One per cent suspicious accounts means I-T has to probe 40 lakh cases

The demonetisation deadline ends on December 30, and a day later, the I-T officers are expected to complete their scrutiny assessment work.

Written by Jay Mazoomdaar , P Vaidyanathan Iyer | New Delhi | Published:December 11, 2016 3:35 am
Income Tax, demonetisation, demonetisation news, tax officers, bank accounts, IT department, taxpayers, tax scrutiny, India news, Indian Express Income Tax Department Building. (Express photo by Vasant Prabhu)

Even if just one per cent of the total 40 crore bank accounts are red-flagged as “suspicious” during analysis by the Income-Tax department after sifting through data made available to it by banks, the tax officers would be saddled with a staggering 40 lakh cases requiring scrutiny.

“This has never happened before,” said an I-T official, who did not wish to be named. The humongous scope of the work and the increased possibility of ordinary and honest taxpayers being harassed has raised concerns in the business and chartered accountant community.

Sources in the I-T department said while there are about 8,000 officers who can undertake assessment work, only 4,000 are available, with the rest on assignment elsewhere, including in administration, audit, headquarters and systems. “Even these 4,000 are handling scrutiny assessment for Income-Tax assessment year 2014-15,” said an I-T official.

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The demonetisation deadline ends on December 30, and a day later, the I-T officers are expected to complete their scrutiny assessment work. The government has already asked banks to furnish a statement of financial transactions on deposits of over Rs 50,000 in Jan Dhan accounts, over Rs 2,50,000 in savings bank accounts and over Rs 12.5 lakh in current accounts to the I-T department before January 31.

According to the I-T department, it picks out approximately 3,20,000 cases for scrutiny in a year. So, each officer authorised (about 4,000 available now) to make assessments handles about 80 cases on an average. But 40 lakh cases for scrutiny would mean 12.5 times the current workload for each officer.

Chartered accountants fear the discretion element kicking in precisely because of such a phenomenal increase in the department’s scope of work. “And all this is over and above the normal investigation work an I-T officer handles. The government does not have such a capacity,” said a leading CA in Mumbai.

“Once notices are sent, the department has to wait for the taxpayer’s response. The officers have to read through and verify 40 lakh responses. After a preliminary enquiry, a tax appraisal is made and sent to the assessing officers. It’s only after this that the taxpayer will file his return by July 31, 2017,” explained the CA.

A senior revenue department official said there was certainly a need to ensure that the I-T officers use their power judiciously, and that there are proper checks. “We will carefully select suspicious cases and the ‘big fish’ through data analytics,” said the official.

The department also reckons it faces an onerous task ahead. But senior officials are of the view that “even if 5 lakh dishonest people are tackled, the rest will play by the rules of the game”. “Further, selective data sharing between the I-T department and the Enforcement Directorate leading to some arrests by the latter, will also instil the fear of God among the fencesitters,” said an officer.

What has left the department frustrated is that “money launderers” have found ways to break down large sums of black money and managed to deposit these in bank accounts. “Almost the entire demonetised money is coming back to the system,” said an official, quickly adding that this has made it easier for the department to track the launderers.

Officials also pointed to statistics released in May this year which revealed that just about one per cent of the country’s population paid taxes. “In 2012-13, only 2.87 crore people filed I-T returns, but more than half or 1.62 crore did not pay any tax. There are so many who escape the tax net. For the first time, they are leaving behind a trail by depositing cash in banks, even if these deposits are in the accounts of the unsuspecting,” the official said.

The revenue department’s investigation and intelligence units are currently handling all the operations related to irregularities during the demonetisation drive. “They will have to come to assessment officers with their finds before any action can be taken. After January 1, the I-T officers and those occupied in scrutiny assessment will also join the post-demonetisation tax exercise in a mission mode,” said an official.

The Income-Tax Gazetted Officers’ Association also feels the government must take immediate steps to fill almost 1,900 vacancies of officers in various positions. “As a responsible union, we are all for the government’s initiative to unearth black money. But unless immediate steps are taken to fill the vacancies through promotions, it may not be possible to successfully undertake such a massive exercise,” said Bhaskar Bhattacharya, Secretary General, Income-Tax Gazetted Officers’ Association.

Even after 390 ad hoc promotions to the assistant CIT post this year, nearly 400 posts are vacant at the deputy and assistant CIT levels, Bhattacharya pointed out. “They are the frontline staff in the battle against black money. Even the recent appointments at the ITO level were forced by various court rulings. Given the magnitude of the task at hand, we hope to see some positive initiative from the government,” he added.

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