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Income Tax > I-T department and its 'surveys'

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Posted: 25-12-2011

This is with reference to the article yesterday (25 Dec 2011) by Mr Srivats captioned “I-T Dept defends survey action, denies harassment of India Inc” in the Business Line.


IT department claims that they have collected 3,060 Crores, 4,857 Crores and 5,894 Crores in the years 2008-9, 9-10 and 10-11 respectively. It is surprising how the same evidence could be used by both the parties in support of their logic!


The very thing that so much of money has been ‘detected’ and ‘admitted’ shows the extent of harassment that has been perpetrated by the department. It is the difference in perception that leads them to pursue the idea that collection of money is legitimate government money.


In most cases, we have found, people admit and pay up not because they owe the Government any money but because they want the department ‘harassers’ out of their back. The very thing that there is an increase in collection over the last three years with decreasing number of ‘surveys’ and ‘raids’ shows that the department is slowly becoming masters in the art of harassment and extort money from gullible tax payers.


Yesterday one of the tax payers was arrested in Madurai. It did not catch the news media. What is important is that he was not served a notice, no legal procedure was followed. He was arrested because according to the department, he has  not paid dues to the government. Of course, arresting is within the powers of the department but then the provisions have been made for cautious usage not with every citizen in this country. It has been solely done to threaten him and rest of the people around as a display of their power and valour. Now, tell me will he accept all that the tax department says or not? Not only will he, people around him in the same market will also accept whatever the department says. Nobody wants to be arrested and harassed.


If the tax departments are straight in what they are saying, let them please answer the following questions:


1.       They set target collection for audits and for scrutiny-s. How can one set a target for these? Do they foresee the extent of violation people would have made even before they are scrutinized? In one of the meetings organized by the tax departments, a scrutinizing officer says, ‘The commissioner can set any target he wants. We will meet it!’ amidst thunderous applause from his colleagues!  I wonder how this is feasible. It only goes to prove what is the impact of harassment on people.


2.       How many small and medium size tax payers vanish from their business, close down and go, after they are served notices by the tax department? Our survey indicates a phenomenal 32% of small and medium businesses close down after the tax department serves notice on them. Or they wind down their business gradually closing it after two to three years. Legal or illegal is not the issue. You are killing people that is more important.


3.       After the scrutiny process of income tax department, department invariably claims a large tax collection. What happens to the tax collection in the following years from the same person who was scrutinised? Again the association of tax payers has collected information pertaining to people whose scrutiny was closed in the year 2008. We found a gradual reduction in the total tax amount paid by individual tax payers. Corporate bodies behave differently. However, individuals slow down their earnings so much so that the loss to the revenue is over 30% on an average in the first year after scrutiny increasing to well over 55% on an average, in the third year after scrutiny from the same person. In many cases, they end up with in the exemption limit! What is the purpose of scrutiny, increase tax collections or reduce it?

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