IT dept begins to tighten noose around tax evaders with its faceless assessment scheme

It will now become difficult for tax payers to dupe the income tax department as the latter, with the help of its faceless assessment system, has begun to tighten noose around those who have deliberately chosen to not respond to the notices for enquiry and verification of the tax returns, according to the government sources. The IT department has initiated a nationwide campaign to trace such evaders and has identified around 6,000 cases in which these persons have not responded to the queries and notices in a bid to escape from paying their tax dues.

“Earlier, in pre-faceless era, may be such tactics of being non-responding have possibly paid dividends for tax evader but now with the faceless assessment scheme, the IT department collates and matches transactions with the ITRs of taxpayers/entities and select tax returns for scrutiny that show wide discrepancies in financial transactions viz-a-viz the income shown in the tax returns. These discrepancies are unearthed by application of risk analysis developed through AI as well as from the experimental and domain knowledge of the tax officials,” a government source told.

Citing examples of such tax evaders, sources said a Rajkot-based individual showed his income less than 5 lakhs per annum while having cash deposits of nearly Rs 10 crore and cash withdrawal of Rs 7.5 crore. “This scamster did not respond to 6 notices, over 10 SMS alerts and other means to contact him. A survey operation was conducted during which the individual was not traceable and the business premises shown in the income tax return was of someone else. His home was traced from the bank but he appears to have absconded. Now, the process to attach his bank account and other assets has been initiated,” one of the sources told.

In another case, as per sources, and individual from Alwar, Rajasthan had shown his income only in the range of 3 to 5 lakh only in complete contrast to his bank account details.  While in 2017-18, he had made deposits of Rs 27 crore, in 2019-20 he had deposited Rs 22 crore. Similarly, a Mumbai-based individual also suggested his income of less than Rs 5 lakhs a year but had made cash deposits of Rs 12 crore. Later, a pre-survey examination revealed cash deposits of approximately Rs 60 crore and also the fact that the said individual does not maintain books of accounts.

The faceless assessment system brings transparency in the tax assessment as it is based on aggregation of financial transactions of a taxable entity that are collected by the various regulatory and facilitation agencies like the Sub-registrars of properties or the banks and other NBFCs and shared with the income tax department. According to sources, with this faceless assessment, it’s just not possible to evade tax payment.