New Delhi: The government on Monday proposed to raise penalty under Income Tax Act for search and seizure cases by 3-fold to 30%, a move aimed at deterring black money holders from misusing the provisions for turning their unaccounted cash into white.
The Taxation Laws (Second Amendment) Bill, 2016, which was tabled by finance minister Arun Jaitley in Parliament on Monday, proposes to increase the penalty from 10% to 30% in case the unaccounted income is admitted by the assessee during the search and seizure operation.
“This deterrent was necessary,” revenue secretary Hasmukh Adhia said, adding that people were not scared of paying 10% penalty by admitting black income during the search and seizure operation. The amendments also seek to do away another provision of 20% penalty which was levied in case the assessee did not admit to holding unaccounted wealth at the time of search operations, but paid taxes and showed it in ITR later. Once the amendments are approved by Parliament, there would be a penalty of 30% of unaccounted income, if admitted and taxes are paid. This would take the total incidence of tax and penalty to 60%. While proposing to amend Section 271AAB, the government has decided to retain the provision of levying penalty of 60% of income in “any other cases”.
That would raise the incidence of tax and penalty to 90%. During 2015-16, the I-T Department conducted 445 searches which discovered undisclosed income of Rs11,066 crore. Total assets seized were Rs712.68 crore. Also 545 searches conducted in 2014-15 have led to admission of undisclosed income worth Rs10,288 crore.
Total assets seized amounted to Rs761.70 crore. Besides, 569 searches in 2013-14 saw admission of undisclosed income of Rs10,791.63 crore and asset seizure of Rs807.84 crore. This took the total undisclosed income which was admitted during searches to Rs32,146 crore. Search and seizure operations are conducted by tax department when the assessing officer believes that the assessee is unlikely to produce books of accounts or likely to suppress books of account and other documents which may be useful and relevant to an income tax proceedings.