Not showing correct information of ownership of foreign assets, even if owned legally, in income tax returns could invite prosecution, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said on Tuesday. Chandra also said that demonetisation has helped in widening the tax base, with a 50 per cent increase in tax returns to 6.08 crore filed so far this year.
Terming it as one of the “serious concerns” in fight against black money, Chandra said taxpayers should file information about their foreign assets correctly in their tax returns. “When you are hiding into BVI or Panama or anywhere, but we are getting this information, maybe not today, maybe tomorrow, so have to mention in returns of income. If you have not shown it, you will be liable for many actions like prosecution,” Chandra said at an international tax conference organised by CII. “Under the Black Money Act, even if you have sent money from legal sources, but have not shown it in I-T return, then one can face prosecution for not disclosing foreign assets,” he said, adding that if a taxpayer has not shown the information in return, then he/she is liable for prosecution for three years.
He cited a recent search conducted by the tax department wherein the individual had disclosed one bank account abroad, whereas the probe showed the individual having four bank accounts. “With the information that is flowing and non-matching with the information in your return, I think it is a serious concern and everybody will have to take into consideration while filing the return whether it’s correctly filled or not and not hide any asset in foreign country,” Chandra said.
He said automatic exchange of information is taking place with more than 70 countries about financial transactions, which is then being compared with the deposits shown in tax returns. “I request tax practitioners and taxpayers that the FA (foreign assets) schedule (in income tax return) should be filled carefully,” he said. “Last year, 4,500 returns were filed for prosecution by the department and 70 per cent of them were convicted,” Chandra said. The number of ITRs filed has increased 50 per cent to 6.08 crore so far in the assessment year 2018-19 compared to last year. “Demonetisation has been very good for increasing the tax base of the country. So far this year, we have already got around 6.08 crore returns which is 50 per cent higher than last year by this particular date,” he said.
The CBDT plans to provide e-PAN within four hours of receiving an application. Chandra stated that the emphasis of I-T department is on simplification of procedure, simplification of law, dispute resolution, litigation management.