With the application of Information Technology, the Income Tax Department has full knowledge of the taxpayers, on a click of a button, not only when they have filed their ITR but also what information, which had direct Nexus to their actual/real income not being disclosed by them. The Ministry of Finance has come out with a novel campaign aimed at luring both the defaulting & the dishonest taxpayers by sharing the information in their possession. It is an option given to such taxpayers to mend ways and file or revise their ITR or face the ire & enormous  penalty prescribed by the IT Act.

Recently on18th July 2020, the Central Board of Direct Taxes has started an e-campaign on Voluntary Compliance of Income Tax for  FY 2018-19 corresponding to Assessment Year 2019-20  from 20th July, 2020.  This e-campaign for the convenience of taxpayers will be available for 11 days ending on 31st July, 2020. This important campaign shall focus on the taxpayers who have  either not filed their Income Tax Returns or have been detected for  discrepancies/deficiency in their  ITRs for the FY 2018-19.

The prime objective of the e-campaign is to facilitate taxpayers to validate online their  tax/financial transaction information available with the I-T Department, especially for FY 2018-19 and promote voluntary compliance, so that they are saved from the lengthy process of notice and it’s compliance in the scrutiny proceedings. Thus, the non filers as well as the taxpayers who had concealed the right information or furnished inaccurate particulars of their Income would be directly benefitted.

It is pertinent that the Government had earlier, due to closure/ lockdown on account of Corona pandemic, had extended the last date for filing/revising the Income Tax Return for Assessment Year 2019-20, relevant to FY 2018-19, to  31st July 2020 as against the statutory cut off date of 31st March 2020.

The Income Tax Department will start sending  email/sms to those identified taxpayers regarding the financial transactions related information received by the I-T Department from various sources such as Statement of Financial Transactions (SFT), Tax  Deduction at Source (TDS), Tax Collection at Source (TCS), Foreign Remittances etc. The Department is in possession of the detailed  information relating to GST, exports, imports and transactions in securities, derivatives, commodities, mutual funds etc. According to the data received the IT department  has identified certain taxpayers with high value transactions who have not filed returns for AY 2019-20 . The Department has also identified the asessees wherein the high value transactions are not reflected the Income Tax Return filed by them. Since,  the taxpayers will now have access to information, as available with IT department, in respect to the  high value transactions, they can revise their ITRs to incorporate these mismatches.

In response to the SMS/ Emails, the assessees can submit online response by clicking the applicable options- whether the Information is correct or  not fully correct or that the Information relates to some other person/year or whether the Information is duplicate/included in other displayed information or lastly that the  Information is incorrect & denied. However, the whole process is faceless and the assessees would  not be required to visit the Income Tax office because the response is only required to be submitted online.

However, it is not expressly stated in the Press Release whether the delayed filing or Revision of the earlier filed ITRs  incorporating the information supplied by the department would attract penalty for concealment as the delayed filing/Revision of ITR is a result of Detection by the Department. The Government should have expressly granted Amnesty to all defaulting taxpayers to attract wider compliance of the innovative campaign. It is important that wider response from taxpayers would save a lot of wasteful litigation & both time & energy of the department as well as the taxpayers. The time limit of 11 days announced by the CBDT is too short for the taxpayer to take remedial steps. The time limit should be extended till 31st August 2020 to make this campaign successful so as to yield revenue to the Government & be  taxpayer friendly & compliant. It is also imperative for the CBDT to issue FAQS to clarify to the taxpayer of their real benevolent intent to attract maximum response.

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March 2021