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Scrutiny Assessment Parameters For Revised or Belated ITRs Filed Post Demonetisation

Scrutiny Assessment of Revised or Belated- TRs Filed-Post Demonetisation

When demonetisation was announced late last year, many people were left scrambling trying to convert their old bills into the new ones. The country was in state of chaos for several subsequent weeks. Though it caused a lot of headache for the common public, the people who were hoarders of black money, evading taxes, falsifying books were hard hit as they were caught with their hand in the cookie jar. In this aspect, the objective of demonetisation was mostly achieved.

Following the demonetisation act, it was found that there were cases of assesses filing revised returns with falsified/manipulated accounts so that the cash transactions could be explained. The Finance Ministry issued a statement following the revelation that the provisions allowed in the Income Tax Act should not be misused. If any instances of misuse/manipulations were discovered then the necessary action would be taken under the relevant provisions of the Income Tax Act, as was done when instances of assesses were selected for scrutiny in Computer Aided Scrutiny Selection (CASS).

The parameters for determining if an assessee has filed revised return to cover up/explain cash deposits are:

  • Difference in the revised return against original return of unsupported decrease in closing stock
  • Higher sales numbers reported in revised returns
  • Revised cash in hand accounts on 31-03-2016 or 31-03-2015
  • Claims of additional cash inflow due to loans/gifts/advancements/repayments etc
  • Outflow of cash reduced after paying of liabilities in cash
  • Compared to previous years’ belated returns drastically lower closing stock on 31-03-2015 or 31-03-2016
    Cash in hand amount significantly higher as on 31-03-2015 or 31-03-2016 as compared to preceding year’s belated return