The Central Board of Direct Taxes (CBDT) has instructed assessing officers to exercise greater diligence and consistency in invoking anti-evasion provisions relating to unexplained income and assets. According to reports from The Economic Times, this directive follows a draft audit report by the Comptroller and Auditor General of India that flagged inconsistencies in their application that led to revenue losses for the government. The directive emphasizes the need for greater care and consistency in how these provisions are applied to ensure proper tax collection.
The provisions being targeted include Sections 68, 69A, 69B, 69C and 69D, which are used when taxpayers are unable to explain the source of money, assets, investments or expenses found during scrutiny. As reported by The Economic Times, these sections allow authorities to treat unexplained cash, investments, jewellery, or spending as income if the taxpayer cannot justify where it came from. These rules provide tax authorities with comprehensive tools to address various forms of undisclosed income and assets.
According to the report, Section 68 typically covers unexplained credits in books of account, while Section 69A deals with unexplained money or valuables found in possession. Section 69B relates to under-reported investments, Section 69C covers unexplained expenditure, and Section 69D deals with unexplained borrowing or repayment transactions. These comprehensive provisions provide tax authorities with multiple tools to address various forms of undisclosed income and assets, ensuring proper scrutiny across different categories of unexplained financial transactions.
