Conflicting reports on how Indian Govt. will go after repeat offenders.
By Sreekanth A. Nair
The Income Tax Department of India has asked its officers to use the rare provisions of the Income Tax act against willful defaulters.
The Central Board of Direct Taxes (CBDT) urged its officers to use the provisions of arrest, detention and auctioning of attached assets of those who willfully do not pay income tax. The directions were issued in a strategy paper for the current fiscal distributed by the Central Board of Direct Taxes, reported PTI.
Under Section 276C (2) of the Income Tax Act, willful defaulters may get rigorous imprisonment for a period between three months and three years and a fine also may be charged. The department has designated officials to execute the provision named Tax Recovery Officer (TRO).
“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,” the paper said.
“Stringent action can be taken in suitable cases including the use of the provision for prosecution under section 276 C (2) of the Act,” it said.
Principal Commissioner of Income Tax will monitor the activities of TROs, especially attachment and sale of property. They will ensure that the assets are sold within a 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 willful 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 told PTI.
The officials are asked to ensure strict monitoring to protect the interest of the department. The officials must also strictly follow the cases being under the Debt Recovery Tribunals (DRTs) to safeguard the interest of the Income Tax Department.
However, the government on Tuesday denied the reports that officials have been asked to use the provisions of arrest, detention and auctioning of attached assets of willful defaulters.
“In this regard, it is clarified that no such statement has been authorized by the Income Tax department. Though the provisions for arrest and detention by the TROs in respect of the non-compliant tax defaulters are contained in the Income Tax Act, these are used extremely sparingly,” CBDT said in a statement.