In the past few years, revenue of Income Tax Department has been increased sharply. The main reason of this revenue growth is GST Implementation, increase in coverage of SFT/ TDS/ TCS Transactions, sharing of Income Tax and GST Department data with each other. Due to availability of this data, Income tax data is using Artificial intelligence to catch tax evaders and Tax defaulters. Here, Section 133(6) and Section 139(8A) play a very interesting role in increasing the revenue of Income Tax Department.
In the past, due to availability of limited information about assesee with Income Tax Department, Section 133(6) of Income Tax Act, 1961 is mainly used in case of Scrutiny assessment. But now a days after the increase in coverage area of SFT Transactions/ TDS/TCS Provision, now income tax department is having more accurate and ready information in comparison to past. Now, if a person does not file its ITR or information provided in its ITR do not match with information available with department, then Assessing officer sends notice U/s 133(6) of Income Tax Act, 1961, stating the reason of sending notice and ask the assessee to file its response online within the stipulated time period.
In the notice, it is clearly mention that, if assessee defaults in comply with this notice then penalty u/s 272A(2) of the Income tax Act, 1961 @Rs. 500/- for every day during which the failure continues, may be levied. Now, Section 139(8A) of Income Tax Act, 1961 comes into play, this section gives an opportunity to assessee to rectify any error or omission or under disclosure of any income in original return then he may use this section and file an updated return along with applicable taxes and penalty. Income Tax department is also more than happy if assessee use section 139(8A) of Income Tax Act, 1961 to pay taxes and penalty. It saves department time, efforts and litigation. Further, Government gets funds at an early stage that can be used for growth of economy. In notice issued U/s 133(6) of Income Tax 1961, they mention that,” Your attention is also drawn to provisions of section 139(8A) of the IT Act, 1961 under which taxpayer where eligible may file an updated return of income.”
Last year, you must have hear that a large number of notices are issued to salaried class taxpayers related to fake deduction claimed by them in their Income Tax return and claiming refund from income tax department. All these notices are issued U/s 133(6) of Income Tax Act, 1961 asking the taxpayers to submit proof related to deductions claimed by them in their Income Tax return. Almost all taxpayers failed to submit documentary proof and they availed the opportunity as given by Section 139(8A) of Income Tax Act, 1961. They file updated Income Tax return, in which they pay the refund amount, taxes and applicable penalty 25% / 50% as applicable. These 2 sections have increased the pace of revenue growth, which is free from any litigation because, in Section 139(8A) of Income Tax Act, 1961, the taxpayer accepts his tax liability voluntarily.
Now, question arises, if we receive notice U/s 133(6) of Income Tax Act, 1961, what points we should consider.
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