1500 cases of wrong deduction on education loan come to fore
JAMMU, Nov 7: Income Tax Department has started issuing notices to 20,000 individuals and entities of Jammu and Kashmir, who deposited huge cash in the banks post demonetization. Even over 1500 cases of wrong deduction on interest paid on education loan have been picked up for detailed scrutiny and launch of prosecution.
Moreover, the department has decided to continue with its drive of widening the tax base in this State despite the fact that huge number of people have voluntarily started filing tax returns since November 8, 2016 when the demonetization of Rs 500 and Rs 1000 currency notes was announced by the Prime Minister Narendra Modi.
The department is of the opinion that there are large number of individuals and traders, who are still outside the brackets of tax and they need to be made assessees either by way of generating awareness or through some strong action if need arises.
In an exclusive interview to EXCELSIOR on the eve of demonetization anniversary, Principal Commissioner of Income Tax J&K Circle, R N Sahay said that soon after the announcement regarding demonetization the Central Board of Direct Taxes (CBDT) launched ‘Operation Clean Money’ in order to verify the deposits made in the banks during the demonetization grace period.
As part of this operation, details of cash deposits were obtained directly by the CBDT from the banks and accordingly explanation on source of income on e-filing portal was sought from the individuals and entities. Though cases wherein verifications were received were handled at its own level by the CBDT, the cases where no response was received were referred to the respective circles of Income Tax Department.
“In respect of Jammu and Kashmir, the CBDT has forwarded 20,000 cases of huge tax deposits post demonetization in which no response has been received from the depositors by the CBDT”, the Principal Commissioner of Income Tax disclosed, adding “the Income Tax Department J&K Circle has been directed by the Board to handle these cases by serving notices to the depositors”.
In response to a question, he said that department has started the process of issuing notices in these 20,000 cases under Section 142(1) of the Income Tax Act. “We are trying to complete this process shortly in order to pave the way for further inquiry”, he added.
It is pertinent to mention here that notice under Section 142(1) is usually served to call upon documents and details from the tax payers and to take a particular case under assessment.
The Principal Commissioner of Income Tax said, “most of these 20,000 cases pertain to businessmen of both the regions of Jammu and Kashmir”, adding “we have been compelled to invoke Section 142(1) of the Income Tax Act as depositors in these cases chose not to respond to the relevant advisories of the CBDT”.
He further disclosed that under Operation Shiksha of the CBDT, the Income Tax Department J&K Circle has identified over 1500 cases so far wherein wrong deductions on the interest paid on the education loan have been claimed. “The majority of such cases are from Kashmir valley”, he added.
It is worthwhile to mention here that interest paid on the education loan can be claimed as deduction as per Section 80E of the Income Tax Act. The income tax benefit can only be claimed on interest part of the loan while as principal part doesn’t quality for tax benefit.
“In these over 1500 cases wrong deductions under Section 80E were being claimed during the past several years but now we have tightened noose against the concerned persons and verification process has already been started”, he said while disclosing that following issuance of notices in these cases the income tax returns have been revised by the concerned persons as they were not having supportive documents to justify the claims for deductions.
He further said that department has also identified certain such cases for launch of prosecution under Section 276C of the Income Tax Department (willful attempt to evade tax).
In response to a question, he said that due to extra-ordinary initiatives of the Union Government like Income Disclosure Scheme, demonetization and Pradhan Mantri Garib KalyanYojana, like in other parts of the country the Income Tax Department has been able to widen tax base in Jammu and Kashmir up to a large extent. “However, we are not going to be complacent as still there is scope for bringing more persons under the tax bracket”, he added.
Not ruling out launch of surveys, he said, “CBDT has issued instructions for unrelenting drive for increasing tax base”. However, the Principal Commissioner of Income Tax hoped that people will extend required cooperation to the department instead of compelling it to take some strong steps.