Officials have been directed not to shy away from the rare provisions of arrest, detention and auctioning of attached assets of wilful income tax defaulters.
The Central Board of Direct Taxes, in a strategy paper for the current fiscal, has directed officials in the tax department to use the rarely-used in this regard.
For wilful evasion of taxes, Section 276 C (2) of the IT Act provides for rigorous imprisonment for a period between three months and three years which may be accompanied by a fine.
The IT department has a designated official to execute these rare powers, called the Tax Recovery Officer (TRO), in its establishment.
“The machinery of the TRO should be strengthened by providing more infrastructure and manpower. The TROs should be further trained specifically for their work in order to increase their effectiveness.
“In respect of non-compliant defaulters, the provisions of arrest and detention as per the provisions of Rules 73 to 81 of Schedule II should be invoked by the TRO.
“Stringent action can be taken in suitable cases including use of the provision for prosecution under section 276C(2) of the Act,” said the strategy paper which acts as a guiding light for the taxman during the financial year.
The department has also asked the supervising authority of the TROs (Principal Commissioner of IT) to “monitor” their work “especially in the area of attachment and sale of property to ensure that the attached properties are sold within one year.”
“The role of a TRO comes at the fag end in a tax evasion case when the demand raised by the department gets converted into wilful default. A TRO executes his power of arrest and detention when there is a chronic default. That is why we see these provisions have been rarely invoked in the past. But now, more action on this front will be undertaken as defaults are becoming a menace now,” an IT official explained.
The instructions also make it clear to the TRO that in case of liquidation of assets there should be “prompt lodging of the claim” with the official liquidator and constant monitoring of the case in order to guard the interest of the revenue or the department.
It has also been directed, as per the strategy paper, that supervisory officers “may instruct” the TRO or the Assessing Officer of a case to monitor cases which are being heard in the Debt Recovery Tribunals (DRTs).
They (TRO) should, it said, consider lodging of claims of outstanding demand in such cases before the DRT.
“At any level of a default case, the department’s interest of getting taxes is supreme and hence the TRO is being directed to pursue the cases upto the level of DRTs too.
“Getting revenue and due taxes from an entity is the ultimate aim of the IT department. By using these new strategies, the department also ensures that a strong message goes to all such people that the taxman will not let it go easily,” the official said.