The income tax department has spooked taxpayers with notices to settle very old tax demands and has been adjusting refunds against dues that date back 20 years or more. Shocked taxpayers have taken to social media to vent their anger. Many are helpless as they do not have the documents to prove that the department’s claims are wrong. Scared of the tax department’s wrath, many are paying the amount demanded without any resistance. And while the department remains unperturbed by the criticism, this episode has only increased the trust deficit between the taxpayers and the department. This also raises questions on the government’s claim of being pro-taxpayer and non-adversarial in tax matters.
The tax department has justified its demands, saying if the system throws up cases where taxes are due, the department will collect taxes or adjust them with the refunds. It says no law prohibits the collection of unpaid taxes, regardless of how old these may be. The tax authority’s justification is that if a tax case from 2005-06 is now decided in its favour, the department will collect its dues. In its defence, it says taxpayers are given the opportunity to respond to the demand notices. But some blame possible ‘errors’ in the tax department’s system which result in numerous tax demands being raised from the past. Even the department admits there could be cases where taxes were paid but the details have not been updated or entered into the system. How can the taxpayer be made to pay again in such cases?
Read more at: The New Indian Express
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