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I-T dept unleashes
September, 03rd 2009

The Central Board of Direct Taxes (CBDT) has introduced a new software programme, called 360 degree profiling, which would provide automatic alerts for scrutiny assessment of an individual or a company to the income tax department, based on its investments and expenditure.

According to official sources, the software is aimed at quick identification of cases for scrutiny where tax default or tax evasion seems present. It would save a lot of time for officers, who could focus on cases picked up objectively, rather than fishing and selecting cases on subjective judgement. Thus, it would also speed tax recovery.

It will be a map of Permanent Account Numbers (PANs), with alerts for the officer to carry on scrutiny assessment. Earlier, it would take days just to identify the related entities, which could end up in identifying a maximum of four to five assessees, explained an official source.

The software will throw up a PAN for scrutiny only when there are some aberrations in the investments, expenses and cash money expenditure made by an assessee or if the investments do not match with the income. Thus, the income-tax officer could just check the relevant returns filed or ask for details of other tax returns.

360 degree profiling is a PAN-based software which tracks an individual or a company as an assessee, and tracks all related PANs of other companies or enterprises to which the original assessee has made payments or investments.

Entry of one PAN can generate a display of numerous PANs, where each one is a possible lead for investigation, since it is attached to the original PAN entry. If the other PAN does not provide any conclusive evidence for further investigation, it will be dropped, said the official source.

The department, over the years, has developed a massive data of PANs by making it compulsory for returns and, more recently, making electronic filing of returns mandatory for companies.

If a company has made such investments, the software will exhibit PANs of all related entities of the company its board of directors, major shareholders, etc. And, following these leads, another set of PANs will be displayed in which these entities have made investments or spent money on.

This process will go on and an entire PAN tree will be made from one PAN. Similarly, if the assessee belongs to a Hindu Undivided Family (HUF), search on the PAN of one entity of the HUF could throw up numerous PANs related to the original assessee.

The department has also decided to hasten the process of clearance of high-demand cases from the stage of appealing to the commissioner of appeals, so that officials could press for recovery.

In such cases, even if the assessee proposes to approach higher courts for further appeal, it would first have to make the payments and then appeal.

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