Published On: Fri, Jul 26th, 2019

CBDT gives 2 months extension to I-T Dept to finalise assessment in DeMo cases

New Delhi: The CBDT on Friday said that it has extended the taxman’s deadline by another two months till September to complete the final assessment of about 87,000 entities across the country who made suspicious deposits post-demonetisation.

CBDT Chairman Pramod Chandra Mody

The CBDT said the extension of time is being granted after considering “various difficulties (being faced by assessing officers) related to completion of assessments in Operation Clean Money (OCM) cases” by July end.

“The timeline for completion of assessment in such OCM cases is hereby extended and it should be completed by September 30,” the CBDT order accessed by PTI said.

It had launched the ‘Operation Clean Money’ to check black money post-demonetisation.

The assessing officers (AOs) of the Income Tax Department had earlier this month petitioned the Central Board of Direct Taxes (CBDT) to extend the deadline, saying it was “humanly impossible” to finish the task by July as it requires a lot of “paperwork and manpower”.

“The number of OCM cases is huge in most of the charges. Other routine official work is to be performed by the AO, including completion of normal scrutiny cases,” the regional offices had told the CBDT.

“Moreover, separate targets have been set for each AO for survey, recovery survey collection, appeal, audit and grievance redressal among others,” they said.

It was after this that the CBDT, which frames policy for the I-T Department, extended the deadline on Friday.

The board had also framed a special operating procedure (SOP) for the assessment of these cases stating that while the taxman initially sent notices (under Section 142(1) that pertains to inquiry before assessment) in three lakh cases, 87,000 out of these have “not filed their return of income” for assessment year 2017-18.

It had asked the assessing officers to use the ‘best judgement assessment’ procedure as stipulated under Section 144 of the I-T Act to finalise these 87,000 cases.

The section essentially reads: “If any person fails to comply with all the terms of notice issued under Section 142(1), the assessing officer after taking into account all relevant material which the AO has gathered shall after giving the assessee an opportunity of being heard, make the assessment of total income or loss to the best of his judgement…”

The CBDT, on its part, had assured the AOs that its technical and data mining arm will provide them with the addresses, bank accounts and the transaction details of these 87,000 individuals and entities who have made “substantial cash deposits during the demonetisation period”.

These cases are those where suspicious deposits of huge amounts or amounts not in conformity with the transaction history of the entity were made, post-demonetisation announced by Prime Minister Narendra Modi on November 8, 2016.

The two high-value notes of Rs 1,000 and Rs 500 were demonetised as part of the decision.

The CBDT had asked the AOs that they should also make a “detailed analysis of past Income Tax Returns, if available, to form an opinion regarding the nature of transactions related to demonetisation” while framing the assessment of these entities.

“On the basis of all material and evidence gathered by the AO, during the course of assessment proceedings, assessee would be duly provided with an opportunity to explain his/her case,” the SOP said.

The SOP said that once the “ultimate beneficiary of a transaction has been established”, the AO should forward this to his counterpart who has jurisdiction over the entity under scanner.

It had flagged a special case, saying if “entry operators” or hawala trade-like instances are found then the jurisdictional assessing officers should “tax the unaccounted commission receipts” and unearth the nexus to catch tax evaders.

The range heads, officers in the ranks of principal chief commissioners and chief commissioners of the department were also asked to “monitor” the framing of the final assessment order of these entities.

PTI

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