Nirmala Sitharaman, the Union Finance Minister, stated on Monday that the government has issued one lakh notices for failure to file returns and for underreporting and misrepresenting income.

She stated that letters were given when it was determined that the income was close to Rs 50 lakh, and they are anticipated to be paid off by the end of the current fiscal year.

The minister stated that all of these cases involve old returns that were filed four to six years ago while speaking at the 164th Income Tax Day celebrations.

“One lakh notices are delivered whenever there is evidence to suggest that your income is more than what you have reported, whenever there is cause to suspect that your income has been overstated, whenever there is information to suggest that you should have declared it, etc.

Officials later confirmed that the notices were sent during the last 14 months and mostly to people with annual income over Rs 50 lakh. 

Under income tax law, officers can reopen past assessments of up to six years. The minister added that the CBDT in May 2023 completed a scrutiny assessment of the 55,000 notices which they had sent pursuant to a Supreme Court judgement.

She added that earlier taxpayers had to keep records for 10 years but now tax assessment cannot be opened after six years. “In 4th, 5th and 6th year, they (tax officers) reopen the assessment only under certain situations,” Sitharaman said. 

Speaking at the same session, Central Board of Direct Taxes (CBDT) chairperson Nitin Gupta said that for the fiscal year 2022-23 more than 4 crore income tax returns (ITR) have been filed so far and the government has processed more than half of such ITRs, resulting in Rs 80 lakh refunds. 

He added that due to the shortage of manpower in the Income Tax department, there is a lot of work pending.  

He urged Sitharaman to approve the cadre restructuring proposal as soon as possible. 

Earlier in the day, the finance ministry shared some data in Parliament, which said that the number of Income Tax Return (ITR) filings reached a record 74 million in FY23, but 51.2 million or 70 per cent of these were zero-tax ITRs, meaning nil tax liability was claimed by the taxpayers. 

Even though the number of ITRs has increased 14 per cent in four years through FY23, the number of zero tax ITR filers has increased by 77 per cent during the period to 51.2 million. 

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