CBDT warns against ‘undue harassment’

At the same time, the directive, issued by CBDT Director Rohit Garg under Section 119 of the Income Tax Act, also asks tax officers to ensure “necessary and strict compliance”.

“By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover might get reflected in the book of accounts,” says the order.

“Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years’ cases involving lower turnover under Section 147 of the Income Tax Act, 1961 by the assessing officer, causing undue harassment to taxpayers,” it says.

Underlining the law that says reopening of cases under Section 147 of the Income Tax Act is “feasible” only when the assessing officer “has reason to believe that any income chargeable to tax has escaped assessment for any assessment year”, the letter says that reopening of past assessments can’t be done “merely on the basis of any reason to suspect”.

The order advises assessing officers “not to reopen past assessments… merely on the ground that the current year’s turnover has increased.”

A senior tax official acknowledged that these instructions underline the government’s anxiety. “No assessing officer would ever reassess past income merely because the concerned taxpayer has shown more turnover this year.”

The I-T department, in close coordination with the ED, plans to kick off on January 1 a massive assessment of what it alleges is “money laundered” by many during the demonetisation drive.