CA Prarthana Jalan points out that the department’s aggressive action in launching prosecution even for trivial offenses is creating panic amongst taxpayers and leading to a state of “Tax Emergency”. She advises that the department should use the weapon of prosecution sparingly and only against habitual offenders and not as a tool to terrorize taxpayers
I had heard about National Emergency, had read about Financial Emergency and am witnessing “Tax Emergency” in front of my eyes. Indeed our country is in the state of “Tax Emergency”.
As during emergencies, no law is applicable except what the government decides according to its own sweet will similarly in today’s scenario also it seems Income Tax Act, 1961 is not applicable but just one law is applicable i.e “TAX Collection TARGET”
One does not need to pay legitimate tax on the income earned according to or as and when stipulated under the Income Tax Act, 1961 but one has to pay tax according to what the department demands through meetings, surveys, searches, notices, high pitched assessments etc.
Just one slogan is being enchanted everywhere TAX BHARO YA JAIL BHARO for astronomical irrational targets have to be fulfilled by the department of not only of collecting taxes but surprisingly also of launching prosecutions.
The common person who is earning income with much efforts, pain, sweat, intelligence, sacrifices, hard work has to bear the futile yet hefty cost of demonetisation, GST implementation failure, mounting Fiscal Deficit, excessive spending by the Govt, Banks scams, FDI’s slowing etc along with the growing inflation. Major tool left to compensate all these excessive burden is Income Tax Collection.
Prosecution notices for non payment of advance tax, return filing, TDS delay, non payment of wrong demands have become a common trend now. The difference between civil liability and criminal liability has been blurred. What should be the last resort to be taken by the department and in case of severe, intentional, deliberate, contumacious conduct is eventually becoming the first resort they are taking i.e to prosecute.
Penalty and interest are casual punishments now. Prosecution is the new ladder taken up by the department to achieve its target. For launching of prosecution dually helps department first it results in collecting of compounding fees and also helps in terrorizing not only the person against whom it has been initiated but also other people also.
If one does not pay the tax as and when demanded from him in the government treasury than he is a severe criminal and his place in the country is just behind the bars or else he could just take a loan and fly away from the country.
Thanks to the expeditious trial by the judiciary also in fast tracking the prosecutions launched by the Income Tax Department and in sending such people behind the bars so expeditiously.
Entrepreneurs, Start-ups, Businessman, working force should instead of gaining knowledge about their areas of expertise should also have profound knowledge about complex tax/statutory laws and also mastery in JAVA language for being able to cope up with the Govt. portals. E-filing websites might crash due to tremendous load and traffic but penalties and prosecutions would be launched for non payment of taxes and non filing of returns on the assesses.
In the year 1973-1974 there was a time when Top marginal rate was effective 97.75%. Retrospective amendment done in sec 115BBE by the government though to curb black money has brought the effective rate of taxation along with penalty to 77.25% , 83.25%, 107.25% and 137.25 % under different circumstances.
In today’s Tax Emergency Era, Judiciary pronouncements are only applicable on the professionals and tax payers and not on the department.
Ironically a common person has an exemption limit from income tax, annually of Rs 2.5 lakhs which approx. cost of running one minute of parliament as per 2014 data analysis. From 14 days the parliament has not functioned the common person’s hard earned money collected in form of tax has been wasted but in our country prosecution happens of only tax evaders and not of tax wasters.
So let us earn so that we can pay tax not only upto our legitimate level but as per the level that department decides for us or else be ready to stand infront of the magistrate for we have not taken money and flown away from this tax emergency nation yet.
Government has placed blind reliance on the unverified, having substantially false/fake data of the tax officials. High Interest rate, Fine, penalty are used as source of revenue. Besides this they are not bothered even considering major challenges of high competition and lower working capital/margins etc. of micro and medium business/ professionals. They are waiting for total finish of domestic businessmen/professional instead of strengthen them.
This will minimize the unemployment among st professionals provided legal services in connection with tax matters.
What about tax predators sitting in the power? Why people evade tax because they don’t believe that those in power spend it honestly. The article covers this aspect.
THERE WILL BE NO ROOM LEFT IN THE JAILS,AS THEY ARE ALREADY OVER CROWDED.WHAT WE NEED IS TAX MONEY AND NOT TAXPAYER IN JAIL.
LET US HOPE SOMETHING GOOD WILL PREVAIL TO AVOID FINANCIAL EMERGENCY.
Very aptly mentioned and timely article from your side
ONLY ONE OR TWO PERCENT PEOPLE ARE PAYING TAX .THE GOVT WANTS TO COLLECT WHOLE OF THE FUND FROM THE SMALL TAX PAYER. BIG PLAYER GO FREE.IN THIS SOCIETY THERE ARE SO MANY OTHER PROBLEMS WHICH A TAX PAYER HAVE TO FACE. THE GOVT STEP TO PROSECUTE THE TAX PAYER EVEN ON THE SMALL DEFAULT IS REALLY A CREATING PANIC AMONG THE TAX PAYER. THE GOVE HAVE TO CHANGE THEIR POLICES. OTHER WISE THE PEOPLE WILL CHANGE THE GOVT.
Your article seems more like an opportunistic attempt by a political party not in power, with the use of coined words used by such party. It really does not seem to be an article that is fair, does not consider the stand either of the Department or the govt.
Madam,
I feel the way you think on the Prosecution proceedings initiated now a days by the department. This is a measure that is required to be used against the offenders who are aware of the evasion techniques / methods and the effect of such an act. Contrarily, it is used even in a case where out of ignorance the tax payer though have adequate tax credit under TDS is also roped in with this Notice. This shows that the Government is having surplus time to spare in this activities rather than hunting / searching for the real tax evaders. In India, many big business houses use dubious methods of booking expenses and create black money (unaccounted money); but have no fear as compared to the common man. Even to quote that in the recent past, a new method of collecting Tax arrears have evolved viz., “Recovery Survey”. I am surprised, is there any provision authorising such survey. Secondly, the target for collection by the Board / Ministry of Finance to the Officials, what is happening? is this valid constitutionally. This paves way for even frivolous demands collected forcibly without even considering it is high pitched / not correct in line with the law.
It is also noticed, that notices are issued for arrears of tax even for the Asst Year 2001-2002, in the year 2018: How can the department expect any assessee to be available even after 16 years to have copies. If no details available, the department will hold its demand as correct.
In some other cases, the Appellate authority had allowed the appeal and the effect is reduction in demand which is confirmed by an order by the Jurisdictional AO. Now the principal commissioner send notice for tax arrears, without knowing the fact, that there is no demand. It is upto the Assessee to forward the copies to the records of Pr. Commissioner.
What an irony, the department doesn’t maintain the records but demand tax without any basis.
This is India. I cannot forsee or expect this in other country. But this is possible in India. As a practitioner it is generating income to me, but I personally say this is not the quality of the department we expect.
In conclusion, I could only feel, that despite judiciary condemning the act of the officials, they outgrow with more incidents which leaves only an impression, that tax payment became compulsory, whether you have income or not.
JAI HIND
Very Well Articulated. Pre-Assessment Tax Collection Measures in the form of TDS, Advance Tax and Self-Assessment Tax constitutes approximately 85% of the gross income tax collections.Interestingly, for discharging this statutory responsibility of the Exchequer, the assessee does not get rewarded in any manner. Infact to the contrary, a failure or default in discharge of this burden, even an unintentional one, results in some very dire consequences including prosecution also. Very recently the Hon’ble President of India have also advised the IRS Fraternity to treat Taxpayers as Partners and not as Adversary. Let’s hope that the extreme measure of prosecution is being resorted to only against willful & habitual defaulters and not against the vulnerable soft targets only.
Sir,
Our society always evades the “Tax” payments to the government.Government running welfare measures is depending on tax payments from the peoples.Evading the tax is a criminal offence so the govt following right direction to collect the taxes.
Mobile:9443194559: Email: johnsonthangiah26@gmail.com
Advocate For “Economic Offences”
This Govt in general and FM in particular, are 1000 miles away from economics and finance. They consider and enjoy harassment of taxpayers with slogans like ‘Ease in doing business’
Dear sir
What about the tax offenders? Who borrowed humangous amount of money from banks and flown.
Will the government take any concrete / realistic measures to bring back the black money stashed overseas to save our country from bankruptcy.