Income tax prosecutions in India surged to 4,527 cases during the financial year ending March 2018, an almost four-fold jump over the 1,252 prosecution cases launched in the previous fiscal, according to the ‘Crime in India’ report released by the National Crime Records Bureau (NCRB) in October.
However, the total assets seized by the income tax department fell to ₹992.5 crore from ₹1,469.4 crore in FY16-17, raising the possibility that mainly low value offences are being prosecuted.
NCRB data discloses income tax prosecutions, convictions and asset seizures every financial year. The number of prosecutions stood at 312 in 2009-10 and remained in the 250-300 range in the FY11-14 period. They increased a little in FY15 and in the succeeding year after Modi government came into power but the rise was not dramatic enough. Prosecutions stood at 669 in 2014-15 and 552 in 2015-16. Interestingly, income tax prosecutions more than doubled after demonetisation to 1,252 in FY2016-17 and then almost quadrupled to 4,527 in 2017-18. The figures for 2018-19 have not been released yet.
The value of assets seized shows no comparable trend. They stood at 963.5 crore in FY2009-10 compared to 992.52 in FY2017-18. Similarly, convictions have failed to pick up substantially. These roughly doubled from 32 in 2009-10 to 75 in 2017-18 even as the number of prosecutions rose 14-fold. The data on convictions is likely to be reflected after a lag given the time taken for a case to be decided.
The growing public outcry over the government’s tax clampdown reportedly led to the issue surrounding a circular by the Central Board of Direct Taxes (CBDT) on 9 September to address tax overreach. As per media reports, the circular said only offences where the quantum of tax evaded exceeds ₹25 lakh will be ordinarily prosecuted. In exceptional cases, prosecution shall only be initiated after the approval of a collegium of two chief commissioners of director generals of income tax, the circular said.