The outcome of an income assessment has become one of the most uncertain event for the Tax payer. In the recently concluded assessments for A.Y. 2016-17 for few of our clients:
- expenses which were being allowed in past without any fuss have suddenly been disallowed.
- A credit entry in the books though from a genuine source and full details provided during assessment was treated as unexplained Credit under section 68 and
- investments made towards intangibles (Product Development) was treated as unexplained Investments without appreciating the fact that the same has duly been disclosed in the books of accounts and not giving enough opportunity to Assessee for submission of documents
We were amazed by some of the additions made by the Assessing officer and were baffled by the huge demands created by the Tax Department and the unreasonably stretched disputes brought into existence for the Assessee. It will be interesting to see the amount of Additions made by the Assessing officer with respect to Assessment completed for Assessment Year 2016-17. The experience we have had and the approach of the department towards these cases indicates the addition is going to be much higher as compared to previous years.
Some of the possible reasons for this are :
- With elections around the corner, the government wants to show more tax collections and reduce its fiscal deficit. Therefore the targets of collections of Taxes given to Tax officers have been raised.
- There is no mechanism to find out the reasons for making additions because of unscrupulous intentions of an Assessing officer.
- In the case additions are made by the Assessing officer then no inquiries are made from Assessing officer whereas in the case of nil assessments, the integrity of the officers is questioned.
- No comparative analysis of the Cases disposed off by an Assessing officer with respect to stand taken on a particular expense/ Credit / Investment and the kind of information called for regarding the same issue from different Assessee.
- Implementation of E-Assessment and the Assessees not meeting the officer.
- Late start of assessment proceedings and then giving not enough time to Assessee. In one of our case, the officer issued a show cause notice on 25.12.2018 by an email which was received at 4.28 P.M. and client was required to provide all the information by 11.30 AM next day i.e. 26.12.2018. 25th December was a Christmas holiday and office of the client was closed. The client provided whatever information could be gathered in terms of identity and genuineness of Lender from books of accounts and from MCA (Registrar of companies) but could not please the assessing officer and had to face an addition of a large amount.
Similarly, in one of case, the PAN migration which was pending for about an year from Faridabad, Haryana to Pune, Maharashtra was finally done on 7th December, 2018 and that too after a lot of follow-up and persistence. The officer to whom PAN was migrated took up the case and closed the case on 22nd December without giving ample opportunity to Assessee in terms of time and made whopping additions of approx. Rs. 7 Crore.
- One sided power in favour of the Assessing officer and no question asked even if the Assessing officer does not apply prudence of a common man and they have been given responsibility of making assessment based on the tax law which requires a specialised kind of knowledge and skill for reading and comprehension.
The assessing officer have adopted an aggressive approach instead of a cooperative one. They are taking undue advantage of their position and without considering the fact.
A procedure should be developed where the officers completing the assessment without using their intellects, without making efforts required from their side and blindly making additions should be penalised and strict action should be taken against them to end the harassment of the law abiding taxpayers.
-From a Tax Practitioner’s point of view