pri Do Surgical Strike , Not Tax Terrorism For Collection of Tax Do Surgical Strike , Not Tax Terrorism For Collection of Tax


Income Tax Officers- high


Income Tax Officers- HIGH


Income Tax Officers- HIGH


Well, as we are marching towards March, i.e end of financial year, Income tax department by any means even by ignoring the provisions of law , judiciary pronouncements and fostering tax terrorism , they just want to win over their target of “Rs. 11,50,000 CRORE- TAX COLLECTION ”.

Whereas, Honble Bombay High Court in a land mark judgement on 27th March 2018, in the case of Shri Saibaba Sansthan Trust (Shirdi) vs. UOI had stated “Whereas CBDT should investigate arm twisting measures, dehors application of the law, adopted by the Revenue for recovery of tax and take corrective measures to ensure AOs are not overzealous in recovering maximum revenue before 31st March”

Ironically, on 4th January,2019, CBDT’S Chairman has instructed the department officials to maximize tax collections in general and collections under Regular Assessment in particular, the following strategies need to be implemented in this quarter in order to surpass the target of budget estimate of Rs 11,50,000 crore collection:-

(a) Targeted recovery surveys in potential cases where high amount of recovery is likely.

(b) Sale of attached properties in appropriate cases by TROs to recover confirmed demand where normal measures of recovery have not yielded results.

(c) Initiation of proceedings under section 179 of the Act in eligible cases to make recoveries of outstanding dues of the companies.

(d) Filing of prosecution under section 276C (2) against persons who are willfully evading payment of outstanding taxes.

(e) Completion of non-time-barring assessments in cases where demand is likely to be raised and collected during the current financial year itself.

(f) Verification of deductors where there is non-payment of TDS to the Government account though TDS has been deducted as well as where there is substantially low TDS as compared to last year including launching of prosecution in cases of substantial default.

(g) Verification of payment of advance tax by the seller of properties in cases where TDS under section 1941A has been made by the buyer.

(h) Monitoring of payment of Dividend Distribution Tax by obtaining information from financial websites, SERI, etc.

3. Other strategies depending upon the specific characteristics of the region should also be adopted so as to increase collections and ultimately achieve the budget target” 

It has been instructed to foster efforts to collect regular assessment demands of current year as well as past years. Whereas if demand is under dispute and is subject to the appellate proceedings, then, the statutory right of appeal vested in the assessee should not be rendered illusory and nugatory. This right gets defeated when assesse is pressurised to pay the demand in dispute.

Further, the aforesaid instructions have been issued without considering the fact that this was the first year of E-assessments (Though E-assessments in true spirit are yet to take place). A Lot of High Pitched ironically “Best  Assessments (u/s 144)” as they are called have been done especially in cases of AIR/Cash deposits/NMS etc. As per Instruction No. 96 of 1969, 100% stay of demand has to be granted in high pitched assessments and even otherwise such hefty demands have been raised that it is next to impossible for assessees to pay even  20% demand.

The aforesaid instruction has been upheld by Hon’ble Karnataka High Court in the case of Flipkart India Private Limited vs. ACIT:-

“CBDT Circular dated 29.2.2016 does not supersede Instruction No. 1914 but modifies it. Both have to be read together. The AO and CIT cannot straightaway demand payment of 15% of the dues but have to grant complete stay if the assessment is “unreasonably high pitched” or the demand for depositing 15% of the disputed demand leads to “genuine hardship” to the assessee”

But abiding by the command of CBDT,tax officers have in the present month of January itself , have not only issued notices u/s 221(1) for tax collection against the time barring assessments done in December,2018 but in some cases even bank attachments have also been done.

Whereas recently on 11th Sep,2018, Hon’ble Bombay High Court in the case of Bhupendra Murji Shah vs. DCIT had stated

 “The AO is not justified in insisting on payment of 20% of the demand based on CBDT’s instruction dated 29.02.2016 during pendency of appeal before the CIT(A). This approach may defeat & frustrate the right of the assessee to seek protection against collection and recovery pending appeal. Such can never be the mandate of law.” 

There are plethora of judgements which have clearly stated that coercive measures should not be adopted by the department in collecting demands especially in cases where appeals are pending for adjudication. In some cases severe strictures have also been passed against officers for resorting to coercive collection methods yet the aforesaid instructions have been issued to the officers.

In order to meet the target, a lot of meetings, surveys/searches would be conducted by the department in the present quarter .

Prosecution notices for non payment of advance tax, return filing, TDS delay, non payment of wrong demands (without disposing of 154/ giving tax effect pending since long time) have become a common trend now. The difference between civil offence and criminal offence has been blurred. What should be the last resort to be taken by the department and in case of severe, intentional, deliberate, contumacious conduct is eventually becoming the first resort they are taking i.e to prosecute.

No doubt for development and smooth running of the country, high tax collection is utmost important and a blessing and every citizen should timely and correctly pay the tax on his income. Tax Evaders should be identified and penalised and even prosecuted as per the magnitude of offences but surprisingly instead of doing surgical strike on real and big tax evaders by using the drones of high data filtration and intelligence properly, Income Tax Department is using its artillery of  Penalty, Prosecution, Benami law, Searches,Surveys etc even on common  law abiding tax paying citizens at large, fostering an environment of Tax Terrorism. Whereas it is desirable that instead of using Tax terrorism at large, Surgical strikes on big and real tax evaders should be done.

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July 2021