Not just tax officials, 4 intel, investigating agencies get access to your I-T records
Experts said taxpayers need to be very careful because discrepancies in information or documents provided by them could attract scrutiny by multiple agencies.Updated: Jul 24, 2020 06:19 IST
The Cabinet Secretariat, the Intelligence Bureau (IB), the Narcotics Control Bureau (NCB) and the National Investigation Agency (NIA) have been formally authorised to access income-tax returns (ITRs) and other tax-related information of individuals or firms, a move that will help these agencies in their efforts to curb terrorism and check drug trafficking, two government official said.
A notification to this effect was issued by the Central Board of Direct Taxes (CBDT) on Tuesday, the officials said requesting anonymity. Section 138 of the Income-tax Act, 1961 empowers CBDT to furnish information received or obtained by income tax authorities to any other enforcement authority, they added.
Himanshu Parekh, partner and head - corporate and international tax at consultancy firm KPMG in India said, “The intention behind allowing such a free flow of information would be to empower the other agencies to take requisite action against the alleged offenders of law under different statutes.”
This provision enables “automatic” exchange of information relating to income-tax assesses with any tax authority, the Reserve Bank of India, and any other authority notified by the government, Naveen Wadhwa, a deputy general manager at Taxmann said. “The recent notification allows the tax department to share information of a taxpayer which might be relevant for the notified enforcement agencies,” he added.
The officials cited above said seamless sharing of information with enforcement authorities such as NIA and NCB aims at greater national security. “While an honest taxpayer should not worry, incongruous information provided by unscrupulous elements to different authorities will now be caught,” one of the officials said.
“The move has also made information exchange between the tax authority and other agencies formal and legally tenable in a court of law,” the second official added.
Explaining the legal implications of the move for income-tax assesses, SR Patnaik, partner and head-taxation at law firm Cyril Amarchand Mangaldas said, “The action taken by the tax authorities cannot be challenged by the taxpayer on the ground that the tax authorities did not have the power to use such evidence against him.”
Experts said taxpayers need to be very careful because discrepancies in information or documents provided by them could attract scrutiny by multiple agencies. “Various agencies and government bodies as notified can receive information from income tax authorities on taxpayers which can further help them in their own governance under various laws,” said Archit Gupta, founder and CEO of financial technology platform Cleartax.
Authorities dealing with different taxation systems such as income-tax, customs and the Goods and Services Tax (GST) are now increasingly sharing information among themselves “automatically” to check tax evasion, the first official said.
A memorandum of understanding between CBDT and the Central Board of Indirect Taxes and Customs (CBIC) on information exchange was also signed on Tuesday, he said. “Access to data will help to quickly nab such unscrupulous individual or firms that claim false input-tax credit under the GST [Goods and Services Tax] regime”. While CBDT is responsible for income-tax related matters, CBIC is the apex body for customs, central excise and GST.