Category: Income Tax

Income Tax Department carried out a search operation on 08.03.2022 on a cable operator of Mumbai, a State Govt employee and the businesses related to him. A total of 26 premises spread over Mumbai, Pune, Sangli and Ratnagiri were covered.

During the search, it was found that a parcel of land at Dapoli was purchased by a prominent politician of Maharashtra in 2017 for a consideration of Rs. 1 crore but it was got registered in 2019. This land was subsequently sold to one of the persons covered in the search action in 2020 for a consideration of Rs. 1.10 crore. In between, a resort was built on the same land from 2017 to 2020. By the time the parcel of land was registered in the name of the said politician, substantial construction of the resort was completed. Later, the resort was almost complete when the property was sold by the politician to the cable operator in 2020. It transpires that the relevant facts about the construction of the resort were not intimated to the Registration authorities and accordingly, the stamp duty was paid only for the registration of the land on both the occasions i.e. in 2019 and in 2020. Evidence found during the search has revealed that the construction of the resort started in 2017 and more than Rs. 6 crore was spent in cash on construction of the resort. Cost of construction of the same has not been accounted for either by the person searched or the politician in their books of account.

Search in the case of the State Government official has revealed that he, his family members and relatives have amassed huge wealth in the form of properties at prime localities at Pune, Sangli and Baramati, over a period of last ten years. The family owns one bungalow and one farm house in Pune, one lavish farm house in Tasgaon, two bungalows in Sangli, two commercial complexes having Tanishq and Carat lane showrooms, five flats in different locations of Pune, one flat in Navi Mumbai, vacant plots in Sangli, Baramati, Pune and more than 100 acres of agricultural land acquired during the past seven years. Detailed examination of sources of acquisition of the properties and the amounts spent on the lavish interiors of shops and bungalows is under progress. The family owns many businesses including showrooms of electronic products, Tanishq showrooms, civil construction business, real estate and pipe manufacturing business.

It is found that the construction business, being run by the relatives of the employee, received many contracts from the State Govt. Search operation has also unearthed evidences of inflation of contract expenses through bogus purchase and bogus sub-contracts aggregating to Rs. 27 crore. Evidence regarding unaccounted cash receipt of Rs. 2 crore in sale of land at Baramati has also been detected. Further investigation with regard to the tax evasion in construction business, is under progress.

As a result of the search action, cash of Rs. 66 lakh has been seized. Digital data and documentary evidence seized during search operation is being further analyzed and further investigations are in progress.

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Net Direct Tax collections for the F.Y. 2021-22 at Rs. 13,63,038 crore showing a growth of over 48.4%

Advance Tax collections for the F.Y. 2021-22 (Till 4th Instalment) stand at Rs. 6,62,896.3 crore as on 16.03.2022 which shows a growth of approximately 40.75%

Refunds aggregating to Rs. 1,87,325.9 crore issued in the current fiscal

The figures of Direct Tax collections for the Financial Year 2021-22, as on 16.03.2022 show that net collections are at Rs. 13,63,038.3 crore compared to Rs. 9,18,430.5 crore over the corresponding period of the preceding financial year i.e FY 2020-21, representing an increase of 48.41%. The net collection (as on 16.03.2022) in FY 2021-22 has registered a growth of 42.50% over the corresponding period of FY 2019-20 when the net collection was Rs. 9,56,550.3 crore, and a growth of 34.96% over the corresponding period of FY 2018-19 when the net collection was Rs. 10,09,982.9 crore.

The Net Direct Tax collection of Rs. 13,63,038.3 crore (as on 16.03.2022) include Corporation Tax (CIT) at Rs. 7,19,035.0 crore (net of refund) and Personal Income Tax (PIT) including Security Transaction Tax (STT) at Rs. 6,40,588.3 crore (net of refund). Collection of Rs. 13,63,038.3 crore as on 16.03.2022 is as against a target of Rs. 11.08 lakh crore (BE) as revised to Rs. 12.50 lakh crore (RE).

The gross collection of Direct Taxes (before adjusting for refunds) for the F.Y. 2021-22 (as on 16.03.2022) stands at Rs. 15,50,364.2 crore compared to Rs. 11,20,638.6 crore in the corresponding period of the preceding financial year. The gross collection for the F.Y. 2019-20 was Rs. 11,34,706.3 crore and that for F.Y. 2018-19 was Rs. 11,68,048.7 crore in the corresponding period.

The gross collection of Rs. 15,50,364.2crore includes Corporation Tax (CIT) at Rs. 8,36,838.2 crore and Personal Income Tax (PIT) including Security Transaction Tax(STT) at Rs. 7,10,056.8 crore. Minor head wise collection (as on 16.03.2022), comprises Advance Tax of Rs. 6,62,896.3 crore, Tax Deducted at Source of Rs. 6,86,798.7 crore, Self-Assessment Tax of Rs. 1,34,391.1 crore; Regular Assessment Tax of Rs. 55,249.5 crore; Dividend Distribution Tax of Rs. 7,486.6 crore and Tax under other minor heads of Rs. 3,542.1 crore.

The cumulative Advance Tax collections for the F.Y. 2021-22 stand at Rs. 6,62,896.3 crore as on 16.03.22, against Advance Tax collections of Rs. 4,70,984.4 crore for the corresponding period of the immediately preceding Financial Year i.e 2020-21, showing a growth of 40.75% (approx). Further, the cumulative Advance tax collection of Rs. 6,62,896.3 crore as on 16.03.2022 (FY 2021-22) shows a growth of 50.56% over the corresponding period in FY 2019-20 when the advance tax collection(cumulative) was Rs 4,40,281.4 crore and a growth of 30.82 % over the corresponding period in FY 2018-19 when the advance tax collection(cumulative) was Rs 5,06,714.2 crore.

The Advance tax figure of Rs 6,62,896.3 crore as on 16.03.2022 comprises Corporation Tax (CIT) at Rs. 4,84,451.8 crore and Personal Income Tax (PIT) at Rs. 1,78,441.1 crore. This amount is expected to increase as further information is awaited from Banks.

Refunds amounting to Rs. 1,87,325.9 crore have also been issued in the F.Y. 2021-22 so far.

More than 6.63 crore Income Tax Returns (ITRs) were filed for AY 2021-22 on the new e-filing portal of the Income Tax Department as on 15th March, 2022, which was the due date for filing of ITRs by Companies and other taxpayers who were required to file Tax Audit Report. As on 15^th March, 2022 more than 5.43 lakh ITRs were filed (compared to 4.77 lakh last year on the due date) and over 13.84 lakh ITRs were filed in the last 5 days (compared to 11.87 lakh last year on the due date).

Out of the 6.63 crore ITRs filed for AY 2021-22, 46% are ITR-1 (3.03 crore), 9% are ITR-2 (57.6 lakh), 15% are ITR-3 (1.02 crore), 26% are ITR-4 (1.75 crore), 2% are ITR-5 (15.1 lakh), ITR-6 (9.3 lakh) and ITR-7 (2.18 lakh). This reflects an increase of over 16.7 lakh ITRs over total filing of ITRs for AY 2020-21 till 15.03.2021.

Over 43% of these ITRs have been filed using the online ITR form on the portal and the balance have been uploaded using the ITR created from the offline ITR preparation software utilities, including Departmental software.

Further, out of the 6.63 crore ITRs filed for AY 2021-22, more than 6.01 crore ITRs have been verified (75% using Aadhaar OTP). Out of the verified ITRs, more than 5.17 crore ITRs have been processed and 1.83 crore refunds for AY 2021-22 have been issued till 15.03.2022.

More than 99.27 lakh statutory forms were filed in FY 2021-22 till 15^th March, 2022 on the new portal including 26.19 lakh Form 3CB-CD, 2.76 lakh Form 3CA-3CD, 20.9 lakh Form 15CA, 5.4 lakh Form 15CB, 2.27 lakh 10A, 5.86 lakh 10E, 77,634 Form 35 and 23.79 lakh TDS statements. The extended due date for filing of form 3CFA, 3CEAA, 3CLA, 9A, 10, 10IB/IC/ID, 10CCF, 56FF was 15th March, 2022 for which total filings till 15th March, 2022 is nearly 1.64 lakh.

To assist taxpayers with a smooth experience on the portal, over 8,500 taxpayer calls and 260 chats were responded to by the helpdesk only on 15th March, 2022 itself. Two email ids were created to resolve grievances of taxpayers in an expeditious manner related to uploading of ITRs (itr.helpdesk@incometax.gov.in) and Tax Audit Report (TAR) (tar.helpdesk@incometax.gov.in). In this regard, 16,252 emails were received, of which 16,233 were resolved by 15^th March, 2022. In addition to the above, the Department has been proactively engaging with and reaching out to taxpayers and professionals for assistance through its official Twitter handle on a continuous basis and through direct webex calls/webinars for better handholding.

The Department expresses gratitude to all tax professionals and taxpayers for the support in timely compliances. Taxpayers and tax professionals are also requested to note that the last date of filing belated return, revised return, linking of Aadhaar and PAN and compliance to the e-proceedings for assessment etc. is 31.03.2022.

The Income Tax Department conducted search & seizure operations on a multinational group, engaged in distribution of telecom products and providing captive software development services, on 15.02.2022. The ultimate shareholding of the group lies with a foreign entity of a neighbouring country. The searches, which were spread across Delhi, Gurugram and Bengaluru covered the main business premises and also the residential premises of the key office bearers.  

The search action has revealed that the group has made inflated payments against receipt of technical services from its related parties outside India. The assessee company could not justify the genuineness of obtaining of such alleged technical services in lieu of which payment has been made as also the basis of determination of consideration for the same. The expenses debited by the assessee company towards receipt of such services are to the tune of Rs. 129 crore over a period of five years.

During the search, it was found that, the assessee group has debited more than Rs.350 crore in its books of account in recent financial years towards royalty to its related party. Such expenses have been incurred for the use of brand and technical know-how related intangibles. During the search, the group has failed to substantiate receipt of any such services/technical know-how, or the basis of quantification of royalty rate for such claim. Consequently, the rendering of services and such royalty payments become highly questionable and prima facie, disallowable as business expenses as per extant Income Tax law.

Evidences gathered and statements recorded during the search also reveal that one of the group entities engaged in providing software development services, has been disclosing lower net margins from the related parties, by claiming its operation to be of low-end nature. However, the evidences collected during the investigation indicated that this entity has been rendering significant services/ operations of high-end nature. On this aspect, suppression of income of Rs. 400 crore has been detected.

The search action has further revealed that the group has manipulated its books of account to reduce its taxable income in India through creation of various provisions for expenses, such as provisions for obsolescence, provisions for warranty, doubtful debts/ loans & advances etc., which have little or no scientific/financial rationale. During the investigation, the group has failed to provide any substantial and appropriate justification for such claims.

Further investigations are in progress.

During the course of the search operation, numerous incriminating documents, loose sheets and digital evidences have been found and seized. The evidences so seized strongly indicate a close nexus between these contractors and the said person. Particulars of about 3 dozen immovable properties, whose value could be more than Rs. 130 crore have also been detected. It includes properties acquired either in their name or their associates or benamidars. Evidences of their involvement in international hawala transaction and routing of the ill-gotten money to certain foreign jurisdictions have also been recovered. Loose sheets and excel files with details of unaccounted cash receipts and payments aggregating to several crores have also been found and seized, which have not been recorded in the regular books of account.  

In the case of contractors, the seized documents reveal the modus-operandi adopted by them for large-scale suppression of taxable income by inflating their expenses. For this purpose, the prominent recourse is over-invoicing of sub-contract expenses through a maze of entities and by claiming non-genuine expenses.  Certain instances show that cash has been taken out from these entities and the same has been utilized for obtaining undue favours for awarding of contracts and also for making unaccounted payments for investments in properties. The preliminary investigation indicates that these contractors have evaded income to the extent of Rs. 200 crore on account of the above malpractices.

During the search operation, undisclosed cash of Rs. 2 crore and jewellery of Rs. 1.5 crore have been seized so far.

Further investigations are in progress.

The Income Tax Department conducted search and seizure operations on a business group engaged in gaming activity, online betting (including cricket betting), etc. on 15.02.2022. Total of 29 premises spread over Mumbai, Delhi, Surat, Jaipur, Pune and Kolkata were covered. The search action revealed that the group was operating in a clandestine manner and had concealed its operations and income from law enforcement agencies. The revenue generated by the group from its activities is largely in cash.

The group operates from Mumbai and has a wide network of agents and area managers in different cities for collection of cash from large customer base who use the websites hosted on cloud servers by private operators. It was detected during the search that, after allotting IDs and passwords to the customers, points are credited into their accounts by agents/area managers after collecting cash from them. The cash is then sent to Mumbai through hawala operators. Handwritten notes, documents and digital evidence containing detailed account of daily cash transactions to be introduced in the books of account have been seized during the search.

The search revealed that the group has been introducing its unaccounted cash into books of account as unsecured loans, security premium, partner’s capital, agricultural income, share transactions, commission and trading income, etc., in the form of accommodation entries. This cash has been routed through several layers of dummy/shell companies controlled by the entry provider groups or through hawala channels. The amounts introduced in the books of account have been invested in real estate and securities market. Preliminary investigation has revealed cash turnover of more than Rs. 600 crore in the last 6 months or so.

Listed securities worth more than Rs. 550 crore and 30 bank accounts have been provisionally attached so far. Cash (including foreign currency) of Rs. 3.08 crore and jewellery worth Rs. 81 lakh has been seized. 

Further investigations are in progress.

More than 29.8 lakh major Tax Audit Reports (TARs) have been filed on the e-Filing portal of the Income Tax Department as on 15th February, 2022. On the last day, over 4.14 lakh major Tax Audit Reports/forms have been filed.

Out of 29.8 lakh of the major statutory forms, over 2.65 lakh Form 3CA-3CD and around 24.5 lakh Form 3CB-3CD have been filed in FY 21-22. More than 2.71 lakh other Tax Audit Reports (Form 10B, 29B, 29C, 3CEB, 10CCB, 10 BB) have been filed till 15.02.2022.

On 15.02.2022, 34,842 Form 3CA-3CD (out of total of 2,65,153), 3,36,842 Form 3CB-3CD (out of total of 24,48,950), 18,644 Form 10B (out of total of 1,50,950), 11,852 Form 29B (out of total of 74,923), 478 Form 29C (out of total of 2,820), 10,542 Form 3CEB (out of total of 33,345), 873 of Form 10CCB (out of total of 4,904) and 570 of Form 10BB (out of total of 3851) have been filed. On the last date i.e. the extended due date of 15.02.2022, 14% of these statutory forms and in the last 5 days from 11.02.2022 to 15.02.2022, 30% of these statutory forms were filed.

Further, more than 5.41 crore Income Tax Returns (ITRs) filed have been verified out of 6.26 crore ITRs filed for AY 2021-22. Of the verified ITRs, more than 4.50 crore ITRs have been processed and 1.58 crore refunds for AY 2021-22 have been issued.

The Department expresses gratitude to all tax professionals and taxpayers for the support in compliances and requests the attention of taxpayers who are yet to accept the Tax Audit Report submitted by their CA to complete the process of submission.

More than 6.2 crore Income Tax Returns(ITRs) and about 21 lakh major Tax Audit Reports (TARs) have been filed on the new e-Filing portal of the Income Tax Department as on 10th February 2022.

Out of 6.2 crore ITRs filed for AY 2021-22, 48% of these are ITR-1 (2.97 crore), 9% is ITR-2 (56 lakh), 13% is ITR-3 (83 lakh), 27% are ITR-4 (1.66 crore), ITR-5 (11.3 lakh), ITR-6 (5.2 lakh) and ITR-7 (1.41 lakh).

Over 1.91 lakh Form 3CA-3CD and 17.26 lakh Form 3CB-3CD have been filed in FY 21-22. More than 1.84 lakh other Tax Audit Reports (Form 10B, 29B, 29C, 3CEB, 10CCB, 10 BB) have been filed till 10.02.2022.

The Department has been issuing reminders to taxpayers through emails, SMS and Twitter encouraging taxpayers and Chartered Accountants not to wait till the last minute and file their TARs/ITRs without further delay. Further, to assist the filers for resolution of any grievance related to e-filing, two new email ids- TAR.helpdesk@incometax.gov.in and ITR.helpdesk@incometax.gov.in have been provided. All taxpayers/tax professionals who are yet to file their Tax Audit Reports or Income Tax Returns for AY 2021-22 are requested to file their TARs/Returns immediately to avoid last minute rush.