You can't evade tax authorities now ...

For many years, some taxpayers were
successful in avoiding the scanner of the Income Tax Department (IT) by
providing off-beam place of residence for communication to the IT authorities
and staying elsewhere. This mechanism made it tough for IT authorities to track
the tax payers to issue tax default notice.

According to existing IT laws, IT
department has the authority to issue the default notice to tax payers at the
place of residence for communication only as provided by the tax payers in the information
acquiesced to IT department. Taking advantage of this provision, many tax
payers have been providing erroneous place of residence for communication to IT
department with the objective of escaping from scrutiny of IT raids to evade
tax payment and protect themselves from getting punished for violation of IT
laws.

However, the government seems to be in
no mood to keep this party going on and has decided to empower IT department
with certain rights to ensure that tax evaders are not escaping from the
punishment for tax evasion.

The existing rules are being relaxed
by the government to empower IT department to use banking, insurance, municipal
corporation or any other organization database to obtain the address of a
‘hiding’ or an ‘untraceable’ income tax defaulter. This will allow IT
department to trace the accurate place of residence of tax payers to issue tax
default notice to them and take any action as required.

With this new tool in its armor, IT
department has got different routes to trace the hiding or untraceable tax
evaders to take legal action against them for espousing unconventional path to
evade tax. The underlying intent of the new ruling is to ensure that tax
defaulters are punished for tax evasion and there is no shortage to government
revenue through collection of taxes.

With the serious implementation of
this ruling no taxpayer even in their wildest of dreams dare to think about the
possibility of escaping from the scanner of IT department as the new ruling
enable IT department to get well equipped with all the weapons needed to catch
tax evaders.

It is high time for tax payers to pay
all the dues owed to the government without fail and maintain zero default
status from their end by clearing all the liabilities towards the government or
else they have to publicly face the humiliation of going to jail for violation
of IT laws.

Research and inputs by Paruchuri
Baswanth Mohan

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About the author :

Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at bhumesh.verma@corpcommlegal.com.