulters
who smartly evade paying due taxes, the Income Tax department has asked its officers not to shy away from invoking the rare provisions of arrest, detention and auctioning of attached assets of the accused.

The Central Board of Direct Taxes, in a strategy paper for the current fiscal, has directed the tax department to use this provision, used rarely till now, stated under Section 276C (2) of the IT Act that stipulates action to ensure rigorous imprisonment for a period between three months and three years which may also carry a fine.

The IT department has a designated official to execute these rare powers, called the Tax Recovery Officer (TRO) within its establishment.

“The machinery of the TRO should be strengthened by providing more infrastructure and manpower. The TROs should be further trained specifically for their work in order to increase their effectiveness. In respect of non-compliant defaulters, the provisions of arrest and detention as per the provisions of Rules 73 to 81 of Schedule II should be invoked by the TRO.

“Stringent action can be taken in suitable cases including use of the provision for prosecution under section 276C(2) of the Act,” it said.

The strategy papers act as a guiding light for the taxman for the financial year, in this case 2016-17.

The directives have also asked the supervising authority of the TROs (Principal Commissioner of IT) to “monitor” their work “especially in the area of attachment and sale of property to ensure that the attached properties are sold within one year.”

“The role of a TRO comes at the fag end in a tax evasion case when the demand raised by the department gets converted into wilful default. A TRO executes his power of arrest and detention when there is a chronic default. That is why we see these provisions have been rarely invoked in the past. But now, more action on this front will be undertaken as defaults are becoming a menace now,” an IT official explained.

The instructions also make it clear to the TRO that in case of liquidation of assets there should be “prompt lodging of the claim” with the official liquidator and constant monitoring of the case in order to guard the interest of the revenue or the department.

It has also been directed, as per the strategy paper, that supervisory officers “may instruct” the TRO or the Assessing Officer of a case to monitor cases which are being heard in the Debt Recovery Tribunals (DRTs).

They (TRO) should, it said, consider lodging of claims of outstanding demand in such cases before the DRT.

“At any level of a default case, the department’s interest of getting taxes is supreme and hence the TRO is being directed to pursue the cases upto the level of DRTs too. Getting revenue and due taxes from an entity is the ultimate aim of the IT department. By using these new strategies, the department also ensures that a strong message goes to all such people that the taxman will not let it go easily,” the official said.

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