With a sharp rise in the number of non-filers of income-tax returns, the I-T Department has asked its officers to impose penalty and initiate prosecution in such cases to ensure compliance.
The number of non-filers with potential tax liabilities has risen from 22.09 lakh in 2014 to 58.95 lakh in 2015. Non filers in 2013 were 12.19 lakh.
"Ensuring compliance from identified non-filers with potential tax liabilities is key to widening of tax base," said the Income Tax Department's Central Action Plan for 2016-17, presented at the recent conference of tax officials.
The Income-Tax Department has implemented the non-filers monitoring system (NMS) as a pilot project to prioritise action on non-filers with potential tax liabilities. The number of non-filers has been thrown up by NMS.
"Action under sections 271F (penalty for non-filing of return of income) and 276CC (prosecution for non-filing of return of income) should be taken in appropriate cases," it said.
Under Section 271F, if a person who is required to furnish a return of his income, as required under sub-section (1) of section 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, Rs 1,000 to Rs 5,000.
Section 276CC of the Income Tax Act provides for prosecution, punishable with rigorous imprisonment of three months to seven years and a fine.
The list of cases for further processing under section 276CC has been shared with tax officers, who have to "examine every such case of non-filer to arrive at a decision whether a particular case was fit for prosecution under section 276CC.
If so, further necessary action is to be taken expeditiously", the Action Plan said.
This exercise, it said, would help in conveying a strong message and assist in improving overall compliance to direct taxes laws.
Action Plan also shows increase in pendency of cases before CIT(A) from 2.32 lakh to 2.58 lakh. Disposal target for current fiscal has been set at 1.33 lakh cases.
Direct tax collection target for 2016-17 has been pegged at Rs 8.47 lakh crore, almost half of which is to come from Mumbai and Delhi circles.
Noting that assessees follow different practices in different regions as well as trade and industries, the I-T Department has instructed each Principal CIT/CIT to prepare and regularly review and update 'Statement on Strategy of Assessment' for their respective charge, with a focus on quality of assessment.
The Department expressed concern over Rs 62,233.14 crore demand outstanding on account of short payment, short deduction, late payment interest and late filing fees.
"Huge demand lying in the records is a cause of concern and is also an opportunity to augment revenue collections.
There may be some reason for not pursuing the demand relating to 'Short deduction' as the deductee may have paid the taxes.
"However, other defaults, particularly of short payment, late payment interest, late deduction interest, late filing fee, interest u/s 220(2) are clearly liabilities of the deductor that have arisen based on the information furnished in the respective statements and corresponding matching with the chalans reported by the banks must be acted upon appropriately," it added.