Income Tax dept reopening old tax assessments based on new algorithm
Tax Assessments: Many people wait for their ITR refunds, the Income Tax Department has begun using an algorithm to reopen old assessment cases. The Income Tax Department is utilizing ‘INSIGHT,’ a platform that spits out the names of tax evaders after sifting through massive amounts of data.
Tax officials now take action based on the name generated by the platform, according to the new rule. Previously, tax officials reopened old tax assessments based on information that the assessee may have tried to conceal some income-related information.
The names are chosen at random. It’s possible that tax evasion took place four years ago, and already have evidence in the form of an income tax return. The INSIGHT system is also dependent on the information to be uploaded in order to throw up a name.
After being tipped by the algorithm, the I-T Department is required to send a preliminary notice to the concerned taxpayer under the newly created Section 148A of the I-T Act, informing him or her that his or her information has been flagged for a specific financial year. The system involves informing the assessee that their profile has been flagged as a “high-risk VRU (variable report upload)” under the “risk management system” by the Directorate of Income Tax (Systems), in accordance with the “risk management strategy” developed by the Central Board of Direct Taxes. After that, the taxpayer has one week to respond, after which the case will be automatically reopened.
If the new algorithm generates enough names, the I-T department can issue as many as 50,000 letters under section 148A in the Mumbai region alone, which accounts for 30% of all I-T collections.
Tax experts praised the move to give taxpayers a chance to explain themselves; they added that if the assessee responds satisfactorily, the case may not be reopened. Since, earlier cases were reopened without the taxpayer’s knowledge.
Read Also: Cash Transaction Restrictions & Top 10 High value cash transaction that lead to IT Notice
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