Giving more teeth to the Income Tax Department to scrutinize older cases related to undisclosed income, Finance Minister Arun Jaitley has proposed to open tax returns files of up to 10 years if any search leads to undisclosed deposits or property of over Rs 50 lakh.
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The present ceiling for scrutiny of past returns of income is six years. Jaitley proposed to increase this period to 10 years in the Budget for 2017-18 tabled in Parliament on Wednesday.
However, tax returns can be reopened only in cases where "tangible evidences" in the form of undisclosed investment in assets are found during a search or seizure operation.
"What we have said now is (that) if during a search we find there is any asset or income worth over Rs 50 lakh which is not disclosed and is older than four years, then we can go back to 10 years," CBDT chairman Sushil Chandra said.
According to the amendment, fresh notices can be issued if the assessing officer has any document or evidence that reveals the income that has escaped assessment amounts to Rs 50 lakh or more in a year or in the aggregate of four assessment years.
As per the memorandum to the Finance Bill 2017, the amendment to the Income Tax Act will be effective from April 1, 2017, allowing taxmen to reopen the books of accounts of an assessee back till 2007.
Additionally, fresh notices can also be issued if the income which escaped assessment is in the form of assets.
"The amended provision of Section 153A shall apply where search under Section 132 is initiated or requisition under Section 132A is made on or after April 1, 2017," the memorandum said.
Meanwhile, to speed up tax assessments, the revenue department has proposed to make it mandatory for taxpayers to file I-T returns as well as revised returns by March end of the assessment year.
Failing to do so, the department has also proposed a fee for a delayed filing of income tax returns. For people whose total income is below Rs 5 lakh, Rs 1,000 fee would be charged. If the income exceeds Rs 5 lakh, a fee of Rs 5,000 shall be payable if the return is filed after July but on or before December 31 of the assessment year. A fee of Rs 10,000 shall be payable if ITR is filed after December.
