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TMI BlogCare required while making names of defaulters public and also issues related with recovery of disputed demands:X X X X Extracts X X X X X X X X Extracts X X X X ..... Care required while making names of defaulters public and also issues related with recovery of disputed demands: - By: - C.A. DEV KUMAR KOTHARI - Income Tax - Dated:- 29-10-2011 - - I-T dept to make names of defaulters owing over Rs 10cr public- webhosted on: http://www.taxmanagementindia.com/visitor/detail_rss_feed.asp?ID=2359 High pitched assessment and demands: It is very common that in process of scrutiny assessment revenue authorities are habituated to raise huge demands and then press hard for recovery. It is matter of record that a major part of such demands are vacated in appeals. Therefore, such demands should not be considered at face value while taking any decision which can adversely affect the reputation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payer. Publication of name as defaulter is serious: Publication of name of a tax defaulter can seriously affect working, reputation and goodwill of the tax payer. Therefore, such publication should be avoided. The authorities have ample powers to collect tax. IN past we have noticed that many times news reports are spread for some technical defaults or lapses by reputed business houses. In many cases ultimately it is found that mistake or lapse was of technical nature or that there was no default at all. Therefore, utmost care is required before name of defaulting tax payers. Appreciation for tax paid is also required: He tax authorities must also appreciate tax paid by tax payers. However, it is considered as duty to pay ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, rightly so, but there must be appreciation for the same. This is because one may not pay tax until and unless called for or caught by revenue authorities. Voluntary payment of tax should be a matter of appreciation. Tax paid vis a vis demand raised: Tax paid by tax payer and further demand raised both must be considered. Suppose a taxpayer has paid Rs.500 crore. The revenue has raised say further demand of say Rs.50 crore. In such case the fact that Rs.500 Crore have been paid and there is bonafide dispute on Rs. 50 Crore demanded should be considered, Merely because there is a demand of Rs.50 Crore ( exceeding Rs.10 crore) should not be a reason to publicize name as defaulter. Credibility of demands should be examined: Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g last few years we have experienced revenue raising huge demands by not following even binding judgments and then pressing hard and recovering disputed tax even during pendency of first appeal. This should be avoided. On receipt of a stay petition the AO should make an analysis as follows (with examples) : Description: Rs. Remarks. Tax paid by assessee Rs.900 crore. Total further demand raised Rs.600 crore Demand on issues already covered in favor of assessee By CIT(A) Rs.300 crore. By ITAT Rs.150 crore By High Court Rs.50 crore. Appeal pending before ITAT Appeal pending before High Court 150 crore. Appeal pending before T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court. Demand on new issues where assessee has made out a prima facie case of relief: Rs.80 crore.* Demand on new issues where assessee has failed to make out a prima facie case of relief. Rs.20 crore** Reasonable recovery policy in the given case: Issues decided in favour of assessee, though disputed by revenue - nil 25% of prima facie allowable new issues* = 20 crore 75% of other new issues**= 15 crore Considering the fact that assessee has voluntarily paid Rs.900 crore as tax, the balance demand can be kept in abeyance. In such cases there should not be any sort of publication as defaulter. Recent report abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t publication of names: As per a recent report the government is considering to make names of defaulters public. The news report is analyzed below: From report: Comments of author I-T dept to make names of defaulters owing over Rs 10cr public. The limit is over Rs.10 crore The Income Tax department has decided to publish the names of defaulters who owe more than Rs 10 crore as unpaid taxes after it unearthed details of such assessees recently. Data base is recently formed. The department has decided to send show cause notices to such assessees, who have reported "no assets/inadequate assets for recovery", by the end of this month, asking why their names should not be published ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and put in the public domain. A show cause notice (SCN) shall be issued first. The taxpayers must immediately make good , reasoned and logical representation as to why the name should not be published as defaulter. "After receiving their replies, we will decide on making their names public in newspapers and on the Internet. Every case will be decided on merit," a senior I-T official said. Let us hope that the department shall properly consider the reply. There should be clear guidelines in this regard. The department got a boost in its efforts to trace such tax payers after it recently got a dossier on them from the Financial Intelligence Unit (FIU) and from the records of a few enforcement and intelligence ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encies. It is surprising as to why department itself could not compile data in this regard, and has to rely on reports made by other agencies. "The names have been finalised after the department got their details from various agencies. The show cause notices have been prepared," the official said. Before issuing SCN the revenue must recheck the latest position about demand and make adjustments for payments made, demands vacated in appeals etc. The measure has been initiated after the Central Board of Direct Taxes (CBDT) in June constituted a committee in this regard and was headed by I-T Director General (Administration) to examine suggestions on pending I-T demands under the categories "assessees not traceabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" and "no assets/inadequate assets for recovery". When the assessee is not traceable or when it is known that the assessee have no assets or have inadequate assets, then whether mere publication can service purpose of recovery? It is extremely doubtful, it may be a case of spending good money behind bad money. The publication of name in such cases may not serve any purpose. Constitution of this committee was among one of the many measures which the government initiated to fight black money. It seems that the government is just trying for diverting and diluting the real issue of fighting black money. Tax payers who have outstanding demands are not holding black money. They have disclosed income and for that reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have demands outstanding. Then how tracing such people can unearth black money. The measure seems just to make general public fool and just to prepare an action taken report and forget real black and also ill gotten money holders. For the cases where the assessees are not traceable, we are gathering more information before taking legal action. The publication of names will be done in a phased manner,beginning with those taxpayers who owe more than Rs 10 crore, the official said. (PTI) It seems that later on name of smaller dues tax defaulters shall also be published in a phased manner. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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