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CBDT clarifies stance on recovery of Rs 36 lakhs from start-up

ANI  |  General News 

Central Board of Direct Taxes (CBDT) on Friday clarified that Rs 36 lakh have been recovered from a start-up, namely, Travel Khana as part of recovery of outstanding demand on account of Angel Tax.

An official statement said that there were allegations that the act was in violation of the CBDT instructions dated December 24, 2018 pertaining to recovery of dues in Angel Tax cases.

The CBDT statement said, "On ascertaining the facts it is seen that the additions in the case were made under section 68 of the Income-tax Act, 1961 on account of unexplained cash credits and not under section 56(2)(viib) on account of premium on shares, as has been alleged."

During the assessment proceedings, the assessing officer requested for confirmation of the persons from whom deposits had been received. Wherever confirmations were submitted, the same was accepted by the assessing officer and no addition was made. However, where no confirmations were furnished by the assesse, the assessing officer made the addition after issuing proper show-cause notice and obtaining reply in the matter said the statement.

"Thus, the addition was made only when the taxpayer failed to substantiate the source of the deposit resulting in demand of Rs. 2.22 crore approximately," added CBDT statement.

Furthermore, the document said: "The assesse did not obtain any stay in respect of the demand raised. Had the stay been obtained, recovery proceedings would not have been instituted by the department. Since there was no stay against recovery and the demand had become due, the department recovered Rs. 36 lakh after attaching the bank accounts of the assesse. Thereafter, all the bank accounts were released."

Asserting its stance, CBDT stated: "Thus, it is clear that the case of Travel Khana is not covered by the instruction issued by CBDT dated December 24, 2018 prohibiting coercive measures for enforcing recovery of outstanding demand in Angel Tax cases as the addition was made under section 68 of the IT Act and not under section 56(2)(viib). Therefore, the action of the assessing officer of enforcing recovery of demand is not in violation of CBDT's instructions."

Moreover, the statement also added that the benefit of doubt should and must be given to our entrepreneurs. However, when after repeated reminders, records of funds received are not provided, the department is unfortunately left with no choice. Our agencies also have a duty to prevent and expose suspected evasion.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, February 09 2019. 01:39 IST