New Delhi: The income tax department has found widespread cases of real estate developers and stock brokers providing wrong business codes in their tax returns, which it says could be to hide evasion of taxes.
The department has started identifying these entities and has decided to prosecute them for providing wrong codes and also for evasion of taxes, wherever found.
“CBDT has decided to prosecute stock brokers and real estate developers who did not file their business codes correctly in the tax return ... there could be big names,” a senior official of the finance ministry told PTI.
Business codes specify the sector in which the business is and the I-T department uses these in its computer-aided scrutiny selection (CASS) system for selecting potential cases of tax evasion in various sectors.
“CASS was run on several sectors to generate cases of high risk of evasion for tax scrutiny. We were startled to find very few cases thrown up in two high risk sectors of real estate and stock broking,” the official said.
While the department expected CASS to select over 1,000 cases each in both the sectors, less than 50 stock brokers were highlighted and in real estate, less than 100 builders were filtered for scrutiny, which was “absolutely abnormal”.
“Having investigated the reasons, CBDT found that taxpayers had not declared their business codes correctly. Though there could be some inadvertent mistakes, they too will be prosecuted for false statement,” the official said.