The Income tax (I-T) department has started the process of reopening the old assessment. The tax officials are busy tracking ‘INSIGHT,” the portal that finds out the name of tax defaulters following an algorithmic scanning of data that has been fed in.
The new rule has come into effect from 2021-22, according to which the taxman has to wait till the machine throws up a name. After that the I-T department has to send a preliminary letter under the newly introduced section 148A of the I-T Act that the assessee’s information has been flagged for a certain assessment year. The assessee will be provided one week to respond accordingly.
“The system has a degree of randomness. So, it’s possible that if there is evasion for four years, the system may show for one year when we know there are grounds to reopen all the years,” said a tax officer.
Once a reopening notice is issued within the next fortnight, a full-blown reassessment would begin involving recording all responses and serving a show-cause notice within nine months from the end of this financial year. In case, there is an accommodation loan entry where irregular cash payment is finding its way back into a company. In such a case, all lenders to the company will be served notices,” said another tax officer.