Income Tax dept sent 1 lakh notices over under-reported income, non-filing of returns: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on Monday said that the Centre has sent one lakh notices for non-filing of returns, under-reported and misrepresentation of income.  

She said that the notices were sent where the income was found to be close to Rs 50 lakh and they are expected to be cleared by the end of this fiscal.  

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Speaking at the 164th Income Tax Day celebrations, the minister said that all these cases are for old returns filed 4 to 6 years earlier.  

"One lakh notices are sent where information is available that income is more than what you have filed, or there are reasons to believe that income has been understated or where they have not filed it and information is there that they should have filed it," Sitharaman said. 

"I want to convey that these are not just being thoughtlessly sent and I have been assured by the chairman CBDT that by March 2024, this entire block will be cleared," Sitharaman added. 

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.

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“The board today is not sitting over notices which have been issued and it is not a place where people are gaming the system; there is a clear-cut approach," she added. 

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. 

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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. 

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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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