Emails to seek tax updates not recovery notices, clarifies tax department
The Income-Tax (I-T) department on Tuesday said computer generated emails sent to about 1.72 lakh assessees such as individual taxpayers, corporate and start-ups are “just a request for seeking an update” and “cannot be misconstrued” as a notice of recovery.
The Central Board of Direct Taxes (CBDT), the apex body regulating income tax matters, dispelled doubts about the allegation that the I-T department was pursuing recovery proceedings and using arm-twisting methods by adjusting outstanding demands of the start-ups.
The CBDT was responding to certain observations made in social media that alleged I-T department is “pursuing recovery proceedings” and “using arm-twisting methods” by adjusting outstanding demands of the start-ups.
Mohandas Pai, co-founder of venture fund Aarin Capital, on Monday tweeted about the alleged overreach by the I-T department, tagging finance minister Nirmala Sitharaman: “Startups Left Fuming As Angel Tax Makes I-T Returns Complicated, @nsitharaman Mam pl see ... Govt had made a promise, to settle angel tax but this is wrong!” Sitharaman had in August 2019 exempted start-ups registered with the department for promotion of industry and internal trade (DPIIT) from angel tax.
Sandeep Singh, president and co-founder of start-up Khabri said that the tax department should help the government in nurturing these future ventures and avoid overreach. “While we understand that the revenues for the goverment are also drying up they should come hard on defaulters, we haven’t so far faced any challenges but can’t be sure of future. Expect the government to be extremely considerate when handling startups as it will give a positive impetus to the startup ecosystem,” he said.
The CBDT said that I-T department had sent emails seeking clarification from assessees who were entitled to get tax refund, but also had outstanding tax to pay. “These computer generated emails have been sent to almost 1.72 lakh assessees which includes all classes of taxpayers - from individual to HUF to firms, big or small companies including start-ups and therefore to say that start-ups are being singled out and harassed is total misrepresentation of facts,” the statement said.
These emails are part of the faceless communication that protects public money by ensuring that refunds are not released without adjusting outstanding demands of the past, it said.
“These emails are auto-generated u/s 245 of the I-T Act in refund cases where there is any outstanding demand payable by the assessee,” it said. In case the outstanding demand has already been paid by the taxpayer or it has been stayed by higher tax authorities, the taxpayers are requested through these mails to provide the status update so that while issuing the refund, these amounts are not held back and their refunds are released forthwith, it added.
The CBDT said that assessees on their part are required to furnish details of the pending demand, whether it has been paid or has been stayed by any appellate or competent authority so that the department could keep the same in abeyance and do not deduct this amount from refund.
“However, not providing such a response to the emails of I-T dept and raising false alarm is contrary to the spirit of the circular 22/2019 of CBDT and is totally unjustified,” it said. The circular, issued on August 30, 2019, provides for a hassle-free tax environment to the start-ups besides having a cell to redress grievances of start-ups.
The board has requested start-ups to respond to I-T department’s emails at the earliest so that further necessary action could be taken to release the refunds immediately.
The CBDT has so far issued nearly 1.4 million refunds involving an amount of over Rs 9,000 crore to various taxpayers, including individuals, proprietors, corporates, start-ups and micro, small and medium enterprises (MSMEs) in order to help taxpayers in the Covid-19 pandemic situation, it said.