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CBDT wing smells gross anomaly in high-value transactions

Santosh Tiwari  |  New Delhi 

The Income Tax Department’s efforts to discover unaccounted income with the help of AIR (Annual Information Returns) data on high-value transactions is throwing up critical results, indicating widespread misreporting of Permanent Account Number (PAN) and concealment of income.

The (CIB) has reported to the Central Board of Direct Taxes (CBDT) that on the basis of AIR information received from the agencies through which transactions happened, it issued letters in more than 200,000 cases where the value of transaction exceeded Rs 25 lakh.

While could be traced in about 42,000 cases, letters could not be served in 57,000 cases. In around 100,000 cases, no reply was received even though letters were served.

The cases of non-response to letters, which were served, strongly indicated tax evasion. The unserved letters, which are due to the wrong addresses, indicated deliberate furnishing of false information and the I-T branch believes that they are potential prosecution cases.

The CIB is also collecting information about those transactions where either has not been quoted by the person while doing high-value transaction or does not have

The information gathered has now been passed on to the respective I-T offices across the country but past record of action by the department on this front has been dismal.

The matter was discussed at the annual conference of chief commissioner and director generals of income tax in the capital last week and a worried has decided to ensure quick and effective action on the information gathered through AIR.

Cash deposits of Rs 10 lakh and above, credit card bills of Rs 2 lakh and above, mutual fund purchase of Rs 2 lakh or more, purchase of bonds and debentures worth Rs 5 lakh and above, shares of a company worth Rs 1 lakh or more, RBI bonds of Rs 5 lakh and above, and sale and purchase of immovable property worth Rs 30 lakh and above come under AIR’s purview.

AIR for 2010-11 has brought out mind-boggling figures on high-value transactions. The tax department received 6,462 returns containing 4.38 million transactions.

The total value of these transaction is a staggering figure of Rs 1,53,28,045 crore. According to CIB, the figure is large probably because this includes bank and other transactions where funds are rotated as well as instances where the same transactions were reported by different agencies.

* 2010-11 AIR captures Rs 1,53,28,045 crore high-value transactions  * Letters sent in 200,000 cases of transaction worth more than Rs 25 lakh
* 6,462 returns filed containing 4.38 million transactions * PAN matching in only 42,000 cases
* Large transaction value may be due to overlapping in reporting * Wrong address in 57,000 cases
* failing to get desired results in utilisation of data * No reply in 100,000 cases 
* asks its offices to act fast

The branch, however, has pointed out to CBDT that though it had been largely successful in collecting and uploading a large volume of data, the expected pay-off in terms of verification of transactions and detection of tax evasion as well as expanding the tax base had largely not occurred.

First Published: Mon, May 30 2011. 00:08 IST