Income Tax Department Sends Notices To Tax Evaders Using Artificial Intelligence

The Income Tax department is reassessing several income tax returns where deductions under section 80G have been taken.

New Delhi: The Income Tax Department in its latest move has identified a number of taxpayers whose ratio of donations against income looks skewed. Interestingly, the I-T department is reportedly doing this with the help of artificial intelligence (AI) tools. The Income Tax department, recently, is reassessing several income tax returns where deductions under section 80G have been taken for donating to charitable trusts and political parties.

It must be noted that income tax payers can claim deductions from 50 to 100% of the donated amount under section 80G of the Income Tax Act, 1961.

“Using artificial intelligence, the Income Tax Department has identified people whose ratio of donation against income earned is skewed for the financial year 2018-19,” Paras Savla, a partner at KPB & Associates, a chartered accountancy firm was quoted saying by Moneycontrol.

As per the report, the notices sent by the IT department were issued under Section 138 and 148 (A) of the Income Tax Act, 1961.

Reassessment Of Income Tax Returns

According to Section 147 of the Income Tax Act of 1961, the Income Tax Department has the authority to review an individual’s previously submitted income tax returns. By sending a notice under Section 148 for Income Escaping Assessment, the Assessing Officer may choose your income tax return for reassessment based on specific pre-defined criteria.

Income tax returns can be reassessed at any point within 10 years for those earning more than Rs 50 lakh and within eight years for those earning less than Rs 50 lakh. It simply means that returns for transactions in FY19 can be re-assessed until March 31, 2029 .

Deductions On Donations Under Section 80 G

Section 80G of the Income Tax Act largely deals with charitable donations, with the goal of providing tax incentives to individuals who participate in philanthropic activities. This section provides tax deductions for contributions made to specific funds or charities. An sum donated by an individual to an approved charity to the extent of 100% may be claimed as a tax deduction when submitting an income tax return.