In the era of fast changing technology and data analytics, Income Tax Department too empowered itself with one of the most enabling data-sets which allowed itself to peep itself into the assessee’s deeper secrets by laying down the responsibility on Financial Institution like Banks, Registering authority empowered to register vehicles under Motor vehicles act, 1988, Registrar or Sub-Registrar registering Purchase/Sale Deeds, Depositories etc, to submit AIR (Annual Information Report) [ w.e.f. A.Y.2015-16 AIR transaction are known as SFT statement of financial transactions]. The details about certain class of transactions (criteria like amount, mode etc) which certain class of persons need to furnish annually ( on or before 31st May, immediately following the F.Y. in which the transaction is registered or recorded) were included in the Act by inserting Section 285BA and related rules (Rule 114E to 114H)
As per section 285BA of income tax act,1961 there is a requirement to furnish statement on account of the following:
In this article, we will focus on Statement of Financial transactions.
Regular scrutiny on the basis of AIR (SFT) information:
The statement of financial transaction required to be furnished under sub- section (1) of 285BA of income tax act, 1961 shall be furnished in respect of a F.Y. in Form no. 61A and shall be verified in the manner specified therein.
Mr. Uday submitted his return for AY 2018-19 (FY 2017-18) on 15th July 2018 and say he has sold out his immovable property worth Rs. 60,00,000 in cash during the year. Now, this information has already been reached to the department in the form of AIR by 31st May 2018. So there is a possibility, that the department issue an inquiry notice before 30.09.2019 u/s 143(2) (the last date for issuing the notice for taking the case under Sec 143(3)- Regular Scrutiny).
In this example, suppose if Mr. Uday intentionally conceals or hides the transaction of Rs.60,00,000. Than in that case department may issue an notice u/s 143(2) to Mr. Uday [ on the basis of AIR filed by Registrar to the department] to ask why this transaction has not been shown in his income tax return .
In this way, department selects cases for scrutiny on the basis of information filed by various Financial institutions.