For many years, some taxpayers were successful in avoiding the scanner of the Income Tax Department (IT) by providing off-beam place of residence for communication to the IT authorities and staying elsewhere. This mechanism made it tough for IT authorities to track the tax payers to issue tax default notice.
According to existing IT laws, IT department has the authority to issue the default notice to tax payers at the place of residence for communication only as provided by the tax payers in the information acquiesced to IT department. Taking advantage of this provision, many tax payers have been providing erroneous place of residence for communication to IT department with the objective of escaping from scrutiny of IT raids to evade tax payment and protect themselves from getting punished for violation of IT laws.
However, the government seems to be in no mood to keep this party going on and has decided to empower IT department with certain rights to ensure that tax evaders are not escaping from the punishment for tax evasion.
The existing rules are being relaxed by the government to empower IT department to use banking, insurance, municipal corporation or any other organization database to obtain the address of a ‘hiding’ or an ‘untraceable’ income tax defaulter. This will allow IT department to trace the accurate place of residence of tax payers to issue tax default notice to them and take any action as required.
With this new tool in its armor, IT department has got different routes to trace the hiding or untraceable tax evaders to take legal action against them for espousing unconventional path to evade tax. The underlying intent of the new ruling is to ensure that tax defaulters are punished for tax evasion and there is no shortage to government revenue through collection of taxes.
With the serious implementation of this ruling no taxpayer even in their wildest of dreams dare to think about the possibility of escaping from the scanner of IT department as the new ruling enable IT department to get well equipped with all the weapons needed to catch tax evaders.
It is high time for tax payers to pay all the dues owed to the government without fail and maintain zero default status from their end by clearing all the liabilities towards the government or else they have to publicly face the humiliation of going to jail for violation of IT laws.
Research and inputs by Paruchuri Baswanth Mohan
About the author :
Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in "The A-List - India's Top 100 Lawyers" by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at email@example.com.