Do Not Coerce Taxpayers To Admit Undisclosed Income: CBDT To AOs

The CBDT has issued a letter dated 18.12.2014 pointing out that instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys opriducted by the Department. It is pointed out that that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light The CBDT has drawn attention to earlier Instructions and Guidelines issued by the CBDT from time to time through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.

The CBDT has also issued the warning that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely.

Click here to download CBDT’s letter dated 18.12.2014 on coercive disclosure of undisclosed income

F. No. 286/98/2013-IT (Inv.I1)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Room No. 265A, North Block
New Delhi, the 18th December, 2014

To
1. All Principal Chief Commissioners of Income Tax
2. All Chief Commissioners of Income Tax
3. All Directors General of Income Tax (Inv.)
4. Director General of Income Tax (I &CI), New Delhi

Subject: Admissions of Undisclosed Income under coercion/pressure during Search/Survey –reg.

Ref: 1) CBDT letter F. No. 286/57/2002-IT (Inv.11) dt. 03-07-2002
2) CBDT letter F. No. 286/2/2003-IT (Inv.II) dt. 10-03-2003
3) CBDT letter F. No. 286/98/2013-IT (Inv.11) dt. 09-Q1-2014

Sir/Madam,

Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light

2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.

3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T. Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely.

4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance.

5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard.

6. This issues with approval of the Chairperson, CBDT

(K. Ravi Ramchandran)
Director (Inv.)-II, CBDT

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