CBDT warns of penal action if drastic revision found in ITR

After the November 8 abrupt demonetisation announcement, the government had allowed depositing of scrapped 500 and 1,000 rupee notes in bank accounts. But a provision of the income tax act that allows assessees to file a revised return or declaration of income for previous years is being misused by some to include the hereto undeclared wealth and escape by paying a maximum of 30 pc tax instead of 50 pc of total on such deposits. 

In a statement, the CBDT said that since November 8, some taxpayers may misuse this provision to revise the return filed by them for the earlier assessment year for manipulating income with an intention to show the current year’s undisclosed earnings in the earlier year’s filing. The CBDT, the policy making body of the income tax department, further said if the department notices any manipulation in income in previous year’s ITR (income tax return), it will conduct scrutiny.

“Any instance coming to the notice of the I-T department which reflects manipulation in the amount of income, cash-in-hand, profits etc and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty and prosecution in appropriate cases as per provision of law,” it said.