The Income Tax Department is all set to crack the whip on tax defaulters by invoking its power, which has not been used for many years, to arrest and prosecute evaders.
The step comes in the backdrop of the government initiating various steps to curb generation of black money in the country and also recently notifying the creation of the first-ever Criminal Investigation (CI) unit in the I-T Department.
The I-T Department, through its Tax Recovery Officer (TRO), has been bestowed with the powers to "arrest and detain" in prison a tax defaulter and carry out subsequent stringent penal action against the individual under the provisions of the Income Tax Act to recover arrears.
The TRO's office and its powers have been "dysfunctional" for a long time now, but rising tax arrears and economic crimes have made the I-T Department revive and restore the powers and functioning of this unit, which is deputed under every Commissioner of Income Tax (CIT) in the country.
"The jurisdiction of the TRO begins when an assessee is in default or is deemed to be in default in making payment of tax," the I-T Act stipulates.
"A TRO is empowered to attach and sell assessee's movable property and immovable property, arrest the assessee and detain him or her in prison and appoint a receiver for the management of this movable and immovable property under Section 222 of the I-T Act," a senior I-T officer said.
A recent blueprint of the department, aimed at curbing black money and speeding up the recovery of arrears to the tune of more than Rs 2 lakh crore, specifies that the post of TRO should be strengthened and made a "special pay post" to ensure better work.
The TRO should be armed with full details of the assets of the tax defaulter, the TRO's mobility should be increased by providing operational vehicles and additional I-T inspectors should be sanctioned to this unit to launch prosecutions, it suggests.
The blueprint has been floated amongst the top brass of the department and will shortly be placed before the Central Board of Direct Taxes (CBDT) and Finance Ministry for approval.
The official blueprint also says that till these measures become operational, the regular Assessing Officer (AO) in each I-T range of the country should be deputed as a TRO as an immediate measure.
"There is an urgent need to strengthen the office of the TRO in the I-T Department. Out of the total arrears of Rs 2,29,032 crore till April last year, a total of Rs 2,12,758 crore is difficult to recover and is a cause of worry for the tax collectors," the officer said.
I-T sources say that the post of the TRO is currently not considered a good post to work as the task and powers given to this elite unit are enormous, but the resources deployed are minuscule.
"The present situation is that the powers to attach property and sale of assets which can be done by the TRO are rarely used. With the TRO's office getting fully operational, it will also make economic crime and tax default punishable with arrest and jail, which is rarely done in such cases," a senior I-T officer presently on deputation to another enforcement agency said.