Recommendations of Direct Taxes Enquiry Committee. - Income Tax - 982/CBDT

INSTRUCTION NO. 982/CBDT Dated : July 21, 1976 The Direct Taxes Enquiry Committee have recommended that with a view to curbing tax evasion, credit facilities by the banks should be denied to tax evaders. The relevant recommendation of the Committee is reproduced hereunder:- "Recommendation No. 140-All Scheduled Banks should be barred from providing credit facilities above Rs. 25,000 at any point of time to any person, unless he gives an affidavit to the effect that he has not been subject to any penalty or prosecution for concealment of income/wealth during the immediately preceding three years." Accepting the above recommendation in principle, the Government have decided that a list of (i) serious cases of penalties for concealment of income/wealth, where an appeal is filed or where an appeal is filed but the penalty order is partially or wholly upheld by the Income-tax Appellate Tribunal; and (ii) all tax-payers who are convicted for tax fraud by a court on prosecution launched by the Income-tax Department, should be communicated to the Department of Banking, who will issue suitable instructions to the Scheduled Banks that credit facilities above Rs. 1 lakh should be denied to such tax-evaders for a period of three years from the date of their order. 2. It has accordingly been decided that cases falling in the following categories should be reported to the Department of Banking :- CATEGORY-A-Cases in which penalty is levied under:- (i) Section 271 (1) (c) of the Income-tax Act, 1961; or (ii) Section 18 (1) (c) of the Wealth-tax Act, 1957. This should include only those cases where the penalty has become final during the quarter viz. either no appeal/revision petition has been filed against the order of penalty; or if the penalty has been disputed in appeal/revision the penalty order is partially or wholly upheld by the Income-tax Appellate Tribunal/Commissioner of Income-tax; in either case, the final amount of penalty being Rs. 5,000 and above. CAREGORY-B-Cases in which conviction is ordered during the quarter by a court for an offence under:- (i) Section 277 of the Income-tax Act, 1961; or (ii) Section 35D of the Wealth-tax Act, 1957; or (iii) Section 199 or 200 of the Indian Penal Code. CATEGORY-C-Cases in which conviction is ordered during the quarter by a court for an offence under:- (i) section 276C of the Income-tax Act, 1961; or (ii) section 35A of Wealth-tax Act, 1957. It is hereby clarified that the credit facilities will be denied only to the 'person' or entity penalised and/or convicted, unless the proceedings have been taken in a representative or fiduciary capacity, in which case both the principal and the representative as such shall be denied facilities. It will not be denied to any other legal entity. 3. The Commissioners of Income-tax will accordingly furnish a quarterly report in the enclosed proforma so as to reach the Director of Inspection (Research Statistics), Mayur Bhawan, 6th Floor, Connaught Circus, New Delhi, by 20th of the month immediately following the quarter. In respect of multi-Commissioner Charges, the Commissioner of Income-tax I will furnish a consolidated report indicating charge-wise particulars. The report for the quarter ended 30th June, 1976 may be sent so as to reach the D.I. (R S) by 16th August, 1976.