The Income Tax Department trusts you completely. Whatever you file under ITR, it accepts it as true. It may sound a little strange. But this is the reality. According to a report by Economic Times, this is true in 99 percent of the cases. Only one percent of ITRs are investigated. In most of those cases too, either there is a complaint or doubt arises due to some specific reason. The Income Tax Department works on a trust based model.
Scrutiny is done due to third party reporting
According to the report of Economic Times, the one percent of ITRs which are investigated are selected after getting reliable information through third party reporting. Despite facing criticism for aggressive income assessment notices, the truth is that the Income Tax Department rarely interferes after ITR. The Income Tax Department takes any action only after something uncomfortable comes out in the algorithm based data analytics. In that too, it gives an opportunity to present one's side after opening a case afresh for assessment. A lot of efforts have been made to keep it faceless and away from bias.
The system of tax dispute management is weak
The business Standard report says that the Income Tax Department's system is very weak in resolving tax disputes. CAG i.e. Controller and Auditor General has also highlighted the shortcomings of the Income Tax Department in direct tax disputes. It has expressed concern especially on exaggerated tax demand, wrong interest levy and error in implementing appeal orders, delay in refund and harassment of taxpayers due to this.
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